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How to control emotion while trading? You Should Know.

Forex Forum, Best emotion control tips while you trading.​


How to control emotion in forex trading

Our emotions have a significant impact on the decisions we make. Trading is all about making decisions of what to buy, what to sell and what to hold. Most traders have a hard time controlling their emotions. Many of them have even blown up their trading account because of lack of control on emotions.

In this article we will discuss about how to control emotions while trading. Also, we will mention the exact actions to take when you think you are unable to control your emotions.

What is emotional trading?​


Emotional trading is when a trader or investor lets personal feelings and emotions impact their decision-making. Sometimes it can be helpful, but usually bringing emotion into trading is a bad idea.

Psychology

Trading Psychology is considered to impact and affect up to 95% of overall trading success. When we think about trading in terms of psychology, this is knowing when to enter a position and when to not enter a volatile market and leave the market alone.

A trader is their own worst enemy when it comes to Forex and it is their responsibility to come to terms with that. The trader is, after all, the chief decision-maker so it's up to the trader to introduce adequate measures to protect open positions. For learn more about forex trading psychology, you need to visit forex forum. Forex forum is one of the best places for learn proper about forex.

Here are some tips, how you can control your emotion in forex trading:​


1. Greed

The general definition of greed – excessive desire for more of something than is needed.

In forex trading expecting a higher return is the worst mistake you can ever do in your trading career. Greed prompts you to take trades continuously without realizing that the market will be open again tomorrow. So as a result of this trading behavior traders often ended up fall into overleveraging and overtrading. So, you have to avoid greed in forex trading.

2. Dealing with a losing position

No matter how diversified and well-tested a strategy is, there will always be times when it's sitting in the red. When losses start to grow, the emotions will distort our perspective on reality.

Cortisol is released by the brain – this is a stress hormone that interferes with thought, memory and rational decision making. This process is very subtle and happens below the level of conscious awareness.

3. Using stop orders

Stop orders are very unique tools that have been designed to help both the busy trader as well as the emotional trader. But its biggest advantage is that it helps you take control of your greed when trading, or more specifically removes greed from the equation completely.

Essentially what these orders do is help you set a specific price point of a financial instrument and register it on the software as a place to either buy or sell something automatically. For Learn more about stop-loss click here...

4. Remember the past

When the stock market dives, remember that this isn't the first time it's happened.

"The stock market has overcome so many obstacles," said Goldberg, pointing to 9/11, the Great Recession and the market crash of 1987.

"What happened each time? The stock market recovered and claimed new highs."
So, Remember the past when you will start trading. It's can help you to control your emotion in forex trading.

5. WAIT FOR A CANDLE TO CLOSE

A trader must not catch a candle which is still open. An open candle provides misleading signals which will leave you in a mess. Do not let your emotions drive your decisions while trading. Many times, these misleading signals are the reason for losing trades.


6. STOP TRADING AFTER TWO CONSECUTIVE LOSSES OR WINS

A trader starts feeling like a loser after two consecutive losses. Since they don't want to lose, they start doing revenge trading. Similarly, a trader feels invincible after two consecutive wins. They think today they cannot lose at all and they start taking some fast and bad decisions without proper analysis. So, a trader should stop trading after two consecutive losses or wins to control their emotions.

7. Overconfidence

If you hit a rich vein of winning trades, as your strategy works favorably during the current market conditions, overconfidence can rear its head. This can have many negative side effects, but the main one to be aware of is over trading.

The importance of emotion control in forex trading

THE IMPORTANCE OF CONTROLLING EMOTIONS WHILE TRADING​

The importance of day trading emotional control cannot be overstated.

Imagine you've just taken a trade ahead of Non-Farm Payrolls (NFP) with the expectation that if the reported number is higher than forecasts, you will see the price of EUR/USD increase quickly, enabling you to make a hefty short-term profit.

NFP comes, and just as you had hoped, the number beats forecasts. But for some reason, price goes down!

You think back to all the analysis you had done, all the reasons that EUR/USD should be going up – and the more you think, the further price falls.

As you see the red stacking up on your losing position, emotions begin to take over – this is the 'Fight or Flight' instinct.This impulse can often prevent us from accomplishing our goals and, for traders, this issue can be very problematic, leading to knee-jerk reactions.

Professional traders don't want to take the chance that a rash decision will damage their account – they want to make sure that one knee-jerk reaction doesn't ruin their entire career. It can take a lot of practice, and many trades, to learn how to minimize emotional trading. Learn more about forex trading emotion control at dailyfx.com

Instead, use time to research the factors that influence markets rather than relying on intuitions and guesswork. Or analyze your trading plan and see how it can be improved.

Even so accept that you can do all of the analysis in the world, and do everything possible but sometimes the market just won't go in the direction you expect it to. Accept that there are always circumstances that cannot be foreseen.

You can learn more about forex trading strategies and currency trading tips at forex.forex

Thank You
 

Canoodle

Member
Thank you for the tips. Forex traders must understand that it is a psychological game and one small mistake makes you lose all of your money. In order to trade profitably you must hold back your emotions strongly. No one can teach you this, you need to learn how to manage emotions by proper practice.
 

Muricide

Member
Controlling our emotions while trading is essential to reach the level of a professional forex trader. These tips are especially helpful to the novice traders who often struggle with managing their emotions and engage in emotional trading. Being analytic, strategic and logical is the only way to avoid trading based on our emotions and impulses.
 

Braggart

Member
When you have your experience to back your trading, you know how to handle situations. You won't do anything that is not required. For this, if you need to keep your greed aside, you will do that too. Just don’t expect gains out of nothing.
 

Paulsy

Well-known member

Avoid trading every market trend and news update.

In spite of the fact that economic data affect exchange rates, and markets experience significant volatility following the release of important news, trading news releases whose outcome and market reaction cannot be predicted are risky; especially if you own a small Forex account considering your lack of experience. Traders who are unaccustomed to increased volatility are advised to stay on the sidelines. It is not a good idea to put your hard-earned capital at risk.

It is essential to use technical analysis when trading Forex as it can help identify the overall price trend, as well as optimal entry and exit points. The goal of technical analysis is to predict future price movements with greater accuracy by analyzing past market data such as prices, volumes, and trends. Taking an online Forex course made by trading experts can help you improve your small Forex account’s performance as well as its growth.
 

Isometric

Member
A few live trades can teach more than you will ever learn from merely reading. You will never understand the pain and sorrow of losing your money until you do. So, better take a few chances and see what happens when you win and lose money.
 
It’s not easy to control your emotions. You will be able to do it best when you know how these can impact your trades. It would need a great deal of hard work to be able to control your emotions but once you can do that, nothing can stop you from winning your trades.
 
I don’t think you will be able to learn much about trading and how emotions impact it until you make a few live trades. Consider taking a few risks in the market and see how it feels to trade and take risks after you have already made a loss.
 

Bravado

Member
This is a very relevant topic. The number of scams has significantly increased and the only way to deal with them is by educating ourselves. But new traders often end up trusting a scammer as they look for shortcuts to success. Such shortcuts are only going to cut down your bank balance in the end. So please be aware of such frauds and scams before you trust anyone with your money.
 
It hurts to lose money and it feels good to make money. There is nothing you can do about your emotions. So, promise yourself that you will stick to your trading plan regardless of the results you have been getting to reduce the impact of your emotions on your trades.
 

Textuary

Member
Absolutely, the best way to trade successfully is to keep your emotions out of it. I am grateful that you shared such a helpful post.
 
Instead of trying to control how you feel, you must learn to accept reality. When you stick to your trading plan, you automatically avoid market nuisances and focus only on what is required.
 
You can’t control how you feel. It’s obvious to feel sad on a loss and celebrate on a profit. But when these emotions start taking the shape of your losses, you know that it’s time to either take a break or strictly stick to your trading plan.
 

Blockhead

Active member
I totally agree with the point that we should stop trading after 2 consecutive losses or wins. But it may be difficult to put that into practice for scalpers or day traders. So, my advice to fellow day traders is to not let the win or loss get to your head. Trade with a conscious and focussed mind.
 

Woolpack

Member
Controlling emotions is a necessity for traders but in no way it is an easy thing to do. So, just stick to your plan and try not to make changes to it when your trades don’t seem to be executing as planned.
 

Arrogate

Member
Very informative post, especially for the beginners. To become a profitable trader, it is important to keep emotions at bay or else it can ruin your trading career. Focus on practising more and developing your skills rather than making money. Develop a strategy and trading plan. Work according to it and don’t risk the money you need to live.
 

Epedaphic

Member
I would say emotional trading always ends up in losses as we deviate from our original trading plan and overlook the risk. In my opinion, poor risk management is the by-product of emotional trading. We must learn to separate our emotions from trading and just stick to our strategy no matter what.
 

Pinnace

Member
Controlling one's own emotions is a valuable skill for a trader. It is best to keep emotions out of your trading. Thanks for posting this long article. Excellent reading.
 

Affusion

Member
When you're trading, it's important to be in control of your emotions. After all, trading is all about making rational decisions based on the market. But that doesn't mean that emotions don't come into play.

Here are some tips for controlling your emotions while trading:

1. Don't let your emotions ruin your mindset.
2. Stay focused on your goals.
3. Keep a cool head.
4. Don't get too attached to any one trade.
5. Remember that losses are part of the game.
6. Focus on the long term.
7. Stay disciplined.
 

Masterate

Member
It is impossible without adopting the mentality of a trader. The mindset of a trader can assist you in controlling these feelings, allowing you to become a more successful trader.
 

Teropus

Member
When you're trading, emotions can sometimes get the better of you. Fear and greed are the two main emotions that can lead to bad decision making. Fear can cause you to miss out on good opportunities or to sell too early.
The key to successful trading is to control your emotions. You need to be able to make decisions based on facts and analysis, not on emotions. When you feel fear or greed creeping in, take a step back and think about what you're doing.
 
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