When everything is going great, naturally greed persuade you to make a position large on that winning moves, or encourage you not taking profit at your pre-determined limits levels. Whereas, when things go badly, fear rules the whole day. May be you remove the small winner swiftly, that it could not reverse against you are running straight to your stop. Or perhaps fear of losing perhaps, encourage you to hold the losing trade with hope it will get back and you will not have to suffer loss. So, greed and fear emotions have pulled out many traders from the market.
In this article I would let you know, how you can balance these emotions, for your benefit.
Confidence: A great Equalizer
How Can I eliminate greed & fear from my tradings?
It is a common question that every new or even experienced trader asks. Unluckily, it’s not possible until you are present in this world , these are part of your life, so never try to get rid of greed and fear; rather embrace them, and think what the best or worst may happen from your trade. Remember one thing that greed and fear could only be handled with confidence.
In Forex market greed encourages you to over-leverage your account in order to make a little movement in amount of the currency pair to a large change in your trading account. But a little retracement against the trend can bring a call for margin to you, and this is the movement when fear comes and you get uncomfortable with too much leverage that can be disastrous to you, even if you were right in your analysis.
How Can Build Confidence
The following tips are being mentioned to build confidence asunder:
The First step to build your confidence is gaining experience.
Like other things in a lifetime , the more you do something, the better you can become, the trading is not different. So, if you place more trades, trade for longer periods, longer manage your trade risk and calculate the ratios of risk- reward , defiantly, the better you will be at doing the same .
Learn From Other Traders’ Experience
The first mistake that traders make, they circle around emotions, and take losses, it is necessary for you to know what kind of thing had worked for successful traders in the last time. So you might be able to get benefit from those things in the future.
Lower the Leverage
The most striking quality of successful traders is they prefer lower leverage in their trading. Results have shown, the traders with low level of leverage versus the trader with high level of leverage has been successful always, because of no margin call they remain confident in the worst conditions.
How much funds suitable for Forex trading.
Here is an analysis for traders with funds <$1,000, $5,000 & $9,999 trading account. The traders with < $1,000 trading accounts were using leverage with the ratio of 26:1, it is too high leverage. On the other hand the best world professional traders are utilizing the ratio of 3 to 5 or maximum 10 times leverage. These are best traders who are taking less risk than the traders of < $1,000.