Forex market psychology and Forex psychological levels
We always hear people saying to control our emotions and trade carefully but we never learn to define Forex psychological levels until we realize what they mean in fact. Below we will discuss this issue of Forex market psychology 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. That is how psychology matters in the trading forex.
Let's analyze Forex psychological levels. 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.
If you fail to control your emotions and comply with the basic rules of Forex market psychology, in the end it will have a major impact on your life , so try to stay consistent and control your emotions.
How emotions can be controlled: we should prevent ourself from being emotional and some of the following recommendations might be useful.
Firstly we need to invest what we can afford to lose and should not invest more than amount we can afford to lose. When you invest what you cannot afford to lose, you have a pressure of the idea that your money are to be lost. It can result in the situation we described in the above example.
Suppose if you lost money in a trade. Then, don’t make another trade in a hurry or frustration, stay cool and take time to enter next trade with careful analysis and enter at right time.
Conclusion: Emotions play a key role and will determine your trading. Stay cool and when loss occurs, wait until there is a perfect moment to enter another trade.
The above article is for information purpose only and is based on personal opinion of article writer.