REMEDIES FOR PSYCHOLOGICAL BIASES WHEN TRADING FOREIGN EXCHANGE MARKET

 The mix feelings that runs through the spine of a trader when trading a live account makes up the psychology of trading. There are two emotions in particular that have been the source of ruin for traders over the years, they are greed and fear. Fear will cause you to either not make a trade when the opportunity arises or close a trade prematurely without giving it a chance to be profitable. Greed will cause you to make trades that are too large or too risky, while trying to make massive gains. Remedies for psychological biases when trading foreign exchange market are as follows:

·        Be dynamic.

·        Know when to exit your trade.

·        A reversal is inevitable in every trend.

·        Do not hold past the point you should have exit i.e. trade with stop loss.

·        Critically appraise your analysis.

·        Trade in agreement with other strategists.

·        Be open minded and learn continuously.

·        Do not jump into trade without evident trading opportunity.

·        Lot sizing is critical to your trading success.

·        Losing is an integral part of the business.

·        Deploy risk management technique.

 


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