Forex Market Psychology

Psychology of human behavior is a key to understanding what is going on in financial markets. All usual, everyday feelings and desires develop in strict market battles. Fear, avarice, hope and other feelings which are so characteristic for us influence a lot upon the trader’s conduct in fast rhythm of exchange trade. Weak, self-assured, greedy and slow people are doomed to become market victims. The knowledge of your own skills and preferences, negative and positive qualities can help to avoid wasting of money. 

Greediness

The motive power which forces us to work at financial markets is greediness. If your greediness is petty you will make few bargains and miss many good moments. In such case it is better to get in other type of business. 

But in case if your greediness knows no bounds you will try to make as more as possible bargains and jeopardize yourself in vain. You’d better try to play casino. 

The result of greediness effect is a motivation to making bargains. It is possible to point out 2 types of motivation: 

- Reasonable motivation. A young trader usually has it till his first entry into market and in the work of professional trader. 

- Unreasonable motivation. It expresses in the player’s excitement and almost every trader has it, but some traders are able to control their excitement and the others are emotion slaves and are doomed to failure. 

It is possible to elicit if you play under the influence of greedy excitement or not with the help of some signals. 

- If the trader asks others: “What do you think about this?” 

- If he tells others about his open positions. 

- If the trader has no work plan before making bargains. 

These facts tell us that a person works under the influence of excitement, not the reason. 

Hope and expectations 

The next factor which can move a trader to making bargains is hope for getting profit. Of course the sense of every work is to get money. But, if the hope prevails over interest you risk making an overrating of your skills and possibilities during situation analysis. Sometimes great hope reduces traders-beginners to wasting money. 

Hope determines the trader’s conduct in two main situations: 

- At the time of entry to the market. Only hope for getting profit can make a person to do some action on financial market. 

- At the moment of getting damages, when there is a hope for changing situation for the better. 

Fear 

Fear appears when you get damages. Some people are petrified by fear and they can’t stop and lose everything. The others fear makes to move and make sometimes incompatible bargains such actions usually quicken ruin too. 

At the moment of crisis it is better to do something, then sit on your hands and watch your dreams about future disappearing. But at the same time don’t act like a nervous choleric person, it is better to act according to plan and don’t panic. Such steps will help to avoid great damage for you. 

About the author: 

Sarah Hall is a distinguished writer. She is crazy about collecting coins. Ask her about custom essay on: Google+.