Overcome self-psychology to win in Forex trading
Trading Forex is certainly not easy, otherwise everybody will be millionaires. In fact, 90% of Forex traders are actually making losses.
Forex market is too complex and there are too many factors that are giving huge impact to the daily fluctuation. The pure technical analysis or the fundamental analysis can never forecast the Forex market trend accurately.
Invest more time to really understand how Forex market work, especially study the trend behavior characteristic in specific time frame before committing with your hard earn money.
Psychological Erroneous - Overtrade
One of the major mistake done by Forex traders is to overtrade their Forex account, failing to measure the risk their margin can absorb. Positions taken always surpass what the margin deposited can undertake. Margin trading is actually a two-sided sharp blade sword.
Most often, Forex traders only need USD1000 to hold a USD100,000 position, but it doesn't mean that an account with USD5000 must hold up USD500,000 position. Treat a USD100,000 position as USD100,000, not just USD1000.
An experience principle is, not to use more than 10% of the margin in trading Forex.
Psychological Erroneous - Lack Confidence
After a few unsuccessful Forex trades which incur huge losses, Forex traders might get lack of confidence in Forex trading. Forex traders getting fear and indecisive towards the Forex market.
After opening a position that is in line with the trend, enter at the right price, but get nervous and uncomfortable after winning only 10 pips, fearing the floating profit will vanish at any time. Lack of confidence, Forex traders tend to close the position with little profit.
While making losses, Forex traders always have confidence that the price will bounce back and will never cut loss. But when making a profit, the confidence seems to disappear. This resulted in most Forex traders being winless and losing more and the net result is making losses.
In Forex trading, must stop early when making a loss and must wait patiently when making a profit.