Trading Psychology - Control your emotions

Trading is less a work, than a psychology, on which your success or failure on Forex market depends on. If you decided to switch to systematical trading, it does not unload emotional pressure at taking a trading decision entirely.

Frequently, Forex traders incline to the opinion that only complete absence of emotions can help while trading. Though, fear, suspense, greed, hope, belief, regret and happiness accompany the trading process inevitably. Suppressing emotions at the moment of feelings overwhelming you means disregarding the sixth sense, intuition, and finally, insight.

It is known that emotions are also transmitting a flow of information to us. We are guided by this information, act under impressions from it. But this is given to us in order to control our emotions and to change one sentiment for another.

There are a number of ways to control emotions:

Firstly, it is possible to change your emotions by switching to another object of your concentration. As a rule, this method is very effective. The thing which draws our careful attention becomes real for us. You can consider suffering losses, or vice versa render an opportunity of gaining profit.

Secondly, having changed your convictions and believes you can alter your emotions. Every belief that we attain during our life time is a sort of a filter for us, influencing all the information perceived. All views accumulated during our life affect the interpretations which we are admitting into our consciousness.

And finally, the third way to change our emotions is by modifying physiology. A change of breathing, mimics, body position, the tone and tempo of our voice, all this has a direct influence on the emotive part of not only a Forex trader, but of any person.

Attention concentration

A concentration of attention is one of the most significant constituents of our emotional condition. Because the thing you are focused on in the process of Forex trading becomes not only an object of happening reality, but also a perception of factual reality. All actions influence your interpretation of events and consequently, affect your emotions. All this manipulates your behaviour, and decisions get emotional connotation. In this case it is needed to define priorities: what are you waiting for? Are you entertaining a possibility of losses? Or are you expecting gains only?

Those who see only losses are likely to hesitate for too long entering the market or can even skip a trade. But once having decided to enter the market, they are gaining profit quickly.

Trading is an attempt to balance the opposites. A trader should focus on profit and loss and try to balance them. A trader should concentrate on probability of his methods, and on information provided by the market, as it is the only accurate and reliable one.

Physiology

It is proved that our body manages our emotions, and emotions affect the thoughts. The easiest and the most correct way to change emotional condition is to change your physiology - tempo and depth of your breath, voice or even your pose.

Pay attention to your position, the way you sit, breathe, whether the muscles of your face, shoulders and of all body are tense. If you feel discomfort, you should only sit cosily.

Absolutely simple physiological manipulation can serve an effective instrument to control your feelings.

Control your emotions, and this will definitely make a more successful trader out of you!

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Pipsing and scalping

What do these two terms mean? This type of trading allows gaining profit from intraday currency fluctuations on the market. Such deals are not held opened but for a couple of minutes. A single pipsing or scalping deal would not provide you with much profit, that is why the main principle of these two trading styles is having as many positions closed as possible.
The number of deals carried out by pipsers and scalpers runs 200 per day. It is however imprudent to expect that all the deals will prove to be profitable. The result to strive for is a positive balance by the end of a trading day. To accomplish this aim one needs to set a stop-loss level close to an opening price rate. This will help to minimize a loss in case the price takes the opposite direction.
It is a well-known fact that Forex is the most liquid market in the world. Prices on Forex mix, falling and rising again, following the cycle. If a price passes approximately 60 points within a day, the gap between its high and low is rather substantial. Trading based on hourly price fluctuations (highs and lows) ensures even more profit. This is why pipsing and scalping are so popular with traders. The novices on Forex may think that through such trading incredible profit is possible to make, the sum fancied may even go beyond any real limits, taking into account an opportunity to reinvest. Such conviction is hardly truth, despite the Internet abounding in the stories of lucky traders who managed to boost their deposits manifold. In fact this strategy will not guarantee you any success. Let us investigate the reason for this.
First, a stop-loss level approaching a price rate increases a possibility to suffer losses at the slightest fluctuation if the strength of bulls and bears has been misestimated, even though further trend has been foreseen. It is far too easier to make a mistake in defining a direction for a short period of time (1-2 hours), than to define a price direction for the whole day.
The simplest way to escape the execution of the order with a risk of loss is not to have such an order, but then, there appears a risk of losing many sources after the strong movement is against you. This happens when the price moves far and is not probable to return to its preliminary positions in the nearest future. If a trader keeps the greater part of his deposit as a margin and does not set any stop-loss levels, he/she may well get a margin call and later to the loss of all the funds on the account.
Second, most traders grow nervous and anxious when dealing with real money. As a rule, such type of trading is tested on a demo account first, since there is no real money involved, consequently there is no risk to waste it. Thus, the emotional state of a trader handling a real account worsens with each pip in case the price moves in the wrong direction.
Pipsing and scalping imply that a trader is to be on the market constantly, which is a stress of course, leading to hasty and ill-considered actions.

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