Continue to Assess Trading Psychology and Follow Forex Market Sentiment
In the previous article, we briefly describe how the importance of self-control and trading psychology for the success of traders.
Before entering the more detailed discussion, we again reminded the essence of trading psychology. Even in our opinion, this is the lesson that should be the first lesson to be gained by someone who intends to wrestle the world of trading.
From our observations over the years, there are so many outstanding traders of his trading system, his guts and his admiration deserves thumbs up. But surprisingly, at one point they end up having to surrender all or most of the managed funds to the “market”. Why?
Because at that point they begin to lose control of themselves. Be overconfident and underestimate the market and lose discipline in the application of risk management. After all the funds drift, then they realize the importance of trading psychology. In the past, when the stress of call margin, we like to joke, “We do not need a psychologist trading ya, we need now ya psychiatrist trading … mental illness ya … hehehe.”
Therefore, before it’s too late let us together add the science of trading by realizing the negative emotions that always descend and disrupt the objectivity of traders. We must also learn how to avoid the emotional trap.
Should Paper Trading?
There are many articles on the internet that recommend to new traders to do trading paper or trading simulation in order to gain experience as well as being a testing ground and proving a reliable trading strategy.
Trading paper is necessary but it should be remembered that although it is useful to find technical patterns and entry / exit points, it seems impossible to simulate the psychological side of trading unless we actually do real-trading alias taking risks with our own money.
Trading psychologists have once explained that to master trading psychology, short-term traders must gain experience through hundreds of real-trading deals to identify their own psychological strengths and weaknesses.
Should it fight the market?
Furthermore, as individual traders or investors we must also understand and realize and remind ourselves that we must avoid emotional impulse to fight market momentum (hordes mentality) or in other words implement counter-trend strategy.
Wrong strategy against the trend? Not always wrong, it can even give a pretty good result if an analyst and trader really knows the current market is in what phase, whether in the trending phase or in the correction phase.
But in fact, there are so many traders who lose money, both in the smallest and large amounts, because they consider themselves (more precisely: the power of the funds) to counter the Herd Mentality or market sentiment that drives price movements in the market .
So for the sake of security and continuity of our trading, it would be wise if we keep trying to read and follow market sentiments, becoming part of the traders gang that is behind the creation of the price we see on our monitor screen.
Do not forget to continue to add knowledge about trading psychology, train and apply various tips from experts for mental and emotional control and ourselves when trading (or outside trading) more awake.