As hundreds and thousands of articles have been written on the
subject of trading the markets, and with the emergence of new financial
instruments every day, I feel compelled to put together a dissertation
on the most important element of trading, the emotional effect.
Before detailing the key elements, I will offer to you the
thoughts of two prominent individuals. They do not need any
introduction, as their work is known and appreciated all over the world.
I am sure you will love their insight into the human psyche.
"When dealing with people, remember you are not dealing with
creatures of logic but creatures of emotion". Dale Carnegie (1888-1955)
"Let's not forget that the little emotions are the great
captains of our lives and we obey them without realizing it". Vincent
Van Gogh (1853-1890)
In a world apparently dominated by logic, it is very interesting
to find such "heretic" ideas. There is nothing more debilitating than
the thought of us acting not on our heavily trained conscious, but
rather on the unknown subconscious impulses.
I would like to add just one more fact to my presentation, in
order for you to fully grasp the importance of this new approach to
trading and in general to any business activity.
The Institute for Health and Human Potential, with offices in
U.S.A., Canada and Australia is a research and learning organization
that uses Emotional Intelligence to leverage performance and leadership.
Fortune 500 companies, the world's top business schools, professional
athletes and Olympic medallists seek their expertise.
According to their studies, "Research tracking over 160 high
performing individuals in a variety of industries and job levels
revealed that emotional quotient was two times more important in
contributing to excellence than intellect and expertise alone"
Shocking? Not at all. It is our way to act on impulse, without questioning the triggers. .
It is well known already that the two emotions dominating
trading are GREED and FEAR. What is less grasped is the extent to which
these emotions influence our decisions.
While amateur traders are greedy when they lose and fearful when
they win, professional operators have an exactly opposite attitude,
being fearful when losing and greedy when winning.
While simple psychological training could help you discipline
your impulse reactions, it is the experience you get "in the ring" that
makes you understand how to play with these primal emotions.
We all hate to lose, not necessarily money. The sentiment is
very powerful. ALL professional operators are well versed in dealing
with it day in and day out. Although they have been through tense
moments due to financial losses, they have learned the most important
rule in trading the markets: losses are the COST OF DOING BUSINESS. They
have a high emotional management procedure and are trained to implement
it no matter how hard their "ego" may suffer.
This is easier said than done, as emotions kick in and all theory crash and burn together with any trading plan.
Here you have some easy steps to help you start taming your emotional horses.
— What you see is NOT what you get, as opposed to what you have
been taught all your life. The way you act is just a consequence of
years and years of education and interaction with others and not your
genuine attitude. You are the product of an outside education, not
necessarily positive.
— In the long run, your Forex business is just PART of your
whole life, together with your family, friends, hobbies, long-term
projects and various other activities. I personally use a very powerful
"mantra" when in pain following a loss. LIVE TO FIGHT ANOTHER DAY!
— Never lose sight of the general picture. That is your primary
goal. For a professional Forex operator, the primary goal is the
PROTECTION of his or her trading capital. Keep a trading journal and
learn from your mistakes.
— If you want to get a pretty accurate picture of your trading
prospects, take a look at your daily emotional decisions. Most of the
time, you will repeat all emotional behavior in your professional life.
If you take your time to sit back and observe your daily
routines, the picture will emerge with greater clarity, helping you
foresee hurdles along your trading career. Do you have a swinging mood?
Do you change your mind very often? Are you capable of keeping a
commitment? Do you lose your temper easily? Are you on the "half-full
glass" or "half-empty glass" side of life?
These traits will not change just because you start trading.
That is why you have to be very careful with your expectations. Base
them both on your assets as well as liabilities, in order to obtain an
accurate picture.
That is just the beginning, but a very resourceful one on a journey few of us have started yet.
I have seen traders taking NLP (Neuro-Linguistic Programming)
lessons, practicing the Tai-Chi art or simply meditating. They try to
get in touch with unseen forces at work deep inside, vectors of
influence that rule our inner world.
The way to succeed in life has infinite variations but one
common start, superbly crystallized in the following aphorism, inscribed
in golden letters at the entrance to the Temple Of Apollo at Delphi and
attributed to Socrates, among several other ancient Greek philosophers:
NOSCE TE IPSUM,(Know yourself).
The magic of success is within our grasp. We just need to find the wand!
by Bogdan Vasile
source :http://www.earnforex.com/articles/your-forex-trading-potential-can-be-predicted-by-looking-at-your-daily-emotional-behavior
