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  1. #1
    Junior Member orgonpower's Avatar
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    Default How to Stay Cool during Tough Markets

    The biggest enemy successful trading faces today is not the market, other traders or investors, the economy, or any other outside force.

    The major danger is YOU; your emotions and human weaknesses can easily get you broke.

    We hear it every day and it is very sad: the average investor is always looking to buy at the top and sell at the bottom. People normally chase the trend and the next ďbigĒ thing, and by doing so, they end up being crushed.

    In fact, greed and fear drive most of investorsí decisions nowadays.

    Even though it is widely said that markets are rational and investors make rational decisions based on earnings reports, price-to-earnings ratios, or technical analysis, the truth is that markets are not rational.

    Weíve experienced unbelievable global volatility, a flash crash, and powerful short-term rallies and falls, without any rational reason in terms of corporate profits, economic reports, or political events.

    This has happened simply because greed and fear are taking todayís markets on a wild and extreme ride.

    Why greed? Well, basically because people want to make money.

    Why fear? Well, here it gets a little more complicated. There are two kinds of fear: the fear of loss and the fear of being left behind.

    The key to being a successful investor is to control your greed and your fear, and here we give you 7 rules to help you do that:

    1. Donít overtrade
    It is very common to see investors overtrade to look for better results or to limit loss, and they end up paying too much in commissions or getting whipsawed by short-term market twists.

    2. Donít assume too much risk
    Greed makes investors undertake dangerous risks, be it through options, leverage, investing in unsafe companies, or taking extremely large positions.

    3. Donít look back
    Whatís done is over. Successful investors never go back to look at trades they already sold to see how they would have done. They donít look back to confirm if they did the right thing or were just plain wrong.

    4. Donít sell your winners too soon
    If you sell too soon, you will lose additional profits.

    5. Donít keep losers for too long
    It is hard for some investors to accept that they were wrong, and this makes them lose more than they should.

    This is the land of the Ego. We all want to be right all the time, but it is not wise to keep waiting for a loser to make a comeback.

    6. Leave your ego behind when youíre trading
    It is never good to feel pride for a good trade, or shame, anger, or grief for a bad one.

    The simple truth is that some trades go well and others donít, and this has nothing to do with the investorís intelligence or confidence.

    7. Find a good plan and stick to it
    Investing is like running a marathon, not a sprint race. Patience will get you a long way.

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  3. #2
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    The human mind is the most difficult facet of Forex trading to overcome. There is no short cut to this except through realization, and coming to terms that we all are human and are prone to mistakes. Once we can recognize this, we can begin to watch out for these “undesirable” mental blocks and take steps to eliminate them.

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