What You Didn?t Know About The Psychology Of Forex Market Trading ? And How It Might Bankrupt YouPosted by Nick Niesen on October 29th, 2010 When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader who?s been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind ? and understanding the way that psychology moves the market. Studying the psychology of the market is nothing new. It doesn?t take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others ? including the mass psychology of the people that use the currency on a daily basis ? but neglect to know what moves you, you?re going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying ?Huh?? about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you. Anything involving winning or losing large sums of money becomes emotionally charged. The answer lies in interpretation. The numbers don?t lie, but your mind does. Your hopes and fears can make you see things that just aren?t there. When you invest in a currency, you?re investing more than just money ? you make an emotional investment. Being ?right? becomes important. Being ?wrong? doesn?t just cost you money when you let yourself be ruled by your emotions ? it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? It?s that little thing inside your head that says, ?I KNOW I?m right on this, dammit!? Bottom line: You can?t keep emotions out of the picture, but you can learn not to let them control your decisions. To most people, being right is more important than making money. Losing traders see loss as failure. Winning traders see loss as learning. Winning traders see loss in the same way. They haven?t failed ? they?ve learned something new about the way that they and the market work. Winning traders can look at the big picture while playing in the small arena. Like it? Share it!More by this author |