Did you know that the percentage of unhappy people in rapidly developing countries is much higher than in the poorest parts of Africa? This is partly due to the fact that people tend to want more. No matter how much stuff they have it will never be enough. We can say that humanity by nature is greedy. And if in some areas the desire to achieve more is beneficial, then on Forex greed is a direct path to bankruptcy.
How to understand that your financial decisions are caused by emotions? How to learn to control your feelings and start making real profits on Forex? Read about this in the article.
Try to Lower Your Expectations
Due to the numerous advertisements of some dishonest brokers who promise untold wealth in no time, many come to Forex anticipating quick and easy money. Unfortunately, in reality, the picture is not so rosy. You need to be prepared that the percentage of profit can vary from 2% to 20%. Some fail to achieve even this.
After spending a few days on a demo account, some traders immediately switch to real money trading. This is a huge mistake. Demo trading is very different from the real one, as emotions are completely excluded from it. When you start risking your money, your decisions become chaotic and are determined by the fear, excitement and, of course, the greed that we are talking about.
It is very important to realistically assess your chances of making a profit. Move to success gradually, without skipping important steps. Get ready for real trading on a demo account and only then invest in a live account. And of course, be prepared to deal with a flurry of emotions that you will inevitably face on Forex.
How to Know that Your Decisions Are Caused by Greed
The success of the Forex trader is based on a number of important steps and nuances. When you notice a discrepancy with the generally accepted approach, you either have not yet realized its importance in general, or greed controls you. It is the desire to make money as soon as possible that makes you break those important rules. These are the first signals that you are controlled by greed:
- The complete absence or ignoring of points of the trading plan. If at least once you move away from your system, then know that your decision is most likely caused by emotions.
- Switching to real trading too soon or completely skipping demo trading.
- You never withdraw funds and keep investing more in trading. This is the first sign that your plan is to earn as much as you can. You should start to control yourself or this feeling will soon take over you.
- Ignoring the risk management system. Often traders go all-in when they are sure that the trade is a win-win. They can’t wait to get the maximum as soon as possible. But unfortunately, you can never predict the market mood with 100% certainty. Even if you are lucky once or twice, during your third attempt you can lose everything.
- Using maximum leverage size. The choice of leverage should be based on several important factors, such as the size and duration of your trade. With increasing your leverage you increase your risks as well.
- Excessive trading. If you spend hours in front of charts searching for suitable trading setups and opening a huge number of trades, then you are controlled by greed and it is time for you to retreat.
- Ignoring Stop Loss and Take Profit orders. These levels are the ones that help you calculate the risk-to-reward ratio. If you think about them only as restrictions that you should get rid of, then you have problems with greed.
Conclusion
To many of you, it probably seems that the desire to make huge money cannot be a flaw. After all, we all come to Forex for money, right? However, trading in the foreign exchange market is subject to its laws. If you want to linger on Forex, you will have to follow them.
Success in trading is possible only in one case - you have to see numbers on your screen, not money. At first, it will not be easy for you to learn how to do this. Keeping a trading journal might help you out with this problem. If you already use it but did not mention the feelings you get while trading, then it's time to start. If you describe all your emotions and surrounding events, then you’ll know what exactly causes your feelings and how to control them. Perhaps it will become clear to you that you make reckless decisions after a fight with loved ones or after a busy day at work. This way you will know that in such periods you better avoid trading.
And finally, set yourself long-term goals and make a plan. That’s how you will know where you’re going and how to get there.