More money is lost because of emotions in day trading Forex currency than because of the unpredictable nature of the markets. You see it all the time. It costs you every time you hesitate to pull the trigger. Each time you stay in a trade too long and don’t take your profits when they are in hand, you’re just giving that money back to the markets. Whenever you get scared and cut your winner short is one more piece of proof that your emotions can be very costly.
You’ve heard the saying, “Once bitten, twice shy.” The source of many emotional problems in day trading Forex currency is fear. There’s the fear that you’ll get bitten again, because it’s happened before. Exiting your trade too early, hesitating, staying in a trade too long all come from that fear.
Other emotions are working on you too, such as anger, greed, shame, guilt, anxiety, pride, confusion, hope, despair, plus a host of others. Revenge is a big one too. Often when you take a stinging loss that has you reeling from the pain, part of you wants to strike back. You want to get even with the markets and reclaim your capital. It’s a natural human response.
In many regards, day trading Forex currency runs counter to our human nature and all that we’ve been taught growing up and that’s a big problem. In trading, emotions tend to work against you, in their function as part of your survival mechanism. It is un-natural for humans to step into a potentially high-risk situation, get hurt (lose money) a more than half of the time, just accept it, and then immediately turn around and do it again. The natural reaction is to protect yourself. In day trading Forex currency, you’re dealing with the unpredictable nature of the markets, along with trying to assimilate a huge body of knowledge along the way..
Getting your emotions in alignment with your trading, or at least to the point that they don’t interfere with your ability to make good decisions and to act decisively at the right time can’t just be willed into being. It doesn’t work to try to ‘force’ discipline or to fight your feelings.
As your confidence builds, your fears will subside, plus you’ll find that it becomes easy to have the discipline to do the right thing when the time calls for it. Keep in mind that forcing it doesn’t do. Certain skills must be developed to make this happen, especially Emotional Intelligence.
Since for most, trading is an entirely new activity, this can be quite a challenge. In any occupation, to be good at it and have the confidence you need, and like all new experiences, you have to develop the skills for day trading Forex currency. Training is usually a given when you start a new job. The company wants you to do well, so they make sure that you have the skills you’ll need. Most traders never get that opportunity though. In any occupation, training yourself on-the-job is the most disadvantageous way to go about it, but even moreso in day trading Forex currency.
‘Trading Psychology’ books have been just about the only help for traders, but most of these were written by Psychologists and not traders. Emotional Intelligence is not a concept though, it is an ability and a skill. Skills are developed from specific actions, not from reading. Experience is what grows your skills, not just acquiring new knowledge.
Until now, there has been little in the way of specific training on how to become a successful trader. The trading system gets at least 90% of the focus with most training that is currently available, not how to develop your Emotional Intelligence as a trader. Real trader training is now available through the Trading P.I.T. Club by Inside Out Trading. The training consists of 26 weekly lessons specifically designed to eliminate your fears and give you the confidence you need to trade well, without the emotional influences that can be so costly in day trading Forex currency.
How much have your emotions already cost you in your trading?
To get a FREE six-part mini-course on Emotional Intelligence for Traders, go to
