When you observe stock market, Forex, commodity and other market charts, you see the trend up,down or flat. Plenty of money could be made if you know what is moving the market. The simple answer of the phenomena; Psychology of the participants/players. Oxford dictionary define the term psychology as:
1.the scientific study of the human mind and its functions, especially those affecting behaviour in a given context.
2. the mental characteristics or attitude of a person.
3. the mental factors governing a situation or activity.
I prefer the definition of No.3 in the context of Forex Market. In Forex market, there are many types of participants. It ranges from Big Boys to small ants(novice retail investors). When Big Boys move, you need to pay attention. It can be fake or real move, if you mental cannot catch the real one, you are in trouble.
Most people easily get distracted when they read news, listen to rumors or even just by simply look at the real time chart. The greed and fear always play in this games, emotions start to control mental. Next, mental will send the flaw signal to the nerve thus you will start to make mistakes. In the end of the day, you lost control of your emotion. The rest is history, you burn your account!
The rules of thumbs say 90-95% players lose money in Forex Market. Do you know that 90-95% money actually transfer from the losing side to winning side. Many people ask me how to make money in Forex.
I always tell them in 3 simple steps. 1. Learn how to lose money first. 2. Learn how to NOT losing money.
3. Learn how to become winner. If you don't know the basic rules of the games, read back my previuos articles. If you think this is not your games, then stay away. I don't want you fall into the 90-95% group.
I gone through a lot of 'experiments' and end up basically emotionless when I listen to the news, look at the charts or even execute the trade in the most volatile environment. I almost take control of the market psychology. I say 'almost' since every trader has imperfection. Sometimes, "trading is not how many mistakes you make, but the matter is how much you can make!"-Hope you get it.
