I’ve heard about Caliber FX Pro and realized that the biggest mistake that someone can make in forex trading is not what you believe. It is nothing to do with trends, charts or systems. Neither is it about stop losses or even risk handling, though all these things are important.
No, the most terrible mistake is to believe in one’s feelings. Sounds weird? Maybe, because lots of us grow up believing that our feelings are what matters in life. We make most of our big decisions on the presumption of our feelings, from selecting a home to wedding. And yet our feelings are constantly changing. This isn’t the place for getting into a discourse about marriage… But certainly when it comes to foreign exchange Currency Trading, we need to understand that our feelings are nothing less than a fleeting response to stimuli. In a sense they’re not real. They don’t have any fixed or permanent existence. And they certainly do not make a great basis for trading choices.
Fear, particularly, can be a forex trader’s worst enemy. Trading is dangerous and therefore it is intrinsically stressed. Stress causes a physical reaction, including production of the hormone adrenaline and the ‘fight or flight’ response. We feel frightened and we feel that we must take action straight away. Faced with a difficult trading situation, we are tempted to hang on in there at any cost ( fight ) or get out of the market ( flight ) depending on our emotions rather than on our system.
Fantasies about making plenty of money can be dangerous too. Like gamblers we dream of hitting the jackpot by finding the perfect trade or system, and all of the things we are going to do with all of that money. This kind of fantasy leads us into taking massive risks. The steady approach to building up one’s account balance is just not quick enough for the big dreamer. He would like to get there fast, so he starts hazarding more and more on each trade. Pretty soon he is at the point where two losses will wipe him out. And guess what – it happens.
It may appear that successful and experienced traders do rely on their intuition, but don’t make the error of thinking this is emotion based trading. What can occur for a while trader is they are reacting to a situation on the presumption of past experience that they do not have any conscious memory of. This could be called intuition but it is not emotion. It is born of experience.
In order to have success with foreign exchange trading, the very first thing you must learn is to follow a system and a trading plan to the letter. Only when you can do that 100 percent of the time are you able to afford to start bending the guidelines. The feelings must be put firmly in their place in foreign exchange currency trading.
