Forex trading mistakes! Find out the 10 Common Trading Psychology mistakes of Forex Newbies

Do you know which are the most common trading mistakes people do? Watch our latest video, where we share with you 10 Common Trading Psychology mistakes of Forex Newbies

10 Common Trading Psychology mistakes of Forex Newbies

In this brief video, we’re going to look at 10 common psychological trading problems. Trading is very much a mental game and it is really a high-performance activity. You need to be performing at your best and one of the facts that slowly dawns on you, as you increase your ability in trading and as you carry on further down the line, is actually, is an extremely psychological and mental activity. And if you haven’t yet grasped that, and you think, “Oh, I’m not interested in the psychological aspect of trading” you almost certainly need to work on your psychology, and if you’ve heard experienced traders  mention this to you, and you’re still ignoring it, go and think to yourself, “Why am I actually ignoring this?” Because your state of mind in the market is such a big factor. If you don’t harness how you’re feeling, your emotions, they’re incredibly strong emotions when you’re trading, then you almost certainly going to a wreck your trading ability and your potential. So, here’s 10 common problems, just to help you to identify the psychological aspect of trading.

So, first of all, one psychological training problem is when you cut winning trades short, you know what your target should be, maybe you’re expecting price to get to the next support or resistance level, you can see that’s the obvious location, but you suddenly see a small retracement on, maybe the 15-minute chart and you cut your winning trades short. A very easy thing to do, I’ve done this and to a certain extent, many traders struggle with this aspect of trading as well. But if you’re habitually cutting winning trades short, that’s an issue that’s going to hinder your success.

Another one is, not pulling the trigger on a good set up due to fear of loss. Maybe you’re just too afraid of risking money in the account. Trading is a risky activity and every time you went to the market, you are risking some money. Sometimes, that might hinder you and affect your ability to actually take good setups.

Another psychological problem is if you’re making small money, but you’re not really able to raise your game to that next level. You’re just making a few points, or maybe a very small amount, a percentage, compared to what you should be making over 6 months or a year.

Maybe you’re afraid to take a good set up because the last few trades were losers. Again, a very common problem to have, you see a good set up, it’s fundamentally sound, it’s technically sound, but because you had two or three losing trades, you’re afraid to take it and you might miss out on a potentially good winning trade.

Another psychological problem is just jumping into the market, unplanned. You’ve all been in the market, when you’ve seen the market suddenly move 50, 60, 70 points very very quickly, and you just jump in to that situation, without planning it, without understanding even what that move is, you think, “Oh, you know, the price is moving, I’m going to join it!” You can very quickly be burned, as price can retrace instantly, so that’s a trading problem I want to watch out for.

Again, if you make profits in the morning, but you lose them in the afternoon, that can be, again, psychology, why you’re losing money in the afternoon when you made it in the morning? Is it overconfidence? How are you reacting to those winning trades?

A deadly disease is doubling down on to a losing position. You’re losing and you just think, “You know, I’m going to add more money into this.” And double down. It’s a very dangerous activity to get involved with. Be careful of doing that, it is a common problem that people have. This is something that I struggle with personally. I’m a pretty mellow guy, and I’m not easily angered, but sometimes when I lose a trade, I feel quite strong feelings of anger and my weakness is I have to watch, I don’t jump into the markets in an unplanned, almost in a revengeful way. That’s an area that I really have to work on. And the thing that works for me is taking, like one, two, three days away from the market, just allow myself to calm down and recover from the anger of a loss.

Another common problem is, letting a losing trade run with the hope of getting to break even. Apologies for that little typo there, it’s a losing run, not a losing run. Yeah, this is, again, a situation you really don’t want to get yourself into, it’s a really common problem, price is retracing against you, maybe you move your stop back, you’re just hoping or praying the price is going to return to your original entry so you can get out without any loss. The problem is the market can be irrational for a lot longer than you can stay solvent. So moving a stop in an unplanned way, letting it run in the hope it will return, is just a recipe for disaster.

And then the final common problem, arguably the worst of all, is over-leveraging. This is, essentially, when you’re trading or risking too much money in relation to your account size. This is one of the worst psychological trading problems you can get, and this is the single worst problem to drain your account the quickest when you’re risking too much, too quickly and you’re over leveraging.

Okay, folks, that’s the 10 common trading problems for you to look at, and you may recognize yourself in those, and I hope in other videos, to explain how we can begin to address those. But, the first aspect, before you can address a problem is to recognize exactly what your problem is, and I hope that going through these 10 common problems has helped you to reflect on maybe those aspects of your trading that is involving far more psychology than you originally thought.