Forex trading – Psychological Issues And How To Get Past Them
The psychological stress in forex is one of the main things that holds your profits back and the most simple answer to it is confidence. Imagine that you are a technical trader and you are looking for a signal, it does not matter what strategies are you using and you get your buy signal and instantly place an order to buy. After you make the order you just hope that the price will go up. That is it, you have no confidence nor conviction . You actually have no solid reason for believing that the price will go up.
If that is the case, you should not do that trade. I know that the price will go up or will go down, it may look bad at start, or I entered at a bad price, but ultimately it will get to my price, because I am confident. The moment I lose confidence I just exit the trade and automatically lose. If you have experienced that is what‘s holding you back, because you are more prone. What if you place a buy order and the price goes against you? Because if you have no confidence you will not be able to hold it for very long. You have no idea what is moving the price and think that it may go on forever, so you need to have trading confidence, what traders call conviction.
Conviction means to understand when you can hold or when you should fold. You ask how do you get that confidence? You attain it by understanding what is moving each currency. If you know that you are buying GPBUSD because there is massive speculation that Bank of England is going to increase rates the next month and they are talking really hawkish. So everyone is very confident and if you place a buy order and the market goes against you, you still have the conviction to hold it, because you know that it will not be sold for long, because of the sentiment. On the other case, if you get in at a favorable offer, you will hold it for a little bit longer, because you know that they are going to increase the rates. That is the main difference, if you are trading technically it does not even matter what currency are you trading, because you have no idea what is moving those currencies. That may be the main reason why you are struggling to get confidence and profits by trading the Forex market.
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