This Emotion Will Destroy Your Trading Career
Guest post from visionsofaffluence.com
So you just had a few good trades and now you feel like you’re on top of the world. You feel like you finally have this forex trading thing down and that from here on out everything that you touch will turn to gold. You are unstoppable and pretty soon you will be able to quit your day job and trade full time.
Things are really looking up for you until you quickly give back all of the gains you just made and in fact no have less in your trading account than you did when you first started. You have no idea what has just happened and how you could go from being on top of the world to being in the dumps so quickly, but actually the reason is pretty clear. You got overconfident.
Overconfidence is one of the most dangerous emotions when it comes to trading because it causes traders to abandon logic because they feel like they can’t lose. If left unchecked this emotion can do serious damage to trading accounts and has been responsible for the ending of many trading careers. This overconfidence rears its ugly had after traders have a good streak of winning traders and they start to be overcome by feelings of euphoria that causes them to take trades that they normally wouldn’t because they are enamored with their own perceived abilities. This is one of the classic traps of trading that has led to downfall of many traders. In order to avoid this you need to remain humble at all times and respect the power of the markets. There is no way you can ever accurately predict the market all we can do as traders is stack the odds as high in our favor as possible before taking a trade. Never let a string of good trades go to your head, and if you do feel those feelings of unwarranted confidence coming on then the best thing you can do is stop trading and only come back after you are thinking clearly. I know that is easier said than done but it is this discipline to resist the alluring pull of their emotions that separate the great traders from everyone else.
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See what other traders are doing in real forex accounts. Check out Currensee. It's free..
Just what happened to me. Last month I made more than 40% and this month I turned all the profit back to the market. I started entering in every single signal and the result…well, I’ll take some time to recover my losses.
thanks for the article.
Scooby
Good post, thanks Yohay.
I used to play a lot of poker, and you had exactly the same thing there – long winning and losing streaks. As you say, when you’re winning, you feel untouchable. It always turns around though, and you can never predict when.
Losing streaks will inevitably happen too, and will make you feel horrible. You learn more when you’re losing though, use this time to analyse and improve your system.
Good luck all!
yeh, this is very true…. after consecutive winnings i had in 1 week, and i can make 20% ROI… but it was swept to the initial amount, just by the very next week. i was shocked and have to get back on the track.. overconfidence is really dangerous.. why don’t you post this sooner…the story could have been different… haha
As usual well said! we all seem to go threw a cycle of learning and as our investing confidence grows we fall in to this trap.
This is true of many things…but you get quicker feedback in the markets
Thank you very much my friend.
I realised the mistake what i did.
Really wonderful article.
Bala
Larry William once said, one of the most useful belief for trader is, ”This trade is bad, I will make mistake”
Therefore, we use stops. Your article reminds me.
Thanks Yohay