Psychological aspects of the Forex market

Why 90% of traders lose money trading the financial markets.

I understand that all can not wait to hear about the trading methods and systems. Learn where to buy or sell, under any circumstances, and other specific items from the trader's arsenal. Tolerate all this will be in your life, but a little later. I want to start «thorny path» to analyze the causes of trading failure and identify ways how to avoid them. Believe me, this is more important than any trading system. People do tend to occur on the rake itself, not listening to others. That is why I appeal to treat the subject special attention. I hope that at least some of the readers do not come to rake financial loss.

So the first reason - lack of experience and obsession advertising unscrupulous DC, which gave the impression of easy money, umalchivaya of all the other difficulties associated with work in the financial markets. New courses are completed online trading and immediately begins to sell. It seems that he knows enough and is able to earn. After all, like everything is clear and understandable. But suddenly the price, the sample, the triangle is unfolding, and the demolition of his back foot. The Fed raises the discount rate, the dollar, as taught, begins to strengthen, and then suddenly turns and drops. Trader does not close the position, hoping that this correction. The next day, the fall continued, and one day becomes vast. Man does not stand the psychological pressure of huge losses and closed position. From the deposit were tears.

Each trader can tell many such stories. The market is not as simple as often advertised. The market professionals earn. Insiders enjoy truism that teaching beginners, and a lot of false breakthroughs of all kinds of trend lines, triangles, bases, lines of shoulders and other technical stuff, engaging the crowd in the loss-making transactions. They use the levels of accumulation of orders, to create movement in the right direction to them. To earn money in the markets need to become a professional. Monthly rates for this, unfortunately, is not enough.

Reason Two - Psychology. At this point should stay more in detail.

The point is that the market is a very unique environment like no other in daily life. His motion does not obey any laws, he never repeats itself exactly (although similar price formations occur), each moment is unique in the market, it could be in line with fundamental factors, but may go against them. The market - This Wednesday at a constant uncertainty. All this can be described in one word - a paradox.

The emotional pain and financial failure is characterized among traders because the principles, attitudes, and inferences, which we use in daily life, often lead to the opposite effect in the market environment. They do not work. Not knowing this, people begin to trade on the markets are not even present, it means to be a trader, what skills should be developed.

I am sure that there are no traders, which are not included in the deal would be too early, before the market gave a signal at the entrance, or too late after that. Which trader is not to convince ourselves not to take a loss and as a result of completed transactions with a large loss than anticipated, or out of the lucrative deal too early, or, in a profitable deal, do not take profits and as a result finished with losses, or moved a foot closer to the point of entry and stay away from the market when the market returned to its side. This is not an exhaustive list of errors committed in the market constantly.

But this error is not caused by the market. The market is neutral, it just gives out information about yourself, which gives us the opportunity to act. That's all. A market has no impact on our ability to perceive information, or to control our decisions and actions. The above errors are the result of an incorrect perception of the market. Wrong perception generates fear instead of confidence and consistency.

Learning to fully adopt a risk not just in any environment, but it is especially difficult in the market. What we usually fear (besides fear of death or of public opinion)? We fear the loss of money and fear being wrong. Recognize that you are wrong and losing money at this very unpleasant. But trading, we are faced with these opportunities almost constantly.

Trading is a fundamental paradox: how to stay disciplined, focused and confident in the face of constant uncertainty? When you learn to think like a trader, you will be able to achieve this. Learning to override your actions as a trader in such a way as to take the risk - the key to a successful trader's mindset.

When you develop a skill of taking the risk of the market will cease to generate information that is perceived badly. And if the market information is unable to cause emotional discomfort, the fears go.

I think that it is easier not to express the difference between successful traders and others. Successful traders are not covered in fear. They are not afraid because it developed a flexible attitude to what is happening in the market, which makes it possible to come and go in the transaction, depending on the information provided by the market. In addition, they have developed the ability to remain collected and to avoid negligence.

Ninety-five percent of errors in trading comes from your attitude to such concepts as: being wrong, losing money, skip the bargain or not to take profits.

Extremely difficult to realize that the source of problems in this regard. Lots of thoughts and perceptions affect our trade - the result of our upbringing and the traditional perception of the world. This is so much in our minds that we do not come to mind that the reason for failure is inside ourselves. Clearly identify the external cause of failure - the market in the entire blame.

If we do not understand how our thoughts and beliefs affect our perception of market information, it might seem that the market behavior is the cause of inconsistency. The result is the idea that in order to avoid losses and become more consistent it is necessary to study the market.

This logical construction is a psychological trap that sooner or later get the majority of traders. This approach does not work. Just the market offers too many variables to consider. In addition the behavior of the market no boundaries. He simply could make anything at any time. Every trader is actually a variable effect on the behavior of the market.

This means that regardless of how much you study the market behavior, regardless of how beautiful you are an analyst, you can not predict every move the market, which is able to deprive you of your money and prove that you are wrong. So if you're afraid of losing money or being afraid of the wrong, the number of knowledge about markets will not eliminate the negative effect that these fears have on your ability to be objective and act without hesitation. In other words, you do not become confident in the face of uncertainty. The harsh market reality is that each transaction has an indefinite result. Until you learn to fully accept the possibility of an indeterminate result, you consciously or subconsciously to avoid a painful situation for you and this will lead to many mistakes.

I do not want to say that the market analysis and a method for determining a favorable situation, it is not needed. Of course you should. But market research and market analysis is not the way to consistently profitable trading. This does not eliminate the errors. Associated with a lack of consistency and discipline.

If you are acting out of conviction that the more the analysis, the more consistency you have to collect in its arsenal of many types of market behavior. And what next? The market is still deceiving you because you have failed to recognize or do not draw attention. Would appear that the market can not be trusted, in fact, can not be trusted with your own.

You have two options - to explore a variety of options of market behavior (path to nowhere), or transform their market behavior in a way that you fully accept the risk and fear none.

Once you reach the state where the risk was adopted in full, you will be more painful nei perceive market information. And if you do not accept sensitive market information, you destroy the basis for fluctuations, rationalization, hasty decisions, hopes that the market will give you money, or hope that the market will save you from failure to timely close the loss-making position.

And what is the solution? There is a need to re-your beliefs and attitudes to trading in such a way that you can trade without the slightest fear, but at the same time were collected and did not allow himself to negligence.

Trading - an activity that offers everyone the infinite freedom of expression, a freedom that most of us have been deprived of all his life.

We were all born in the social environment with lots of restrictions, rules, morals, etc. All the need for restrictions and personal desire to express themselves in conflict. Anyone trying to master the art of trading is faced with this conflict.

Trade represents an environment where we have set rules of conduct. There are almost no boundaries and limitations of our self-expression. (Except for the need to have a margin account).

Unlimited possibilities, coupled with the unrestricted freedom of expression constitute a psychological test, which just a few. Most are not even aware of this fact, but as you can be ready for what can not have the concept.

In such an environment need to change the habits of submission, and to create a structure in consciousness that will ensure the trader's high degree of balance between svobotoy do anything, and the potential to cause a financial and psychological damage.

Creating such a structure can be extremely difficult because of the subconscious resistance, which provides our consciousness, and which shaped all our lives. It is as if we were a country where there is unlimited freedom, and then someone slap us on the shoulder and said - Hey, you need to create rules!

In order to effectively operate in a market environment, we need rules as restrictions on our behavior. The risk of loss can be unlimited and not to expose themselves to danger trauma necessary to create an internal structure in the form of internal self-discipline, guide our actions in the market. This structure must be within us, because the market as opposed to society, such a structure does not provide.

There is nothing with which we face in public life that would prepare us to act in the market structure, nahodyasheysya in constant motion, not subject to no laws.

In trade, no one except yourself will not force you to identify risks in advance. In fact, we are dealing with an unbounded structure where everything can happen at any time and only the consistent and successful traders determine their risk before entering into the transaction. For the rest of the definition of risk leads to face with the reality of the probabilistic outcome of any transaction may sta loss. Successively play on the market are doing everything to avoid such a reality as it is. For traders of all kinds are typical rationalize, explain themselves and hope that the transaction can not be resolved, which makes the definition of risk as it is not necessary.

One of the contradictions inherent in the market trade is that the market offers and the sticks and carrots at the same time. Cake - perhaps for the first time in life we are in full control all their behavior. Knut - the absence of external rules and constraints of our behavior. Therefore, restrictions should be put inside of us. The structure of self must emerge in our consciousness as an act of goodwill.