Forex trading psychology (III)

We keep going and we get to greed. That is the leading sense in trading, but not only. Even though you have read in advance that it is very important to follow the chosen strategy and close the deals when you get a signal or the price reaches the specified level, it's not that easy at all. By seeing the profit, besides the sense of satisfaction, you will feel another - called greed. Greed will try to keep you in position because you can win more. Of course, in most such cases, the price goes in the opposite direction, and the trader loses some or all of the profit gained so far.

The objective data on the stock exchange is only 10% and the other 90% is psychology. We can summarize that demo trading is very useful, but it should not be overwhelmed with it because it leads to false confidence in less experienced traders. Those who manage to control their emotions can be profitable.

„Individuals who cannot master their emotions are ill-suited to profit from the investment process.” – Benjamin Graham

Forex trading psychology (II)

All have demo accounts. Some traders test different strategies on them, others explore a particular broker, others learn to trade ... but in some cases instead of helping, the demo account damages. As already mentioned, it can give false assurance, so let's look at the main differences between demo and real account. They are essentially psychological, expressing the emotional states they cause.

First is the uncertainty. Going into a real account, you already have something to lose, that's why before each transaction you will be asked if the decision you have made is right. You will suddenly realize that you are afraid. You have experienced this feeling when trading a virtual account, but it is now much more pronounced. It is your fear that makes you feel insecure in yourself and miss the great opportunities the market has offered, and you have not taken advantage of them.

Fear will increase the losses. Let's say you've opened a deal and you're minus late at night just when you want to go to bed. Ask yourself: will you close the deal to minus or leave it as you sleep? In fact, will you be able to fall asleep until you know what's going on with your money? If at this point you were trading with virtual money, you would not care much. Still, you've already done that a lot of times on your demo account.

Forex trading psychology (I)

Many experienced traders share the view that trading on a demo account is useful only while exploring the functions of the platform you are using. In the virtual money market, the risk of real loss does not exist, which is why many beginners get too high confidence, as a result of which their first real money account is quickly melted.

By trading on a demo account, an inexperienced trader does not really think whether to buy or sell a volume of any tool, and when he loses, he just restarts his balance. With a good coincidence, recording several consecutive profitable deals, he feels ready to switch to a real account. At this point, the beginner has forgotten how many times his account has been restarted - it is only important for him that his ultimate balance is a big plus.

The above description is the way in which most traders go in their quest to succeed in the financial markets. But if this time can be circumvented?