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Business : You Must Understanding Emotions In Forex: The Emotional Cycle In A Trader's Mind
As a Forex trader, you are presented with
the opportunity to make a decision on what position to take on the market. It
can be a ‘Buy’ position or a ‘Sell’ position. You are not absolutely sure of
the end result of your trade position but obviously it will be a profit or
loss. You are looking at the chart and price is moving in a certain predominant
direction. Whether you have done pre-studies of the market or you haven’t, you
want to take a position on the market from your chart. Let us stop at this point
and zoom into two dominant aspects of your mind: The logic or technical aspect
and the emotional aspect.
The logic aspect of a trader’s mind
This is the capability of your mind to
make decisions on probabilities present at hand. Your mind weighs the situation
against all viable options and solutions and makes a judgment on the right
direction to take. A sober decision is mainly attributed to the logical mind.
However, the process of making a decision in mind will always be inspired by
traces of emotions hence we need zoom into the emotional aspect of the mind.
The emotional aspect of a trader’s mind
Emotions are an integral part of the
decision-making process in mind. As a trader, any expression by price on chart
generates a wide range of impressions which trigger emotions in your mind.
These emotions can be profiled in five stages starting from the first in
occurrence to the last one: Excitement, Greed, Hope and finally Regret.