Emotional Financial Trading
Many traders lose their funds in the markets everyday because they are unable to control their emotions.
Many experts have done a big amount of research on trading psychology and they all agree on one thing, Traders must have a trading method and a systematic strategy that enables them to use only logic and rationality when trading and not to let his emotions alter those logically based trading activities.
-Fear of losing funds: I had three forex traders a beginner, an intermediate and an expert trade forex for 2 months with the same capital and leverage on a demo account then again for 2 months with a live account (the same capital, platform and trading conditions) and the results were shocking.
The expert had a %2 extra on returns on the demo account while the other 2 traders had over %88 more returns on the demo accounts and all was explained by one factor fear.
Fear when trading in the financial markets often leads to panic and panic leads to closing positions at wrong time and on the wrong price resulting in huge unexpected losses.
The moment a person decided to enter the financial markets and becomes a trader he willingly accepts the risks in exchange to the big returns.
To live with that risk requires to the trader to stay logical and fearless at all times.
-Emotional attachment: the financial markets are a vicious battle ground and what goes up today goes down tomorrow.
This is why traders should use logic to decide when to leave a certain instrument.
Many traders have had huge losses because of the felt emotionally attached to certain stock, currency or future because it made them big returns and prosperous profits.
A successful trader know exactly that when it is time to move on then it is time to move on, the real loyalty in the markets is for profits and not the instruments that made them.
-Hope: we always hear stories of successful traders who opened a losing position but yet their hope of the instruments going up has clouded their judgment resulting in losses and some might even go as far as buying more of that instrument to make more returns from it.
Greed is good when it works as a motivator for self improvement however greed is bad when it clouds the trader's logical judgment.
A successful financial trader should always be reasonable.
Financial trading is a gold mine filled with all sorts of stressful and emotionally consuming traps hence being a trader requires great emotional control in order to enjoy the returns of trading success.
Many experts have done a big amount of research on trading psychology and they all agree on one thing, Traders must have a trading method and a systematic strategy that enables them to use only logic and rationality when trading and not to let his emotions alter those logically based trading activities.
-Fear of losing funds: I had three forex traders a beginner, an intermediate and an expert trade forex for 2 months with the same capital and leverage on a demo account then again for 2 months with a live account (the same capital, platform and trading conditions) and the results were shocking.
The expert had a %2 extra on returns on the demo account while the other 2 traders had over %88 more returns on the demo accounts and all was explained by one factor fear.
Fear when trading in the financial markets often leads to panic and panic leads to closing positions at wrong time and on the wrong price resulting in huge unexpected losses.
The moment a person decided to enter the financial markets and becomes a trader he willingly accepts the risks in exchange to the big returns.
To live with that risk requires to the trader to stay logical and fearless at all times.
-Emotional attachment: the financial markets are a vicious battle ground and what goes up today goes down tomorrow.
This is why traders should use logic to decide when to leave a certain instrument.
Many traders have had huge losses because of the felt emotionally attached to certain stock, currency or future because it made them big returns and prosperous profits.
A successful trader know exactly that when it is time to move on then it is time to move on, the real loyalty in the markets is for profits and not the instruments that made them.
-Hope: we always hear stories of successful traders who opened a losing position but yet their hope of the instruments going up has clouded their judgment resulting in losses and some might even go as far as buying more of that instrument to make more returns from it.
Greed is good when it works as a motivator for self improvement however greed is bad when it clouds the trader's logical judgment.
A successful financial trader should always be reasonable.
Financial trading is a gold mine filled with all sorts of stressful and emotionally consuming traps hence being a trader requires great emotional control in order to enjoy the returns of trading success.
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