Many online traders tend to develop obsessive tendencies that take over their forex trading experiences and actually destroy them. What was once a carefully executed activity is now an obsession, resulting in compulsive behaviour that only fuels trading losses.
Listed below are 3 psychological FX trading mistakes that destroy your chances of success:
The desire to understand everything
The forex market is the biggest market in the world, generating trillions of dollars a day in trades. This magnanimous market runs 24-hours a day, 5 ½ days a week, while there is endless data associated with the forex market.
If you feel compelled to know and understand every single aspect of forex trading, then you are committing one of the major psychological forex trading sins. Many extreme variables, such as indicators and economic data, give conflicting signals which often lead to confusion and internal conflict.
There is no way that you will ever truly understand the inner runnings of the forex market and once you try to, you will overwhelm yourself and destroy your chances of success. Instead, focus on the information that matters. Use technical analysis and never stray too far from the charts. All the information you need is contained within the charts, provided you look closely enough.
Inability to switch off
It’s easy for forex trading to become an obsession. The market never sleeps; your trades are constantly running, and the desire to persistently check the market and review your open trades might never go away.
If you’re thinking non-stop about the forex market and feel compelled to constantly check your trades, it’s time to take a step back and assess what’s going on. Remember that quality is more important than quantity and that the market will always run no matter where you are or what you are doing.
Once you set a trade do you feel compelled to sit and watch its every move? If so, you are committing a psychological forex trading mistake. Micro-managing your trades is counterproductive and can lead you to make irrational trading decisions. Instead, force yourself to take a step back and allow the trade to run its course. Trust the market to take control of the trade; in the meantime, keep yourself busy and distract yourself with a different hobby or activity.