In Forex trading, there are a lot of things that you have to understand before you take a step into it. From Forex terms to techniques, basic to complex, you have to be able to grasp them all without uncertainty. You can do so by studying, learning and being guided to formulate the best trading strategies for you to win. But aside from the details you must master in this industry, the emotions that you might encounter as you trade Forex must be comprehended and managed properly as well.
Many beginner traders often forget to pay attention to the fact that emotions play a significant role in every trader’s plan and action. Because of that, they fail to prevent the negative effects of negative and overwhelming emotions. Eventually, that results in unfavorable trading results and experience, and soon, these will branch out into more unhelpful emotions.
Emotion management is definitely important if you want to take Forex trading seriously. To elaborate more on how substantial it is, the list is here below. Check out these 8 bad things that can happen if you don’t control your emotions in Forex trading. Find out why you should not let your emotions get ahead of you!
1 – You might ignore the importance of a trading plan.
A trading plan is the most essential tool that must be in your trading preparation bag. Having it, you will know what to do, what to trade in, how to trade, how to manage unexpected changes in the market and how to come up with back-up plans.
Unfortunately, this is where many traders, especially beginners, commit a mistake. In many cases, it’s because of emotions that cause them to set aside the significance of creating a surefire plan before trading Forex.
Too much excitement is disadvantageous when you do not know how it should be handled relative to your trading decisions. If you’re too excited to trade, you might become impulsive and forget the weight of a trading plan.
When you’re feeling impatient and sort of annoyed at how time-consuming the preparations before trading Forex are for you, you might thoughtlessly skip over the major section in the trading process and leave behind the trading to-do list.
2 – You might trade greedily and recklessly.
Forex trading is not gambling. You cannot simply guess and trade without caution. You cannot be too excited or too relaxed about it, or else, you might trade carelessly.
Greed is one of the common emotions experienced by many Forex traders. If you experience winning trades and want to keep winning and winning and winning, there could be times when you are not so careful anymore because you believe that using the same trading strategies is always the way when it’s actually not.
On the other hand, if you lose more often than you win, or if you have never won yet, frustration combined with greed can also harm you and your trading decisions if you don’t control them steadily. These might lead you to trading all you can, no matter what it takes, even if it’s risky, just to win.
3 – You might hesitate a lot.
There are many opportunities in Forex trading, but you can personally enjoy them if you make an effort to enter the market and to win. If you have a lot of emotions that make you doubt and hold back your interest or your brave steps in Forex trading, you might hesitate a lot.
Although hesitation sometimes veers you away from unwanted situations, it also sometimes keeps you away from good shots! If you hesitate so much in every trade you make or in using the trading plan you thought hard for, you might waste opportunities and rewards that should be yours.
4 – You might lose your trades.
If you’re reckless, greedy, inattentive and hasty, you might lose your trades. That’s a positive sign that you’re close to failing in Forex trading. What makes it worse is not listening to pieces of advice from expert traders or from reliable Forex brokers. Arrogance after winning a trade and especially before beginning to trade is one of the qualities of a Forex trader that does not have a bright future in the Forex market.
5 – You might overlook bigger and better Forex trading opportunities.
Hopefulness is a good emotion, however, if it becomes a hindrance for you to see better things. It keeps you holding onto a fruitless trade even when you clearly see it near to or obviously losing. Just because you see a small hope, you keep focusing and spending money on that trade, and it often ends up against your hope. That happens when you are brightly hoping so much amid the clear sign that it’s a losing trade already.
Because of this, you might overlook bigger and better Forex trading opportunities. Instead of using your energy, brain cells and money on potential trades, you’re wasting them on hopeless trades.
6 – You might fail to choose the best Forex broker for you.
Forex brokers are the aces that can help you get access to opportunities of buying and selling currencies. You need to speak and work closely with them for you to be taught and guided professionally.
If you don’t concentrate on looking for high-quality and reputable Forex brokers, you might fail to choose the best one for you. Emotions that might lead to this are greed and thrill.
Mindlessness will harm you and your choices because you won’t carefully look into credentials, performances and good customer experience if you’re only interested in winning and not in getting excellent growth as a Forex trader.
7 – You might become a victim of Forex scams.
Related to the previous number is this. If you don’t control emotions like greed and excitement mixed with rashness and overconfidence, there’s a tendency that you won’t be meticulous when choosing Forex brokers, platforms and offers presented to you.
Just because the presentations are impressive and sweet-sounding, you easily agree, hire and pay even before you get to fully understand Forex. With these actions brought about by negative and overwhelming emotions, you might cause yourself to become a victim of Forex scams.
8 – You might feel like giving up easily.
Forex trading is not easy, but for those who experience wins after hard work, it’s worth it! Losing is normal because what are the chances in such an industry? It’s either win or lose.
If you get overly discouraged and saddened by your failed trades and let it stay that way for a long time, you might feel like giving up so easily. If you’ve done everything yet keep losing, that’s the sure time to give up, but if you’re a newbie, you have a lot to learn and to experience, so encountering harmless losses is acceptable and giving up early is not a Forex trader thing.
Not being able to control the emotions of dejection from a lost trade will keep you down until you want to quit Forex trading.
EMOTION MANAGEMENT FOR FOREX TRADERS
Just like when purchasing food, clothes and gadgets, emotions have a big portion in the choices you make when trading Forex. It’s beneficial if they are always positive emotions that bring about friendly decisions, however, if they are negative, they can lead to wrong trading actions.
Well, sometimes, even positive emotions can overwhelm you so much that you go a little extra excited or pumped up, causing you to become carefree. That’s why you must absolutely be in control of your feelings while trading Forex.
Prevent trading outcomes and experiences that you will most likely regret later on just because of your unconstrained emotions. Be smarter and wiser even when your emotions are strong enough to try to convince you to trade carelessly.
Remember, you are the master of your emotions, and not the other way around! Practice and value emotion management for Forex traders, so you can trade in better ways and reap better fruits!
ABOUT THE AUTHOR:
Nicole Ann Pore is a writer, an events host and a voice over artist. She finds quality and well-researched writing as a worthwhile avenue to enlighten and delight others about things that matter. Film critiquing and filmmaking are among her interests too. Giving all the glory to God, Nicole graduated Cum Laude from De La Salle University Manila, Philippines with a Bachelor’s Degree in Communication Arts.