“It’s advisable to know forex markets, inside out”

Taking the right steps into the forex market can be a daunting and unnerving process. The right tools, mindset and psychology must be brought forward to tackle the industry head on

 
Author: Dmitry Gurkovsky, RoboForex
March 13, 2013

Many people already have their own opinion and associative field about currency trading. Many are attracted to trading because it offers a wide range of options for personal development and an excellent opportunity to earn money.

However, despite the fact that there are a lot of different materials providing basic knowledge for a successful start, a very small number of traders become successful ones. Many, regardless of their competence and experience, share the same opinion – perceptual psychology is one of the keys to success. Certainly, no one should ignore such attributes as self-education and acquisition of new knowledge, as investing in yourself is the most profitable project one can be involved in.

Optimising resources
But still, a training process should be treated with a caution. Today there are many different reading materials and technical opportunities for practicing. I think the best way to describe this is to remember the words of Russian generalissimo Alexander Suvorov, who was never defeated during his military career: “No battle can be won in the study, and theory without practice is dead.”

The key route to solid theoretical knowledge is to use a sample account, as it allows a learning trader an excellent chance to appreciate all peculiarities of the trading process, study functional capabilities, analyse how to make right decisions of when to buy, sell or close an order, see the difference between line charts and Japanese candlesticks, and make risk assessments when working with deposits.

Traders often emphasise a very interesting point – the amount of the profits made on demo and real accounts differs immensely. I think it’s a good example that shows how psychology may influence the final result. If we are talking about technological capabilities of demo accounts – which are effectively the same as real ones, but with one great advantage: safety-conscious accounts with no fear to make mistakes enable early-stage traders to make right decisions, without any pressure based on their own analytical abilities and instincts.

Dealing with pressure
This particular ability to switch between the trading schemes and think several moves ahead without any subconscious fear of making a loss is key for gaining high profits. This is exactly why it seems to be very easy to use a demo account, where there is no pressure, but when a trader becomes fully qualified, all can be lost.

To know perceptual psychology is very important. Of course, no one should act without thinking and hope for the best. The Forex market is a field where analytical thinking – together with the ability to control emotions and make a risk assessment – are the most important qualities. There is no such thing as a single psychological pattern, which may help individuals turn $1,000 into $100,000, as success is inside each particular person.

I think any experienced broker will agree that the trading process may involve both simple and advanced techniques, as they have no influence on the results. However, there are several emotional aspects that may prevent a trader from trading efficiently, including as fear of losing money, being wrong, closing an order, and keeping money ‘on the table’. The best way to get rid of these psychological pitfalls is to find out the reasons and neutralise them.

We have to admit that there are no perfect people, and anyone can make a mistake. Those brokers, who are constantly thinking what they do wrong and how not to make a mistake, lose their valuable experience and ability to assess the situation, and consequently, lose their money and profit.

If someone can’t handle this emotional background, an excellent way out is to use different types of automated tools, known as trading robots. Today there are a lot of quality algorithmic products that can perform a specific set of functions. The only factors to be taken into account are the complexity of the software codes developed for a trading robot, and expensive expert services.

In the end, the forex market is one of the most prospective and fastest growing fields of people’s activity. Statistically, a daily turnover can reach $5trn. For trading successfully and efficiently, there should be a balanced and clear approach to the process. A stable mental attitude, quality and structured knowledge, stress resistance, and strategic control of impulsivity are the qualities that will help traders reach the top of financial well being.