Trading on currencies can be very addictive. The market is moving all the time, 24 hours a day, and you can always find a moment for grabbing a look at the charts and seeing a possible move. Such a move should fit the trading strategy that you’ve chosen. But some traders are too keen to enter into a position, and might jump into hasty decisions. This can be disastrous.
Guest Post by Yohay Elam of Forex Crunch – Forex Trading Blog
Here are some reasons for such a behavior, and what can be done to avoid it
* Need for action: Many traders are fascinated by the constant moves of the market, and they want to be inside – they want to be in a position. The adrenaline just doesn’t “allow” them to stay outside.
* Revenge: Emotional control is one of the most important factors in trading. When a trader is thrown out of a position, he might believe that he missed the stop loss in just a fews pips, and might want to “take revenge” on the market, being certain that now he’ll do the right thing.
* Too much chart time: When the trader is constantly looking at the charts, or reading economic news, he might be overloaded. This exhaustion can also lead to missing a truly important figure, making unintended shortcuts and placing a wrong position.
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It’s important to take breaks from trading. Sticking your nose to the screen isn’t healthy at all. A break from time to time can help you freshen up. And when you do return to trading, you have new energy.
Sit back, relax, read the daily forex outlook, check out out a reasonable number of charts (not too many), and most importantly, test your possible trade against your strategy.
* Tim Barnby – Stop Over-Trading Your Forex Account – The Power Of Goal Setting
* Casey Stubbs – Patience is a Virtue In Trading Forex