For the subject of this week’s article, I thought that I would take the time to explore the thought process behind most trading decisions we make during our FX speculating. As you may already know if you have read previous articles written by myself or my colleagues, we all drive home the importance of formulating and then following a detailed and actionable written trade plan, so as to remove any underlying emotions from the decision making process and thus enforce ongoing discipline in our trading activities. The less the trade becomes about us and more about our rules and plan, the more we have steered ourselves towards achieving success in the markets on a consistent basis. The plan tells us what to do, as opposed to us looking at a chart and guessing what we should do.
Controlling our emotions during our trading is perhaps the toughest obstacle we face in making our goals a reality. Every single time a candle on the charts moves up or down, we can be easily tempted to click the buy or sell button on a whim, without any real reason to be entering at all! In the early stages of my trading education, I remember reading that candlesticks and trend on a price chart are nothing more than simply a representation of people’s emotions when they buy and sell. Rising prices are an illustration of greed in the markets and when prices are falling, we are seeing the picture of fear taking over. Greed causes prices to rally and fear causes them to fall…or so they say. After teaching students worldwide with Online Trading Academy both in the classroom and during the ongoing virtual environment of our online graduate Extended Learning Track program and obviously through my own experiences as a trader for pushing eight years, I have started to look at the emotions of fear and greed in a slightly…
