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Forex Trader's Psychology

trading_psychology_small_smallBefore beginning to trade in the Forex market, a trader must analyze his potential positions properly and give thoughts to the trading plan for the next day. Many novice Forex traders always neglect this part of their training and because their anxious to make money jump into trading based on hunches and guesses.

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Forex Decision Fatigue

A recent New York Times article relates the story of three jailed Israeli men who appeared for parole hearings before the same board. Two were serving a 30-month sentence for fraud, and one a 16-month sentence for assault. All three had completed at least two-thirds of their sentences, but only one had their parole approved by the board. It turns out that the decision was influenced by the time of day the hearing took place.


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Forex Demo Accounts

A Forex Demo Account is provided by almost every top broker. It is a powerful tool to learn how to manage your money and trade with forex. With a forex demo account, the fear and greed can be controlled in a much better way. With a real account these emotions are stronger and often they may lead to wrong decisions.

Nevertheless, regardless of how brilliant or faulty your system can be the maximum amount that you can lose or gain in demo trading is zero. Demo trading is a game, but forex trading can involve high risk actions that can lead to significant consequences your financial well-being.

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Greedy Forex

phsychology of forex trading

"Follow the news" psychology is one of the most common weaknesses. The traders react on the breaking news aggressive and fearless when the charts show market movements. They want to be the first to enter but they are nervous too: others might be profiting from the news while they are still not. Definitely, following the trends is the  #1 rule but it does not mean that you have to be the first to enter the market when trends are changed.

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Forex Trading Psychology

There is no doubt that fundamental and technical factors are essential in forex dynamics. However, there are additional factors that could be important to understanding short term movements of the market. These are expectations and sentiment. This  terms may sound similar for a beginner of forex, but in fact they are distinct.

Expectations are formed ahead of the release of economic statistics and financial data. Solely paying attention to the figures released does not suffice in grasping the future course of a currency.


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