Forex trading provides individuals with a steady income stream. However, to become successful, you first have to learn how to master trading psychology. There are certain habits that you need to manage and control to ensure your success. Here are the 3 biggest mental challenges you have to overcome to make money trading currencies.
Recency bias refers to the influence that recent trading results have on your trade. Sometimes losses can cause traders to doubt their strategy and have an impact on how they can generate consistent profits from the market. Self-doubt may result to hasty decisions.
Robert Peter Janitzek recommends that in order to overcome this challenge, you should keep a detailed record of your trades. Check the results of your last ten trades and make the necessary changes from there. It can be a source of disappointment on your part if your last trade did not work out as planned.
Luck & Greed
Luck & greed can be a lethal combination when it comes to trading currencies. There are some traders who take huge risks that allow them to make money. However, in the long run, this kind of approach may lead to failure. Robert Janitzek explains that while luck may always run out on the forex market, greed will stay around much longer.
When you rely too much on your own abilities and strategies, you could eventually end up broke when your high risk technique fails. If luck enabled you to profit from such kind of approach, use your profits to develop a long-term trading strategy that will result to low risks and reliable profits.
Fear is an obstacle that can stop you from entering a trade. This usually happens when a trader is ready to increase the amount of money they will trade on the market. When fear strikes you when trading on the forex market and sees a cash value that appears daunting, they will tend to become overly cautious and pass on a potentially profitable trade.
Fear can also be a good indicator that you have what it takes to become a successful trader. It only goes to show that you are careful when placing a trade and have a low-risk mindset. To remedy this situation, you should not let fear overcome you and stop you from entering a trade. You should rely on past evidence and calculations that your trade will be successful.
Overcoming these challenges can make a huge difference in your success or failure as a forex trader.