Psychology of forex trading or how your emotions can mess you up
Most sites that offer advice on succeeding in the Forex market are going to point out to you that the biggest enemy you face is not the market itself, but rather your own emotions. This is true in just about any activity that involves financial risk. It is really not all that different from playing poker. If you go into it afraid of losing, then most likely you are going to lose. It is pretty much accepted that most human beings have an innate desire to prosper. This desire is what makes failure so frightening.
Regardless of how you make your decisions you need to proceed with confidence tempered with caution. Whether you use technical analysis or fundamental analysis or flip a coin, it really doesn't matter as much as developing your own investment strategy, and proceeding with it until you are sure it is working or failing. Do not take council of your fears, and bounce around with no pattern, overreacting to every setback. Nor should you grow overconfident and let a small temporary success lead you into foolishness. Remain constant and stick with your plan.
The Forex market has some peculiar emotional landmines that you need to be aware of, and need to avoid. You are dealing with the currency of foreign countries and how they are going to be valued against the currency of other countries, one of which is your own country. It is important to keep things in perspective. If you find yourself rooting for the USA and booing Japan like they are your alma mater's football team and its biggest rival, then you should not be investing in this market, but saving for tickets to the next Olympic Games.
Investment of any kind takes self control, and emotional stability, and Forex is no exception.
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