Traps for your money - Grand Forex Systems

Breaking

Home Top Ad

Traps for your money

 


Experienced traders believe that psychology accounts for 90% of success in Forex. Many books have been written on trading, half of which is devoted to a trader's psychology. But few people read them, but in vain. Most often, novice traders get by reading a couple of articles on the Internet and a few practical tips. But experienced traders tell in detail how to deal with the main enemy when making deals - yourself. They know how to deal with trading failure and don't make fatal mistakes. This article is devoted to beginners' main mistake in the forex market - the desire to win back immediately.


HOW FOREX SETS TRAPS


Nobody can predict the movement of the quotation of a particular trading instrument with 100% probability. Several unpredictable factors have a strong influence on the price movement of a particular currency pair or company stock:

- natural phenomena (earthquakes, volcanic eruptions, tsunamis, etc.);

- social upheavals (terrorist attacks, rallies, uprisings ...);

- unexpected actions and statements of responsible persons in the field of business and finance.

There are situations when a trader enters the market after analysis, and the trend in Forex turns against him due to one or another unforeseen factor. In this case, there are several patterns of behavior.


BEGINNERS' REACTION TO AN UNFAVORABLE TREND


 The first reaction is to close the position to minimize the loss and then either open a new position with an increased lot in the opposite direction or the old direction. The purpose of such actions is the same - to immediately "win back", return the just received loss and catch the trend. There is practically no thought before entering the market. And this is the main mistake. As mentioned earlier, the market has a lot of unpredictable factors. 


 Before entering the market, you should always draw up a plan of your actions in case of an unfavorable movement of the quote - either insure yourself with a pending order or hedge positions on another "allied" currency pair. If you do not take insurance measures, then sooner or later, the loss of the deposit will occur. 

 

The second type of reaction notice traders - wait for a miracle in a price reversal form. Without taking any action, they risk waiting for the "drain" of the entire deposit.


BEHAVIOR OF EXPERIENCED TRADERS


 The first step is to close unprofitable positions to minimize losses. 

 The second step is to analyze the "origins of losses". It would help if you always looked for the cause that led to the loss. Further, the development of measures to neutralize the loss in the future when they found reason reappears. Only then should you enter the market again. And no emotions, just a cold mind and a clear calculation. There is no trading without losing trades, but experienced traders have fewer of them than profitable ones. The balance shifting towards profitable trades is what distinguishes an experienced trader from a beginner.

The activity of all casinos, without exception, is based on the desire to immediately place a bet and win back at this very moment. But forex is not a casino but a serious business. You can not let emotions prevail over reason and guide the actions of a trader. If you feel that you cannot conduct market analysis calmly, it is better to go for a walk, read a book, or watch a movie, not to enter the forex market.