Friday, January 2, 2009

Emotions like fear and euphoria in currency trading

Emotional currency trading is detrimental to the capital , the life blood of trading.However emphatically it is stated that emotional trading will take away all your capital, it is very difficult to keep away emotions from currency trading.Once you have a position in the market you will experience this swings of emotions.Fear and Greed are the two basic emotions that controls the market.When the market is adversely moving the fear creeps in and when the market moves favourably you will be engrossed by greed.The effect of fear is it drives out knowledge, it leads to myopia, it immobilises us and leads to inaction.The mirrror image of fear is euphoria, the feeling that we can do no wrong.As much as fear, euphoria will ultimately lead to trading failure.Since currency trading is a game of probabilities, we will experience times when we can do no wrong.But these times will come to an end.The trader caught in the euphoric trance will not recognise this and taking on risks too many will evenmtually get caught in a heavy loss.If the trader is lucky , the loss will not be a catastrophic loss.Fear and euphoria can catch not only newbies but also the most experienced and successful trader.The emotinal trading can be eliminted only by having an approach (Method) to the currency markets and keeping commitment and discipline to your approach all the time.Good trading to my readers. Muraleedharan

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