The Psychology Of Forex Trading

There are many similarities between trading on the foreign currency markets and playing so-called games of chance, for example poker. In both, the Forex trader or player can make a profit or a loss on their original entry into the market/game. There are odds and sequences to be calculated, rules to learn, understand, and apply, and there is the adrenalin rush as a trader goes to close out a successful position or the player knows the river card gives him the best hand.

The mechanics of trading and playing can be learned. Some traders may be particularly mathematically adept and be able to set up a Fibonacci Study (which can be used to analyse chart patterns in the currency market), and likewise some players can learn the myriad odds that come from knowing what cards are in the hand, on the table, and calculating the percentage likelihood of a particular card being turned up.

However, the real key to success in the field is discipline, ensuring that the mind is able to control the emotions so that there is an appropriate relationship between the greediness that is a natural response to things appearing to go right, and cautiousness that can hamper efficient and sometimes intuitive trading.

Good Forex trading performance is built up gradually as the understanding and manipulation of the mechanics improves and gradually becomes second nature. A rush of blood to the head when trading circumstances seem particularly favourable may lead to a rush of money out of the account.