By: Alex Harper
Submitted: 2011-08-24 13:12:24 | Word Count: 366
Humans are emotional beings and often these emotions can work against us. As traders it would be more beneficial to view the markets like Spock from Star Trek with cool logic. Amateur Forex traders make big mistakes when they trade using the emotions of fear and greed.
How many times have you cut your profits short and let your losses run? This is totally backwards from what we are told to do. Because of fear we want to take the profit while it is there, because of greed we have trouble taking a loss.
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Be aware when you are trading of how many times you are feeling fear and what types of decisions you make as a result. Professional traders are aware of zones where the retail traders have made mistakes due to fear and greed and they capitalize on this knowledge.
Statistics show that over 90% of retail traders lose their money and give up within 2 years. Clearly the herd is not the crowd that you want to be a part of if you want to make money trading forex.
So how do we conquer fear and greed? Confidence! We need to be very confident in our methodology and our ability to execute trades according to our methodology. We need to be patient enough to wait for valid setups and patient enough to take our profits in accordance with our trading rules. We need to be disciplined enough to stick with the rules and trust that we will profit because we are confident in our methodology.
A technique that you can use from Yoga is deep breathing. Anytime that you start to feel fear running through your body, take 20 deep breaths. As the oxygen levels in your body increase you will feel more relaxed. Another good technique is to stop trading and go for a walk for 10-15 minutes. When you come back to the computer you will be in a different state of mind.
If you have been losing due to fear and greed, commit yourself to overcoming these emotions and joining the professional traders.
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