The forex market is a highly volatile one, which can seem rather intimidating; however it comes with other advantages, such as massive profit possibilities, which keeps traders trading. Yet, not many individuals are able to handle this market, particularly the volatility. To survive there are particularly things you need to be aware of and prepared for. These can be learned through both practical experience and appropriate forex training course.
Trading Psychology and Forex Training
Many traders assume that forex trading is merely the exchange of one currency for another. This is not true, there is a great deal more than the simple transaction mentioned. One important aspect which is not paid enough consideration is that of trading psychology.
Trading psychology refers to the psychological behaviour involved when trading the forex market. When focusing on trading psychology with a forex training course, the trader is taught how to control his emotions whilst on the market floor. It has been seen that the mood a trader is in can influence the present trade greatly. Not only do the emotions affect the actual trade but they effect the trader’s perception of the market as well. An emotional view of the market can cause emotional trades which are more often than not bad trades resulting in huge losses. The best forex training should cover methods to cope with these feelings despite the erratic market movements.
How You Handle Losses
It is a fact that traders will experience losses. The key to being a successful trader is knowing how to handle these moments. Forex training should cover this and teach coping strategies so you know how to behave when facing a bad trade. One of the best strategies to deal with this is to admit and learn from the trading mistake. By acknowledging your failures, you can accept and adjust your trading strategies accordingly. If your training does not approach this topic, you may experience some severe difficulties when losses instead of profits roll around.
How You Handle Profits
While most forex training courses will look at handling losses, there is not much education on how to handle a profit. It is assumed the trader would be aware of how to do this, but good trades can cause as much emotional stress as bad ones. Winning trades cause joy and an inflated ego creating a delusion of grandeur. A succession of good trades has the potential to affect one’s objectivity and change your perspective of the market. This may lead to trades based on behavioural bias instead of technical analysis, which ultimately may cause damaging losses.
Using the Right Position Sizes
Position sizes are incredibly important when the forex market is showing volatile movement. It is during these times that the position can swing from positive to negative and back again. When this is the case it is best to take a small position as these do not cause as much emotional stress as the larger positions. Taking this stance also allows you to maintain a degree of control when placed under trading pressure. If placing a larger position size in a volatile market, the chances are you will experience more anxiety with a riskier trade.