The Market Will Continue Testing Forex Traders’ Patience
We continue the discussion about trading psychology. In the previous article we have already mentioned the dangers of overconfidence and the great risk that must be faced when trying to fight the Herd mentality that is the main component of the sentiments that are dominating a market.
This time we will still explore the related issues of market momentum and its relation to the psychology of trading. Basically the dynamics of momentum formed on financial markets such as forex, stocks and commodities just shift from one direction to another when the “horde” decides to shift. So instead of shifting or moving direction just because there are individual traders believe a reversal should occur.
The famous economist and speculator John Maynard Keynes once said, “The market can remain irrational longer than you can stay inside.”
Can you understand the meaning of Om Keynes’s words? We believe you understand but let us add to the explanation of the sentence he meant.
Often for analysts or traders who are 100% technical or 100% fundamental or a combination of both, are trapped by overconfident attitude that the analysis or the system is the right one. If he really means the market is wrong, right?
When the trader does not believe in the fact that plastered before his eyes, saying, “It’s 12 hours sideways market, time Buy!” Or “Retail sales data ugly, we must Sell right now!” … Lah kok must? That’s when the trader goes into the Batman trap set by the market.
Remember again the words of Om Keynes, the market will continue to look irrational, contrary to our analysis and beliefs, longer than “should” and longer than our ability to keep patience.
Herein lies the importance of trading psychology. Train yourself to continue to be objective, to be patient waiting for the momentum that fits most with the trading style as well as the strength of our funds or client deposits that we must keep.
Keep the momentum of traders in any market, always make market trend as our friend. Fighting will only lead to greater losses for our long-term trading activities.