Every step you take as Forex traders are crucial to every decision you make because eventually, the overall result of your trades will come from these. That’s why being careful and wise is essential to succeed in it. And the most impactful factor that affects your steps leading to your decisions is your emotions.
As Forex traders, there are a lot of emotions you will encounter, which will determine your plans and, most importantly, your actions. Like in shopping for food or clothing, emotions drive your trading choices and behavior. They can make or break your successful opportunities. It proves how having good emotion management is essential in Forex trading.
Now, you need to know that most, if not all, Forex traders are familiar with and can relate to the common emotions that this industry stirs up. Awareness of this is significant so that you will know that these emotions are normal in Forex trading.
For you to explore more about this essential trading subject, here are 8 positive and negative emotions that Forex traders experience! Know how they affect trading decisions too!
1 – FEAR
It’s inevitable. Fear is one of the primary emotions that Forex traders feel, especially for beginners in the business. Of course, filling yourself up with information and skills in Forex trading is vital for newbies, but you can’t deny the fact that entering the Forex market for the very first time comes with a natural fear of whether or not you will be doing great.
Even when you fully understand and create a plan, there will be times when you will be worried and afraid. If you have initial doubts about embarking on the trading journey, this isn’t far from happening.
On another note, fear is the most significant root of some Forex trading mistakes. Most traders fear losing; needless to say, no one wants to lose. But while a lot use their best plans to avoid losing, a lot fail to do that.
Because of too many hesitations from their “what ifs” in trading, they miss big wins. Because of panic, they end up going for poorly thought trading techniques, leading to failures.
Another thing, this emotion can urge Forex traders like you to change trading plans at the last minute or forsake it at the exact moment of trading, just because you suddenly felt unconfident and fearful.
Say you experienced losing trades before. For sure, you’re afraid for that to happen again, and you don’t want it to, so you choose never to do the same trading strategies next time. With this, you see that fear can teach you a lesson and help you be more cautious.
2 – OPTIMISM
Though there’s worry somewhere in your head as you begin and continue trading, there’s optimism too. It is most likely when you’re genuinely willing and prepared to join the Forex market.
Positive thoughts and expectations exist because you’re not supposed to join Forex trading without looking forward to good fruits! With a well-crafted trading plan backed up with a strong willingness to do what it takes to profit in Forex trading, you can be more optimistic.
On the contrary, if you experience a trading loss, your optimism will be your potent weapon to overcome the negative emotions that the unwanted circumstances carry.
3 – EXCITEMENT
When you step into Forex trading after discovering how awesome it is, you cannot be not thrilled and enthusiastic! The tremendous advantages of the Forex market are why many aspiring traders join and why both new and old investors are excited! They make you desire to achieve success and envision yourself reaching it. This excitement enables you to work hard in Forex!
Similarly, for experienced traders, excitement is still there, especially when you see your trading plans and hard-made decisions bringing on remarkable outcomes. It encourages you to trade and invest further and to come up with more improved trading practices.
Just take note that excitement becomes risky when you’re too focused on the goal and not on the process of Forex trading. Concentrate, and don’t get too overwhelmed with zest, so you can formulate the best decisions and celebrate later with more excitement.
4 – GREED
Nobody wants what’s less than good. No one desires what’s below success. Forex trading is the same, and it’s excellent because all Forex traders’ target is winning. Right! But the problem comes to the picture when you become filled with greed.
In some ways, greed is beneficial and engenders good products, but that’s not always the case. More often than not, desire leads to many Forex trading wrongs, including reckless and impulsive decisions that yield disbenefits!
Sad to say, greedy Forex traders often resort to dangerous trading approaches, which transform their pursuits into what seems like gambling. They trade beyond what’s suitable for their capacity and condition.
Sometimes, they have unrealistic assurances that they make. When your eyes and mind are both on money, money, and money alone, you’re close to harming in Forex trading.
5 – JOY
Winning in Forex trading is, without a doubt going to make you the most joyful person in the world! It’s the most positive emotion that Forex traders experience from a successful trade, even more, when you score more than just one trade!
Joy will make you motivated to trade again, using the same or enhanced trading styles. It gives you bags of confidence, which will aid you in making trades in the future.
6 – HOPE
Hope is important. When you have it, you will keep moving forward and pressing on no matter what. Being hopeful is a crucial characteristic anywhere you are in school, the workplace, and even in Forex trading. It allows you to be solid and functional despite the challenges that Forex trading possesses.
On the other hand, though, hope can also be hazardous in Forex trading. Why? Because hope can keep you pushing ahead and trading more even when the chances of winning in a particular trade are no more. Hope can keep you wanting to make things work out on a losing business while you’re holding onto tiny signs of uncertain hope.
When this happens, you’re wasting money and time, which you should be spending on making new and more potential trades. Moreover, you might be forgoing a better opportunity out there just because you’re too focused on losing your position.
7 – DESPERATION
Desperation is experienced by Forex traders who have never won a trade before. You’re discouraged because you feel like you’ve done everything to reach your trading goals, but you still end up losing.
This emotion can compel you to give up trading Forex. However, if you’re still hopeful despite the desperation, you will continue trading while thinking of and using better trading methods. Sometimes, you might do anything and everything, even the risky ones, out of desperation.
8 – REGRET
Last but not least is regret. This negative emotion is felt when you’re disappointed about your actions that led to unfavorable out-turns, and you wish you could turn back time and erase those actions!
Regret also experience in Forex trading when you miss out on a lot of profitable opportunities. Frustration comes along with it. These two can stimulate you to trade again and correct your mistakes or persuade you to quit Forex trading.
EMOTIONS IN FOREX TRADING
Without question, emotions are a powerful driving force in the decisions and judgments that Forex traders choose. As you have read above, these emotions are helpful yet sometimes harmful, depending on the situation, the cause of these emotions, and how you respond to them.
These emotions are normal, but you should not let them take over you, especially negative ones. Instead, they must drive you to do better and strive harder. Remember how you react to those emotions in Forex trading? It will be the most determinative of all decision-making aspects and conclusions.