Losses come alongside wins when you trade Forex. For new traders, this can be disheartening and cruel. Then you start to question yourself if you are really destined to trade. Or you will end up becoming your own enemy. As you allow those negative behaviors from leveling up your stress, you are actually killing your chance of fulfilling your dreams to become a successful Forex trader.
To avoid self-sabotaging, take these tips to heart and practice them on your next trade.
Embracing Too Much Risk
Want to avoid stress in trading? Don’t take too much risk! Whether you’re a newbie or an experienced Forex trader, you should consider this simple reminder. This trade-related stress is understandable considering that you are dealing with a huge chunk of money. Not losing such a huge amount of capital will flare up all those dangerous emotions. This scenario is quite common among Forex traders and yet they still end up biting the risks and dealing with their emotional breakdown later on. Why is this so? These 5 things are the culprit.
- Desperation
- Urgency
- Lack of Patience
- Arrogance
- External Financial Pressure
If you are starting to experience anxiety after a losing trade, then this is a sign that tells you to decrease your risk ratio. Ask yourself about the amount of money that you ought to risk. You need to be honest with yourself because no one will hold the responsibility for your decisions but you alone.
Overtrading
Another common reason for failures in Forex trading is overtrading. Traders who overexpose themselves in the market and open multiple trades all at once usually end up getting doomed. Usually, traders think that opening another position will not hurt at all. But when trades get out of control, that’s the time you’ll understand the harmful effects of overtrading.
Overtrading can also be the result of the fear of missing out (FOMO). There are traders who take too many positions because they are afraid to be left out. This is a poisonous way of trading, and you will only realize it after the result sinks in.
You should remember that discipline is highly needed to become a profitable trader. Taking advantage of only the best opportunities in trading hones the abilities that will help you in your future trades. Having too many trades at once will most likely mean too much risk on your account. Remember that a lot of things can happen in the market and one wrong move will blow your entire account. This is not healthy. As much as possible, look for the bigger picture, trade slowly, and consider the risk-reward ratio.
Trade Only With The Money That You Can Afford To Lose
Most people get excited with the idea of earning hundreds if not thousands of dollars every time you trade Forex. Then, the urgency to join kicks in. But what if you don’t have enough money for such expenses? Then you try to source quick money. This is wrong. You can’t predict the movement of the market. Good thing if you hit the jackpot, but if you don’t you’ll be buried in debt very easily.