Psychological issues and how to overcome them
The psychological stress in forex is one of the main thingsthat 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, itdoes not matter what strategies are you using and you get your buy signal andinstantly place an order to buy. After you make the order you just hope thatthe price will go up. That is it, you have no confidence nor conviction . Youactually have no solid reason for believing that the price will go up.
If that is the case, you should not do that trade. I knowthat the price will go up or will go down, it may look bad at start, or Ientered at a bad price, but ultimately it will get to my price, because I amconfident. The moment I lose confidence I just exit the trade and automaticallylose. If you have experienced that is what‘s holding you back, because you aremore 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 verylong. You have no idea what is moving the price and think that it may go onforever, so you need to have trading confidence, what traders call conviction.
Conviction means to understand when you can hold or when youshould fold. You ask how do you get that confidence? You attain it byunderstanding what is moving each currency. If you know that you are buyingGPB/USD because there is massive speculation that Bank of England is going toincrease rates the next month and they are talking really hawkish. So everyoneis 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 besold for long, because of the sentiment. On the other case, if you get in at afavorable offer, you will hold it for a little bit longer, because you knowthat they are going to increase the rates. That is the main difference, if youare 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 mainreason why you are struggling to get confidence and profits by trading theForex market.
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