Forex Trading Psychology

The Right Mindset: The most important factor, over and above good technical analysis tools and timely market information, is the mindset of a trader. A practical trader does not hope to make profits out of a losing transaction without a reason and never expects to achieve exponential profits suddenly.

The most important issue to deal with while trading is one’s risk quotient after making a profit. Many traders tend to become overconfident after winning a transaction and start playing on gut feeling without any analysis of the invested currency pair.

It is crucial for a trader to know how to deal with losses. A loss arising out of a forex transaction can create fear in the mind of a trader. A good trader is one who works objectively and never gets too excited or too depressed about his earnings from the market.

A successful trader should be determined and analytical, and always be ready to learn. S/he needs to be disciplined and base his/her risks on a fundamental or a technical reason.

There are only certain times viable in a trading day to book profits. An investor should know how to capitalize his/her position during those hours.

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