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FX TRADING PSYCHOLOGY


You can’t change anything in the market, but you can change your ideas. Your trading results come from what’s inside you, from your mental environment, in other words your expectations, your beliefs, your values, your mental images, your perception and your confidence. Tese will influence the way you will implement your trading strategy. Using a defined strategy in the right mental e n v i r o nme n t is fundamental if you want to become successful.


Tere are several components of the mindset that drive our trading decisions and in the following pages I will try to cover most of them.


EXPECTATIONS Good mental


trading, they have spent a lot of time on paper trading, but they still make mistakes in live trading and most of their trades are losing. Te reason for these weak results is that intermediate


Let’s explain what “expectation” means. Te word originates from the Latin verb expecto, which means “to look and focus in one direction”. In modern times, “expectation” has two main meanings:


Belief in the Future


When we expect something, believe


we that


something in the future is going to happen. Belief is what shapes our perception.


Using a defined strategy in the right mental environment is fundamental if you want to become successful


traders usually have problems with one specific mental category called “expectations”.


skills are extremely


important for the so called “intermediate” trader, who already has some experience in trading but whose track record is still negative. Tis is a


traders. Tey have read trading books, they


30 FX TRADER MAGAZINE April - June 2019


common case with intermediate know the


fundamentals of


In trading everything is based on expectations. Markets are moved by expectations. When you understand this mechanism you will have better knowledge about the driving forces of the market. Every trading decision - whether to buy or sell - is based on expectations about the future.


Te main point here is that traders are prone to turn their opinions into beliefs. Our minds work in such


a


way that once an opinion turns into a belief, we start to filter, from the information


we receive, only the


facts that support our belief, and we ignore all other facts that contradict our belief. In psychology, there is a term that describes the influence of belief on our perception, and it is called “cognitive dissonance”. You can notice this problem in many aspects of society – politics, religion, etc. Actually our personalities, our identities, everything that makes us a distinct person is based on beliefs.


Inexperienced traders oſten have


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