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Emotions or sentiments play a huge role in the world of trading. They drive major market surges or declines. However, being too emotional usually lead the individual trader to a lot of losses that are obviously not good for his or her trading profits.
Here are some of the most powerful emotions that could derail logical trading decision making. We also offer some tips to fight them. Check it out!
Fear
If this emotion bugs you, you often are in constant panic at any situation. You fear entering into a transaction, or you’re already afraid of the losses you may incur even if you haven’t started the trade.
Suffering from this kind of emotional trading can cause fatigue, lack of logical analysis, higher loss rate, and even serious psychological breakdown.
One solution for this is to reduce your position size and to ensure that you can afford to lose the money you’re trading.
Greed
When you are a greedy trader, you have this strong desire to earn at each and every price movement you see. At the same time, you may be planning already what you will do the money you haven’t even earned.
To fight greed, make sure that you wait first for big profits, and keep an eye on what made the trade successful. Remember that overconfidence and winning consecutive trades are two very catastrophic ingredients.
Envy
Now this is a very familiar emotion which many traders are often guilty of. If we feel envious, we typically compare our performance to that of other more successful traders.
In the process, we view their success, ability, weaknesses, or knowledge under a corrupted lens, leading to incorrect assessment of their trades.
Your goal then transforms from being a successful trader to becoming a better trader than the person you’re envious of.
The simple fix for this problem is to keep your perspective intact and goals clear. Set up real and personal trading goals.
Imitation
Unlike envy, this emotion tends to get you following other people’s advice, strategies, analysis, and trading techniques. As a result, you have this desire to shift the responsibility for a trade decision to another trader.
Instead of honing your own trading style, you start looking for forex gurus and buying signals and indicators, which are all suspicious at best.
The cure for this emotion is simple: develop your own trading strategy. You can use all available information and tips when you do it but remember that you should be the one in control, not the next-door trader
Laziness
When you are bitten by the laziness bug, you usually think of reasons—or excuses—not to trade or not to consider a particular trade or strategy.
You convince yourself that you don’t have enough time or that the trade is too risky. But in truth, laziness is just you not wanting to dig deep and study and take control of the trading process.
If you think you’re guilty of this emotional, the first thing you got to do is to consider whether you really want to continue trading. Get your Wibest Brokers List or any Wibest Brokers News at this website
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