Forex Trading - 3 Emotions That Can Destroy Your Trading Capital
James Woolley
May 13, 2010
If you have ever traded the forex markets you will know that it's possible to experience a whole range of different emotions whilst trading. However in this article I want to focus specifically on three different emotions that can have a detrimental effect on your trading, and can sometimes destroy your trading capital.
1. 'I'm A Loser'.
I'm sure we have all been there. Everything seems to be going well until you suddenly get one losing trade...followed by another...followed by another. You feel like a complete loser. You realise that your so-called profitable trading system isn't as profitable as it seems.
This is a very dangerous position to be in because your resulting action is often to try and chase your losses. You increase your stakes and try to make it all back. Sadly this nearly always ends in disaster.
2. 'I'm A Winner'.
While it's dangerous to trade on the back of several losing trades, it can also be dangerous trading currencies when you have experienced several winning trades in a row. This can lead to complacency and a feeling that you're a successful forex trader who is destined to become filthy rich.
As a result you will often start increasing your stakes to try and make more and more money from your impressive trading system. You may even start using other trading methods or opening impulsive trades because you believe that you can interpret the price moves very easily and are in tune with the markets. Again this over-complacency and mis-placed confidence has destroyed many a trader over the years.
3. 'I'm Bored'.
There are times when the major currency pairs simply aren't going anywhere. During these periods you should simply sit on the sidelines and wait until you get a decent set-up. However this is something that's very hard to do.
Many of us like the excitement of being in a trade, but you should never trade when bored because you will often deviate from your trading system and open positions based on nothing more than gut feeling. As a result you will nearly always experience many more losing trades than winning ones simply because you traded lots of poor quality set-ups.
So to sum up, you have to be very careful about trading the forex markets when you're bored, and when you've just had several consecutive winning or losing trades. Your emotions at these times will lead to poor trading decisions and will nearly always damage your trading capital. If you stick to your trading system at all times and apply strict money management rules, you should ensure that your profits gradually increase in a smooth and predictable pattern in the long run.
Click here for more information about a forex course that will teach you all the basics of currency trading, and to read a full review of Forex Nitty Gritty.
1. 'I'm A Loser'.
I'm sure we have all been there. Everything seems to be going well until you suddenly get one losing trade...followed by another...followed by another. You feel like a complete loser. You realise that your so-called profitable trading system isn't as profitable as it seems.
This is a very dangerous position to be in because your resulting action is often to try and chase your losses. You increase your stakes and try to make it all back. Sadly this nearly always ends in disaster.
2. 'I'm A Winner'.
While it's dangerous to trade on the back of several losing trades, it can also be dangerous trading currencies when you have experienced several winning trades in a row. This can lead to complacency and a feeling that you're a successful forex trader who is destined to become filthy rich.
As a result you will often start increasing your stakes to try and make more and more money from your impressive trading system. You may even start using other trading methods or opening impulsive trades because you believe that you can interpret the price moves very easily and are in tune with the markets. Again this over-complacency and mis-placed confidence has destroyed many a trader over the years.
3. 'I'm Bored'.
There are times when the major currency pairs simply aren't going anywhere. During these periods you should simply sit on the sidelines and wait until you get a decent set-up. However this is something that's very hard to do.
Many of us like the excitement of being in a trade, but you should never trade when bored because you will often deviate from your trading system and open positions based on nothing more than gut feeling. As a result you will nearly always experience many more losing trades than winning ones simply because you traded lots of poor quality set-ups.
So to sum up, you have to be very careful about trading the forex markets when you're bored, and when you've just had several consecutive winning or losing trades. Your emotions at these times will lead to poor trading decisions and will nearly always damage your trading capital. If you stick to your trading system at all times and apply strict money management rules, you should ensure that your profits gradually increase in a smooth and predictable pattern in the long run.
Click here for more information about a forex course that will teach you all the basics of currency trading, and to read a full review of Forex Nitty Gritty.
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