Here are some great snippets of trading psychology from the book The Technical Analysis Handbook. I hope that the bits and pieces in it can help you better understand your own trading psychology and the importance of psychology in foreign exchange trading.
1. Remember that becoming a profitable forex trader is a journey, not a destination. There is no such thing as a trader who only wins but never loses. Try to trade better every day and have fun with your progress. Concentrate on learning the skills of technical analysis and improve your trading skills, instead of just focusing on how much you win or lose in your trading.
2. As long as you do what you should do according to your trading plan, then congratulate yourself and feel at ease with this transaction, regardless of whether the transaction is profitable or lost.
3. Don't be too complacent when you make money, and don't be too downcast when you lose money. Try to maintain a balance and take a professional view of your trading.
4. Don't expect this or that to happen in a transaction. What you are looking for is thoughtful consideration of the facts, not speculation.
5. If your trading method tells you that you should make a transaction, but you don’t execute it, you miss an opportunity to make money, and you can only watch from the sidelines. This kind of pain is far greater than if you enter the market according to your own trading plan and do a The pain of making a trade but losing money in the end.
6. Your own life experience shapes your understanding of trading. If you lose the first trade you make, there is a high chance that you will never get involved in that market again for a long time, or even never touch that commodity for the rest of your life. The psychological impact of losing money and failure in trading orders is greater than the physical pain, and the impact lasts longer. Losing money on trades would not have such a negative and lasting effect on you if you hadn't been knocked out by a bad trade.
7. Educational experience plays an important role in shaping the way traders view foreign exchange trading. A formal business education can give you an edge in understanding the general conditions of the economy and markets, but it won't guarantee you money in the markets. Most of what is learned in a formal university education will not give you the specific knowledge you need to be a successful forex trader. To be a winner in forex trading, you must learn to perceive opportunities that most people ignore, and you must tap the knowledge that is essential to successful trading.
8. Arrogance and pride in making money can bankrupt people. Making money stirs up emotions that distort one's view of reality. The more money you make, the better you feel about yourself, which makes you vulnerable to arrogance. The thrill of making money is what gamblers demand. Gamblers are willing to lose money again and again, just for the pleasure of making money once.
9. Always keep in mind that no matter win or lose, one person bears it. Don't blame the market or the broker. Losing money provides you with an opportunity to notice what went wrong in your trading. Do not attack personally.
10. Successful traders quantify and analyze risks, and truly understand and accept risks. Accepting risk emotionally and psychologically determines your mindset on each trade. Individual risk tolerance and trading time preferences also make each trader different. Choose a trading method that reflects your trading preferences and risk tolerance.
11. The foreign exchange market is not a spot market. On the contrary, the foreign exchange market is a collection of psychological stereotypes of all participants in the transaction. The long and short daily fight reflects what the long and short are thinking every day. Be sure to look at the relationship between the closing price of each day and the high and low of the day, because this reflects the recent strength and weakness of the market.
12. Never go long just because the price is low or short just because the price is high. Never add to a losing money list. Never lose patience with the market. There must be a suitable reason before making any transaction. Remember, the market is always right.
13. Traders need to listen to the market. To listen to the market effectively, a trader needs to pay attention to his trading methods and, likewise, to pay attention to himself as to the charts and the market. The challenge a trader faces is to understand who he really is, and then to develop those qualities that are conducive to his trading success in a firm and conscious way.
14. As a foreign exchange trader, the farther away from hope, greed and fear, the greater the chance of successful trading. Why are there thousands of people who analyze technical charts well, but really good foreign exchange traders are so rare? The reason is that they need to spend more time on their own psychology than on analytical methods.
15. If a worker wants to do a good job, he must first sharpen his tools. Lincoln also said, "If I have to spend eight hours chopping down a tree, then I will spend six hours sharpening my ax." In foreign exchange trading, this motto can be understood as: research and learning are very important. important. It takes more time to prepare for the transaction than to place an order and watch the order.
16. Most traders are less patient than the market. There is an old adage that the market will do whatever it takes to drive most traders crazy. As long as someone goes against the trend, the market trend will continue.
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