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The Psychological Pressure in Forex Trading
Written by: PaxForex analytics dept - Friday, 16 December 2016 0 comments
As traders in a 24-hour market, we are certainly forced to contend with a good amount of stress and trading pressure. Many times this stress is intensified through periods of losing streaks and rough patches. But in the end, it is the coping mechanisms used to handle this stress that ultimately determine our ability to find a healthy and profitable path. Given the fast-paced nature of the forex market and its potential to result in monetary losses, it is not surprising that a lot of traders are under lot of pressure.
A successful trader’s career mainly depends on his or her psychological stability in stressful situations which are common in the process of trading. Theoretical knowledge can be acquired be reading professional literature; practical skills and and experience are acquired in the process of actual trading. The most difficult process is adjusting psychological stress, because in real life it is impossible to completely eliminate the stress factor influencing human activity.
Underestimating the stress factor could play a main role on traders and even completely block their abilities to make reasonable decisions in real trading situations. The psychological stress of those trading in the forex market is extremely high. Traders must work under permanent psychological pressure making
decisions in highly unpredictable and uncertain market situations. Each trader goes through mistakes, failures and losses their own way, in accordance with their personality and temper.
Being permanently under pressure, a trader can often make insufficiently considered, impulsive and therefore wrong decisions that result in losses or premature liquidation of profitable positions. Sometimes, after a few successive failures with various trades traders become fearful of the market. They are in a state of a psychological pressure, and even a simple market situation can cause panic. They cannot overcome their emotions or soberly evaluate their current situation, and they are unable to make any reasonable decision.
To deal with the problems associated with psychological pressure in forex trading we must minimize the role of emotions in our trading decisions. To minimize the role of emotions, we must understand that success or failure are not related to luck, but are the logical consequences of our own choices. Like anything worthwhile in life trading forex presents moments of difficulty. Those who are thinking of taking up forex trading as a career must accept that their emotions will be subjected to an unpredictable (albeit exciting) rollercoaster ride.