Forex encyclopedia

We always hear people saying to control our emotions and trade carefully but we never understand them until we realize what they mean in fact. Below we will discuss this issue in details. Consider an example where we know how emotions lead you to lose: Suppose you have $500 of capital and you are trading. You took a high risk and thus you have lost $200. What finally remained is $300, you get frustrated and open again with an even more risky trade. Again you lose and come to $100. By following the same pace, you will end with zero balance. Let's analyze. You started with capital of $500 and lost $200 with $300 remaining. Your intention is to recover losses immediately and this is what we call an emotion. You have only thought of recovering money and you do not even think whether that situation is suitable for opening a trade or not.

Over decades, swing-trading term was only applied to the situation on the futures market, when trader had held open position for more than three days until received highest profit from cyclical price fluctuations both in sales and buying. This method is applicable today as well for any order that does not require an active intraday trading. But real opportunities of such an efficient trading art and such a generalized approach puts certain limitations. Under the conditions of an absolute liquidity of financial markets, trader can find excellent chances on daily, hours' or minute's charts.