TRADING PSYCHOLOGY

It's been 2 years since I started trading the forex market and still, some of the market elements remain as wonders for me to really comprehend.

Questions like:

What really moves the market?
What makes traders buy or sell that particular pair?
How come when a breakout occurs, market could gone crazy & rally like there is no tomorrow?
At times, it doesn't move at all. Why?
How to know when the currency pair is undervalued or overvalued?

And so on...

One thing I realize for sure, it is all about psychology, what you and I believe that matters. That is why trading gurus always put psychology as the main constitution in the trading world, at least 60%.

At first, I didn't agree. But later I understand the reasons why...

When I started, I always thought and believe that a good system and money management shall do it, psychology is the least part that should be mentioned. But after days, weeks and months watching the market and price behavior, I can tell you that I am actually watching human's behavior instead of lines and numbers.

The story line is always about the buyers aka bulls versus the sellers aka bears.

Hence, in relation to psychology, it is worth mentioning that the 2 everlasting human components are fear and greed. It is easy to say, even a thousand times, for a trader to control his fear and greed in the market. But in reality, huh, flying a jet fighter could have been easier.

Like I wrote before that "It is fun to watch unless"... till today, still the points written in that articles are worth to be mentioned again. Once you are in with real money, admit it or not, your adrenaline will slowly pumping in, unless of course you are playing tiny lots or in with a deep pocket.

Talking about traders inability to take small losses when wrong, I do realize that the fact of losing money or losing anything is something that we, as human, do not fancy at all. The problem is, new traders hardly realized this fact, unlike the pro's and the seasoned traders who knew what it takes to survive and prosper in this market.

Reason being, it is easy to say that 'learn to take small losses' etc etc. But once you are faced with a losing streek (especially if you are new), you knew it is not that easy at all, even if it is a small small one.

So, how do we improve our weaknesses on this? Perhaps the best answer is to learn from a mentor, experience as well as try not to repeat the same mistakes over and over again.

Unless you start learning to conquer your own fear & greed, admitting your mistakes and taking responsibility in your own decisions, I knew by heart that there is no way you can survive in this market.

And yes. It is true that Trading Psychology is the mother of all trading skills.

The beauty of it is, it is within you and it is you who are ultimately responsible for developing it.