The Biggest Mistake in Currency Exchange
I’ve heard about Caliber FX Pro and noticed that the biggest mistake that someone can make in forex trading is maybe not what you think. It is nothing to do with trends, charts or systems. Nor is it about stop losses or maybe risk handling, though all these things are important.
No, the most terrible mistake is to believe in one’s feelings. Sounds weird? Maybe, because plenty of us grow up believing that our feelings are what matters in life. We make the majority of our big decisions on the presumption of our feelings, from choosing a house to marriage. And yet our feelings are continually changing. This isn’t the place for getting into a discourse about marriage… But certainly when it comes to foreign-exchange currency trading, we need to understand that our feelings are nothing more than a fleeting reply to stimuli. In a way they’re not real. They have no fixed or permanent existence. And they certainly don’t make an excellent basis for trading decisions.
Fear, especially, could be a foreign exchange trader’s worst enemy. Trading is risky and therefore it is inherently stressed. Stress causes a physical reaction, including production of the hormone adrenaline and the ‘fight or flight’ reply. We feel shocked and we feel that we must do something immediately. Faced with a difficult trading situation, we are tempted to hang on in there at any cost ( fight ) or get out of the market ( flight ) depending on our emotions rather than on our system.
Fantasies about making plenty of cash can be deadly too. Like gamblers we dream of hitting the jackpot by finding the perfect trade or system, and all the things we will do with all of that cash. This sort of fantasy leads us into taking big risks. The slow and steady approach to building up one’s account balance is just not quick enough for the gigantic dreamer. He would like to get there fast, so he starts hazarding more and more on each trade. Pretty shortly he is at the point where two losses will wipe him out. And guess what – it happens.
It may appear that successful and experienced traders do rely on their intuition, but do not make the mistake of thinking this is emotion based trading. What can happen for a long time trader is they are reacting to a situation on the premise of past experience that they don’t have any conscious memory of. This is going to be called intuition but it’s not emotion. It is born of experience.
In order to have success with currency trading, the first thing you should learn is to follow a system and a trading plan to the letter. Only when you can do that one hundred percent of the time are you able to afford to start bending the rules. The emotions must be put forcefully in their place in forex currency trading.
Tags: caliber fx pro, Currency Trading, finance, foreign exchange, Forex, Investing, Money, profit, risk management, trading