FX TRADING PSYCHOLOGY


short circuits logic every time, until you retrain the default survival response.


Until you can fix this glitch from your e v o l u t i o n a r y past,


thinking


your brain


will always be set up for failure due to being hijacked by the power of survival instincts embedded in your emotional brain. The question is how do you solve this problem so that reason and logic are available to you as you engage uncertainty and risk?


This


the hole in your trading strategy.


with is not an option. It is learning how to use emotions intelligently that needs to become your aim. It is by employing the intelligent use of


emotions that you learn how


I use for emotion. An emotion is a biological action potential that coordinates action between the organism (that’s you the trader) and the environment in which it is embedded (that’s the markets you in).


trade


are caused by changes


Emotions in


status of the env i ronment . Now think of all those charts you read for entering trades


and is


Freedom FROM Emotion vs. Freedom OF Emotion


Each time there is a change in status in the markets, there is a learned emotional response that is triggered in the trader


Emotions are an inescapable reality of trading. There is no “leaving emotions at the door” or “trading without emotions”. These are dangerous notions that attempt to ignore the power of emotions over your ability to think clearly. Emotions are ever present. In fact, the only time that you are not engaged in emotions is when you are dead. So not having emotions to deal


50 FX TRADER MAGAZINE January - March 2019


to create the mind that can trade effectively. emotion.


This is freedom OF


First, ask yourself – What is an emotion? Go ahead; take a moment and jot down your answer. What is an emotion to you?


Is it part of your psychology?


Is it a feeling? Is it


touchy-feely? Whatever you believe an emotion is – write it down. Now, let’s cut to the chase. Here is the neuro-biological definition that


by perceived threats of loss).


managing trades – there are lots of changes in status going on all the time. And each time there is a change in status in the markets, there is a learned e m o t ion a l response that is triggered in the trader (especially By


definition, you are going to have to become emotionally intelligent if you are going to become a highly effective trader. There is no way around it, except through it.


Now go back and compare your definition of emotion to the one that is given here. Do you see the difference? This is the hole in your trading strategy and performance. It’s time to become emotionally


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