When you are learning forex trading, you have certainly learned various financial theories and risk management that need to be applied to maximize profit potential. However, outside of these financial theories, there are other factors that can increase your risk in trading.
These factors are emotional factors that you might feel everyday. To avoid losses due to these factors, you can limit your trading activities while experiencing the following things.
A trader who has just suffered losses, especially in large numbers, would want the lost money to be returned as soon as possible. Unfortunately, opening a trading position immediately after experiencing a loss increases your risk of loss.
This is explained in trading psychology, that unconsciously, you will tend to make bad trading decisions due to the desire to immediately avenge your losses. It makes it easier for you to ignore trading signals and analytical results that emerge, so the potential risk will be even greater.
Tired of Activity
When you are tired, your analytical skills will decrease. Of course, this will affect your ability to estimate the direction of price movements. To reduce the risk of loss, avoid trading when you are tired.
Just Getting Big Profits
Not only big losses that can make you rash in making decisions. You should also avoid trading as soon as you make a big profit.
This is caused, the feeling of euphoria that you feel tends to make you feel too confident and make inappropriate decisions in trading. To avoid this, stop trading for a moment and manage your finances. It is strongly recommended not to take advantage of all the profits you get to open a new trading position that is bigger at once.
Sad or agitated
Emotion is the biggest opponent of logic. That way, you should avoid trading when you feel strong emotions like when you are sad or anxious. Therefore, a strong emotional drive will make it difficult for you to do a good analysis. Without sufficient analysis, your risk in trading will increase.