14.07.2009 Post in Trading

InstaForex Company warns all traders that work at Forex currency market is not only highprofitable, but also highrisky business. Therefore, we advice every participant of the exchange market to follow the definite psychological canons. If you adhere to them or at least remember them, you will able distinctly decrease risk constituent that will have an affect on your work efficiency.

All emotions inherent in us – fear, greed, hope and etc. – in a fast rhythm of stock trading exert the determinative influence upon trader’s behavior. Weak and self-confident, avid and sluggish – all these people are doomed to become victims of the market. Awareness of your own capabilities and preferences, positive and negative qualities can help you to avoid bankruptcy. If you add to this faculty for appropriate appreciation of mental state and suitable behavior of market crowd, the success is guaranteed to you.

The driving force, which makes us work at speculative financial markets, is greed. If your greed is minor, you will not make a lot of deals, losing many good moments. In this case it is recommended to find another occupation that is more composed. If your greed passes all bounds, you will try hard to make as many bargains as possible, exposing yourself to the risk of unclear outlooks. You should better play in casino; it will be congenial for your nature and cheaper for your wallet. The result of avidity’s action will be motivation to the bargaining.

Revealing of are you playing or not under pressure of the greedy vehemence is possible with the help of the following signals. If a trader asks others: “What do you think about this?” If he tells others about his opened positions. If the trader does not have a plan of work, which is made before bargaining, – all this shows that the trader works most probably under pressure of the vehemence, not the mind. The best vehemence drug is making a plan of deals arranging (the financial activity plan).

Next factor advancing the trader to conclude deals a hope for making profit. Of course, activity goal is to earn money. But when the hope dominates under the calculation, you risk to overestimate your own abilities in the situation analysis and make out a mountain (your dream) of a molehill (the reality). The hope should be under the calculation and greed.

The fear appears when you get losses. Some are paralyzed by fear and they can not stop on time and lose everything. Others are forced by the fear to move and sometimes arrange interlocking deals that usually just quicken bankruptcy.

In the critical moment it is better to do something than let the grass grow under your feet and watch how beautiful dreams vanish with the quotations changing. At the same time oppose convulsive actions of a nervous choleric subject to reasonable and systematic steps for overcoming the crisis. Operate right according to the plan made by you before the position opening (accordingly before the fear emerges).

Some traders’ mistakes are unordinary at all. They are based on mental state of the bug. Often a trader, who got a great profit for the certain time frame, leans that all his trades during the passed time period was made at the DEMO-account. The given mistake can also be related to initial fear of real operating.

The article was added by Dmitriy Golynskiy, Clients’
relationship manager of InstaForex

  • Mike

    Interesting material, thanks. 🙂

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  • Kitty

    are there any secrets how to strugle against your fear? I can’t bring myself to open a real account. i’m afraid trading at live account will be more difficult, than at demo.