User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Wednesday August 16, 2017 - 12:06:25 GMT
Global-View.com - www.global-view.com

Share This Story:
| | Email

Psychology of Forex Trading

There are many reasons why online traders struggle to succeed but the one I am focusing on today is the Psychology of Trading. It is hard enough to make money that you don’t need psychological factors to work against you but that is the reality. As with all my discussions, everything I say comes from experience and not from anything I have read in a textbook. My hope is that this trading psychology discussion helps in this regard. 

 

1) Rapid Eye Movement

Have you ever put on a position, stared at the screen watching the price changes, see the market go against you, then see it come back to your entry level where you get out only to see it continue in the way of your original trade? You initially breathe a sigh of relief that you did not lose money but then kick yourself for getting out. You then look at your trade recap. You were in the trade for a minute and a half with your forex broker, not a length of time anyone would consider long enough to give a trade a chance to work. While this may be an extreme case, even 5 minutes staring at price changes can sometimes feel like 5 hours. This is where the deck is stacked against you. 

To illustrate, I picked a random point in time yesterday when the market was active and calculated the number of price changes in the EURUSD. Guess how many? 91 price changes! This is about one and a half price changes per second.

 I call this rapid eye movement because there are so many ticks going on that it can make it feel like you have been in a position forever. I am sure it was not even a consideration when electronic trading started but it certainly has a psychological impact that favors the broker. Brokers count on traders taking off winners or potential winners too soon while letting losers run. Rapid eye movement is one reason this may happen. 

There is no easy solution to this as long as you are watching the price changes. Being aware of what I call rapid eye movement may help you take a deep breath, see the market with a clearer eye and give your trade to time to play out.

 

 2) Don’t Trade Scared

No one likes to lose money even though it is part of the game. This is easier said than done because I don't think I have ever put on a trade where I didn't have that feeling of trepidation immediately afterwards waiting to see if I timed my entry right. 

However, don't confuse trader anxiety with being scared. We all get butterflies when waiting for a trade to unfold but anxiety is different from being scared. The former is part of trading. The latter is a psychological impediment.

 

3) The Market is Not Your Enemy

This is one of my favorite topics as I believe it is a downfall of many traders and suggest reading it closely. 

  • Have you ever had one of those trading days?  Have you ever lost money trading and gotten mad at the market? 
  • Have you ever taken it personally, lost discipline and tried to convince yourself the market is wrong? 
  • Did this make you feel like the market was your enemy? 
  • Did you repeatedly fight the trend in order to beat the market only to see your trades stopped out? 
  • Did you ever try to flip from long to short and back to long, each time buying the top or selling the bottom, determined to outsmart the evil empire? 
  • Did you double your leverage in an attempt to make back your losses, determined to beat the market at its own game?

Some of this has probably happened to most traders at one time or another but it is not something you want to repeat.  Think of it this way. If you ran into a wall and smashed your head you would not do it a second time. Just as the wall is not your enemy, the market is not your enemy. Falling victim to the psychology of trading is your worst enemy. 

 I saved this forex trading post from a few years ago and while the levels are different, it is as applicable today as it was at that time. In this example the trader repeatedly bought USDJPY even though it was in a downtrend and falling (oh how the trend has changed but not the trading psychology).

Last 2 weeks it was very painful experience being long this pair to no avail. It was more a lesson in patience than any profitable venture at all.  I'm constantly asking myself why I persist as I have myself pointed out that it is mainly a side show now.

Now that you asked me I must admit it was a psychological anchor from the past that I "know" they will come in and give it a lift so I was AFRAID to trade it from the TREND perspective which I have said many times I'd favor.. So YES, I'm persisting on the wrong side of the market and I got my share of pain on that one…

Now, this is where the “market is my enemy” can take over. You can’t believe the market is acting irrationally and keep buying (or selling) at every pause. Each time you get stopped out you get angry, not at yourself but at the market. You can’t believe the market is doing this to you and stiffen your back. You forget about what charts are saying, throw discipline out the window and become determined to catch the top by selling (or bottom by buying) when charts are telling you the opposite. By the time the move stalls out, you are a beaten trader. You have taken your lumps in what has been an emotionally draining day battling with an unemotional market. 

Does this sound familiar? If so, then don’t repeat it. Step back when that feeling comes and take a deep breath. Walk away and come back with a clear head. Remember, the forex market is not your enemy. It is not a living organism. It is only a place where trades are transacted and prices set. When that feeling comes, remember the adage, “the market can remain irrational longer than you can remain solvent.” 

 

4) Get Rid of the Emotion

It is hard to get the emotion out of trading but the best way is to take a systematic approach that gives you confidence. Once you let your emotions take over you lose objectivity and discipline. I remember when I was a bank trader I would play a game with myself that no one would know when I was having a good or bad day trading. It helped me (and still does) contain my emotions and stay disciplined. This brings up the next subject, which is something many retail traders fall victim to.

 

5) Don’t Base Trades on Emotion or Intuition

Do not make trading decisions because a currency feels bid or looks offered. Brokers count on it. Traders lose by it. This is another psychological factor as you may be making trading decisions based on emotion or intuition and not what your analysis is saying. 

One way to get around this is what I call going out of body. 

The term out of body experience is defined by Wikipedia as  An out-of-body experience (OBE or sometimes OOBE) is an experience that typically involves a sensation of floating outside one's body and, in some cases, perceiving one's physical body from a place outside one's body  

There is usually a negative connotation associated with an out of body experience as it is not done intentionally. 

 I use it in a different and positive way for trading. For me it means stepping back from the emotion of trading and taking an objective look at the market so you can make objective trading decisions. This is not easy to do in the heat of battle when you are staring at your platform, but if you can master this you will eliminate some of the psychological factors that work against you. 

 

6) Psychology of Numbers

I refer to my Magic Levels as certain levels that have a psychological influence on forex trading. Skeptics say with algos and automated trading having an increasing impact, how can there be levels that have a psychological influence. I could make the same argument except that I continue to see evidence to the contrary. 

You can feel it when a currency trades, for example, above or below a big figure (e.g. EURUSD 1.3500) or above or below the 50 level (e.g. 1,3550, 1.3650, etc). If you don’t believe me, see how your sentiment swings when you see this happen.

 

7) How to Build Confidence

So you may ask how to overcome some of the psychological impediments that may impact your trading?

Unless you want to go automated and that route has limitations, it is an ongoing battle. The first step is to remove the psychological obstacles to trading. Step two is to build confidence. For me, and I can only speak for myself, and without trying to sound like an infomercial, I believe confidence comes from trading on the strong side of the market. As those who follow my thinking know I feel that finding the strong side of the market is more than half the battle. There are many ways to determine the strong side of the market. Find one that works for you and see how it feels when you trade from that side.

Feel free to contact me with any questions or comments.

Jay Meisler

Founder, Global Traders Association

 

 

 

 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 20 October 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales


Tue 24 Oct
All Day flash PMIs
Wed 25 Oct
01:30 AU- CPI
08:00 DE- IFO Survey
08:30 GB- GDP
14:00 CA- BOC Decision
14:30 US- EIA Crude
Thu 26 Oct
11:45 EZ- ECB Decision
12:30 US- Weekly Jobless
14:00 US- Pending Homes Sales
Fri 27 Oct
12:30 US- GDP
14:00 US- final Univ of Michigan

Forex Trading Outlook


Potential Trading Opportunities


  • POTENTIAL PRICE RISK: High Fri-- 12:30 GMT CA- Retail Sales and CPI. Top economic indicators.


  • POTENTIAL PRICE RISK: HIGH Fri-- 14:00 GMT US- Existing Homes Sales. Top Housing statistic.



John M. Bland, MBA
co-founding Partner, Global-View.com

EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

 
Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map


Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105