Trading on the foreign exchange can be a very exciting and stimulating business with an excellent monthly pay-out; however, there are also many drawbacks. These drawbacks can include long working hours, a competitive environment and many psychological difficulties, such as high stress levels. This is only natural as all humans have psychological processes which make them vulnerable to stressful situations. Yet, while we have these mental reactions, we also possess innate coping mechanisms which can be deployed. If one learns to manage these strategies, it is simple to handle nerve-wrecking settings like the forex market.
Although there are numerous stress blockers which impede an individual’s way to financial success, only two have been noted as the most detrimental to one’s occupational and personal well-being. The first is dealing with your unknown, inner demon. The second is dealing with an inner bias of denial.
Knowing About the Inner Demons You Have
Successful traders typically have a particular personality, or nature if you will. He is not that emotional, frail, shy boy in the corner; but rather the confident, determined, decisive boy who is always leading the team to victory. It has been said that these types of people will show traits of a Narcissistic personality type, caring for no-one but themselves and their businesses. This is not always a positive attribute in social circles, but can be beneficial in certain industries, such as the foreign exchange market.
If a trader is ‘hard-line’ and ‘emotionally stunted’, perhaps the extremes of the traits for success, these individuals will have plans of action and stick to those plans regardless of the market situation. He will continue to trade according to his rules regardless of whether they are correct or not. He will fail to understand that trading forex requires some adaptability in order to succeed, and when the trade fails his inner demon will contort the facts to blame everyone else for his loss.
Trading on the Foreign Exchange with Trading Bias
In the world of forex, traders understand bias in two ways:
Sensory-deprived bias and trade-fear bias.
Sensory-deprived bias focuses on a trader’s behaviour of trading forex without sufficient analysis. The trader strips away any media hype from the information he receives and bases his trades on facts but, he will not stop to discover whether this information is true, trustworthy and un-biased.
The trade-fear is a rather complex manifestation. This is noted when the trader has a fear of trading – unusual, yet true. Instead of exploring various avenues in the market, he will restrict himself to the trades which he is most comfortable in regardless of whether he makes a profit or loss. The trader must learn to jump out of their comfort zone and expand their trading horizons.
Acting On The Trading Bias
Upon identification and realisation of the mental difficulties in trades the trader is now in a position to take action and overcome these barriers to success. One of the simplest methods, and a method rather appealing to those who are trading forex, is to create a list outlining the path you were on and where you wish to be. Objectifying the trading journey can ensure that the right steps are taken towards success.