Foreign currency trading is a delicate skill to master. It requires a heavy quantity of self control, restraint, dedication and the ability to say ‘No’ to your inner instincts.
Unfortunately, human nature is designed in a way which doesn’t really help those engaged in foreign currency trading, and there are a lot of natural traits in the human brain which will slowly but surely send a trader to his or her financial destruction.
When faced with the knowledge that a certain amount of money is guaranteed to be lost – something which happens often in the world of foreign currency trading – it has been shown that human nature will dictate to the brain the best course of action is to put a lot more money on the line in order to be given a slim chance of recovering some of that lost money.
This is a self destructive instinct and one which has caused a lot of those in the foreign currency trading market a much more devastating loss than the initial amount.
To be successful at foreign currency trading you must understand certain points:
- Sometimes, losing money is inevitable. It’s something you can’t control – all you can do is accept the fact, deal with it to the best of your ability and move on to the next trade
- Getting hung up on specific trades can influence your ability to stick to your methodological system
- You are not going to win every single trade. Period
Why does our instinct tell us such things?
The human brain is not wired naturally for foreign currency trading. It is wired to make the most of the moment – a mindset which is not encouraged or useful in relation to foreign currency trading.
To understand the successful behaviour of those making money with foreign currency trading, you must learn to harness these instincts and plough ahead with the bigger picture:
- Don’t live for the moment – plan for the future
- Hammer your system into your instinct. You’ll never replace it entirely, but the more you follow your system the less you’ll listen to the destructive advice of your instinct
An example of human nature in relation to foreign currency trading
One of the most common train of thoughts which brings a trader crashing to his or her knees is the thought process of: “Run with your winnings… play with your losses”.
It is easy to distance yourself from money classed as a ‘loss’ and place it mentally as an amount of money which isn’t yours. But it is important to remember that no matter how much lower the amount is than it once was, it still remains money which can be utilized successfully.
Never disregard a trade because it has caused you a loss. Foreign currency trading isn’t all about focusing on your wins – it’s about what you do to minimize damage, utilize losses and build a fortune as part of a bigger picture.