How emotions affect our trading strategy in forex

[Lens1000]

In forex trading we should not allow emotion to take better part of us and that is one of the things that will make us lose. In trading forex, we should set aside emotions and face the strategy. We need to use the strategy at all times. The strategy also include set of rules that should be followed when we take a trading position.

In most cases, the rookie traders allow emotions to override their strategy and as a result of these, they would record a huge amount of losses in their trading career, which may discourage them from coming back to the forex trading.

The most important thing to eliminate while trading is not to allow emotions override our trading techniques. The following are the emotions that affects our trading decisions.

-Greed: this is when we do not exit trade when we are making profit. Knowing the right time to exit trading is very important because it will allow us avoid incuring unecessary losses.

-fear: this is also one of the emotions that we should not allowed to interfere in our trading strategy because it will not allow us make progress.

-happiness or sadness: whenever we make profit, we would normally be very happy and it will affect our trading techniques and if we are losing, Sadness would set in.

 

[Holicent]

In forex trading, emotions play a very important role. It is well known that traders who are emotionally stable and can control their emotions are more likely to succeed in the market. Emotions can have a negative impact on your trading strategy as it could lead to bad decisions and loss of money. However, if you can control your emotions, then you will be able to make better decisions and avoid losses.

Here are some ways in which emotions affect your trading:
Loss aversion - Loss aversion refers to an investor's tendency to strongly prefer avoiding losses over acquiring gains. In other words, we hate losing what we have more than we like gaining something new. As investors, we tend to hold onto losing positions longer than we should because of this tendency. We may also be hesitant about taking profits from winning trades because of our fear of missing out on additional gains or "giving back" our profits.

Greed - Greed is another emotion that affects trading negatively as it leads us into making poor decisions based on hope rather than hard evidence or facts. Greed causes us to follow hot stocks without doing adequate research beforehand, which often leads us into buying high and selling low at times when prices make sudden movements against our positions.

 

[eldavis]

I met a trader who once said to be successful in trading, you need to be able to control your emotions. Most people suffer losses cause they tend to get over excited after a successful trade, they end up taking multiple trades hoping to get the same results. While there are others who once they experience loss, they try all they can to cover that loss in one day, hence they end up making wrong decisions.

 

[Feeble]

Emotions are an important part of forex trading. You might view them as a distraction or as an irritation or even as a sign that you’ve made a mistake. However, if you can learn to manage your emotions in the right way, they can actually help you make better decisions and improve your results.

 

[Vigorish]

The art of controlling every emotion you feel might sound like a task but nothing a little revision of your current plan to find out the underlying issue. You could always take a break and go back to demo trading until you are able to manage your emotions in a better way. To make better decisions, you need a clear mind, backtest a few strategies and find the one holds the most potential. If something doesn't work out, it is okay, you can always try again. Motivate yourself by watching some videos or quotes to raise your morale.

 

[Jenet]

Well said, emotions do have a big role in decision making. It is up to the traders to make the right choices to attain profit rewards as per their desire.

 

[Turrical]

Emotions play a significant role in forex trading. You might see them as a distraction, an annoyance, or even a sign that you've made a mistake. However, if you learn to manage your emotions correctly, they can actually help you make better decisions and achieve better results.

 

[Economacy]

This is true, I also want to add that it can be challenging trying to find a balance between making a successful trade and managing your emotions simultaneously. If you have a good plan in mind, it helps you focus on your perspective.

 

[Titulus]

Having emotions in forex trading is not necessarily bad. But not being able to control emotions is definitely a huge red flag in forex trading. A trader can have a perfectly good strategy and skills, but being overwhelmed by the emotions of fear can lead to poor decision making. Although the concept is not so popular among beginners who rush into forex trading, it is absolutely essential to learn about trading psychology. It helps you overcome fear, control overwhelming amounts of emotions, and become confident and focused while trading.

 

[Gastrolatry]

Emotions help a trader understand what can be done and what cannot be in the future. Emotions help a trader make better decisions, provided that the trader knows how to use them to their benefit. If a trader does not know how to use emotions to their benefit and use them in making negative trades instead of playing right, losses will be there, for which a trader will be solely responsible.

 

[Jack Reacher]

Here is traders are failure mostly. Eurotrader allows traders with a bunch of trading facilities that lure them to earn more.

 

[Chockcroal]

Emotions like greed, fear, hope, anxiety, hope, and anger may propel us to make irrational decisions which lead to losses. To avoid being swayed by your emotions while trading, make sure you stick to your trading plan and know when to quit, whether you're winning or losing. Maintaining healthy habits on a consistent basis will help you succeed.

 

[Monadism]

Emotions can affect our trading badly. If we are concerned about trading flawlessly, we need to keep negative emotions like greed, FOMO, and anxiety out of the trading game. They will come and go, but we have to focus on our trading.

 

[Kamala Hooper]

There are different ways to tackle emotions. Traders should control their emotions and use it for the better by analysing the market, doing research before they decide to choose a trend. One wrong move and you can lose, but even then, you’re learning so that’s still a win. It’s all about your mindset and how you approach the market. Keep emotions in check and you will have successful trades.

 

[Sociable]

Using emotions in your trading can be dangerous while making rational trading decisions. It is best to keep away your emotions from your trading.

 

[Snaffle]

Being too emotional can be disastrous for trading. Forex trading requires perfect emotional balance. When emotions go uncontrolled, trading goes out of control too. Therefore, a trader needs to focus on emotions. If you have good trading strategies, you will use those instead of emotions, so put your focus on devising good strategies.

 

[coinsrider]

True, emotional balance is very essential trading goes out of control and it is necessary to learn well before trading its a full time game.

 

[Walkabout]

Emotional influence is somewhere the strongest influence that keeps traders from reaching heights in the forex market. Learn to embrace your emotions so that they become a part of your success and not a reason for your failures.

 

[Slumberous]

In simple words, emotions blur your understanding. When you are greedy or fearful, you lack the basic skill of decision-making. You end up making trades that take you nowhere.

 

[Asahi]

Leverage provided by brokers is of different sizes, like some brokers provide 1:400, whereas some others provide 1:500. Eurotrader provides you flexibility in this regard, meaning here the leverage depends on the account type you select.