Don’t Get Emotional in Trade06/26/12
Actually, getting emotional in the Forex market may be the worst thing that can happen to a trader or an investor Indeed, seeing paper losses in everyday trade is a very common thing In many cases, once the traders took a decision to purchase something and make losses, they still hold on even if situation gets worse, only because they hope that it might turn back in their favor. Their problem is emotions: the decision to stick to a losing trade for a while is undoubtedly an emotional one, because a trader is in no mood to accept a loss and leave the market
Currency exchange market is largely influenced by the financial market, so the traders should always trade based on indications of the general market, not just initiate the operation because their heart tells them to. Sometimes, traders might be too emotionally attached to a certain currency in the market, which make them more exposed to the financial market. However, there’s nothing wrong with it if you have reasonable grounds to think that your favorite currency will do well. In this case, you will most likely profit from the transaction But it becomes wrong if you open up a trade in a currency only because you want to. In this case you are strongly recommended to check the reality by looking at what the Forex indicators say That will at least provide you with a clear picture of whether or not it’s worth it to trade in that currency.
The main thing you need to remember is that if you have already initiated a trade, and are currently incurring paper losses, and everything shows that things are getting even worse for you, then you best decision is to book losses and quit trading instead of sticking to it till seeing some questionable gains from it. Never forget that the markets don’t have room for emotions.
Basically, Forex trading is never a win-win situation for traders So you have to be ready to lose on some trades. That’s how Forex works – someone wins, someone loses It isn’t even a question of whether you are right or not, it is more about the market moving in an unexpected direction You can throw all the fundamentals and experience into the air if the market decides to change its course
The way out is to follow the indications seen on Forex In the event that you feel after initiating a trade that situation is developing in the wrong way, book your losses and quit it. It will be better to invest your money into other deal and profit there rather than sticking to your losing trade.