There are a number of foreign currency exchange mindtraps that you need to know about and master. If you do not look into these foreign currency exchange mindtraps then you could suffer losses when you are trading. It is better to know what the traps are before you start trading so you do not suffer any losses.
Demo Trading Versus Live Trading
All new traders should start with a demo account to practise their skills and become comfortable with the trading platform. The problem for most traders actually comes when they have to change from demo account to live account. The trading psychology at this point often throws the new trader making them lose on their trade.
When trading on the demo account there is no real risk as the money is virtual. This allows traders to be more focused even when they are losing on some trades. However, when you are dealing with real money this focus is harder to get because of the loss of real money on certain trader. This tension which comes from trading live can actually cause traders to divert from their plans and behave in a less methodical manner.
Your Foreign Currency Exchange Expectations
A lot of new traders look at the forex market as an easy and fast way to make money. This is actually very far from the truth as you need to be patient with this market and study way to make money. While some new traders do make money quite easily this leads to a mindtrap where they believe it is easy to trade. The money these traders make is generally on their demo accounts and when they transition to live trading they find themselves overwhelmed.
To avoid this trap you should never have the expectation that you are easily and quickly going to make money. You have to be realistic about your trading targets and take the time to study up on the market.
Suffering From Paralysis By Analysis
Paralysis by analysis is actually a very interesting phenomenon which many traders suffer from. When a trader is analysing the market for a potentially profitable trade they many become so involved with the analysis that they actually neglect the trade. In these cases the trader is so focused on the details of the trade and the analysis that they are unable to place the trade. To avoid the trap you should never overanalyse the market because this is what leads to paralysis through analysis.
Know What Your Emotions Are Saying
All new traders are told that feels are bad when you are trading and this is true, but only if you let them get the better of you. While you should not let your emotions take over you should acknowledge that they are there. If you do not acknowledge your emotions you will have a hard time controlling them.
Finding Your Trading Zone
As traders are human they cannot be prefect and their trading will never be perfect either. However, the trading could be profitable if the trader is able to find their trading nirvana. This area is when they are able to control their emotions, the market works with their strategy and they do not overanalyse the trades.