Trading Psychology - Forex Trading Psychology and the right mindset

Forex Trading For Profit

Trading Psychology – develop the right mindset

Trading Psychology
5/5 (4)

Share on...

Forex Trading Psychology

When we take a deeper look at the Forex market, we will find it’s main driver is the “Trading Psychology of Market participants”.

Trading psychology or market psychology is a derivative of human emotions. All market participants are driven by either fear, greed, dreams, and ego.  Human nature tends to follow the crowd and we seem to react in the same way when contracted in certain situations. Human behavioral patterns are re-occurring in all aspects of life and is likewise with trading psychological behaviors.

Market conditions are a derivative of human emotions.

It all, honestly doesn’t matter if you are a small time retail trader or running a multi-billion dollar hedge fund your trading psychology or mindset will be the driver of how you place trades and determine your profitability.

Forex psychology is not purely constraint to your emotions. Mindset, risk appetite, risk management/money management, trading plans, business plans, and even why you trade are all contributing factors of trading psychology.

The trading psychology of fear

Its human nature to always look for ways to increase wealth, this comes from the raw animalistic instinct of survival. This instinct of survival is driven by fear itsself. The fear of “have not” or the “lack of”. This drives us human beings for better more secure ways of living. The reason why we go the school study hard at uni is for a higher paying job and more opportunity to create wealth. We seek wealth creation out of the primal e-motion of fear. This brings us to the fear of not having enough money which then creates the fear of loosing money

Traders are driven by fear with fear.

We as traders risk the money we have, to gain more money. So as traders we have to concur with the fact that we are driven by fear with fear.

The psychology of  Risk

With risk comes reward. This is likewise with “any” business or job. We all have a certain degree of risk no matter what we do in life and we all have a different ability to control risk and/or depending on our risk appetite. Risking to much while trading could lead to or be labeled as gambling.

learn algorithmic trading

The psychology of  Greed

One component that drives the speculative Forex market is greed.  Is greed good? Sometimes yes, it can drive us to exceed our goals and a little bit may be good. But, it can often cloud our judgment. Greed can lead us into being over confident and feeling invincible. Have any of you ever had that feeling of being over confident to then come crashing down when its all lost? Then passing the blame game and calling forex a scam?

The psychology of  Ego

Ego is the driving force behind all our desires it makes us want more and more, and drive us to be on top of the next guy. Human kinds biggest enemy is ego and can often lead us into self destruction or worse the destruction of others. Ego plays a big part in trading psychology and is a big driver of the forex market.


We all have dream of sitting on a beach with a laptop being a million dollar Forex trader but so few will ever get there. Alot of new comers come in every year thinking they’re all that, and believe they will make a million by funding $1000 into an account.

The forex markets are filled with all sorts of dreams.

The problem is most traders are way under funded in comparison to their goal or targets.

The psychology of market participants

All market participants are driven by fear, greed, hope and ego. They all tend to react the same way each time they encounter the same situation.

New participants are surprising ignorant of the way markets have acted in the past. The same mistakes are repeated by each generation of market participants. Even the experienced market participants will tend to repeat their past mistakes over and over. These mistakes are soley caused by their fear, greed, hope or their ego.

All markets are, is simply crowds of people watching prices, interacting with each other and based of their trading decisions. Some are buyers, others sellers., and all have psychological predispositions that influence their decisions.



Why technical analysis reduces psychological impact?

Technical analysts can take advantage of exploiting trends and patterns well into the future needing not to have any impact of trading psychology affecting their trading decisions. Trading becomes purely reliant on reading the charts.

The tendency for people to ‘follow the herd’ is another  factor that technical analysts can take advantage of . The technical analyst has a sound understanding of human nature and psychology. Extreme price volatility, for example, is frequently the result of the impulsiveness, unpredictability and lack of rationality of a crowd.

With technical analysis we disregard all other aspects and only follow routine, machine like actions and being apathetic.

The market psychology can go on about its way how ever it likes but, it wont affect the trading psychology of the individual trader using technical analysis principals and techniques.

Trade Safe! 🙂

forex trading

Share on...

Please rate this

Leave a Comment

Be the First to Comment!

Notify of
Photo and Image Files
Audio and Video Files
Other File Types

Forex Trading For Profit

Forex TFP

A journey of a retail trader. How to trade on the foreign exchange market and make it a lifstyle.

Comodo SSL
  • Facebook logo
  • Twitter logo
  • YouTube logo
  • Linked in logo

We have been voted in the top 100 Forex Sites


Forex Trading

Forex Trading For Profit, a journey of a retail trader. This website has been set up for retail traders to give answers to those seeking the same information I was when I first started trading. Forex Trading For profit endeavours to bring the most informative approch to trading forex, and shows anyone can become a successful trader no matter what your background, with some dedication, study and determination. Trading CFD's and in the foreign exchange market is a high risk investment so please read the disclaimer.

DISCLAIMER: Any advice or information that has been presented on this website and related accounts on social media forums is only general advice and is not intended for you to invest your money solely based on its contents. By viewing the content on this site you agree that it’s for educational purposes only and will not hold the Author responsible for any loss incurred by the content herein and associated online accounts or paraphernalia. Forex Trading for profit nor do the Author('s) operate under an AFSL and any product or advice sold on this site is only bought or taken as an educational product or guide from my collective experience’s and knowledge trading forex. If you invest any money into forex you do solely at your own risk.

HIGH RISK WARNING: Trading CFD’s such as forex and/or on high leverage is a high risk investment and you must make yourself aware of the potential loses you may incur. Forex trading is not suitable for all investors and you have the potential to lose all of your deposited funds or more. Any opinions or analysis of the financial markets on this site is ONLY commentary in nature and does not solicitate investment advice. Please do not invest any money based on the advice given on this site or associated accounts nor invest money that you cannot afford to lose. Past performance of any trading system or method is not indicative of future results.

Privacy policy

What information do we collect?

We collect information from you when you fill out the form. When ordering or registering on our site, as appropriate, you may be asked to enter your: name, e-mail address or phone number. You may, however, visit our site anonymously.

What do we use your information for?
Any of the information we collect from you may be used in one of the following ways:

For contact purposes and conversing requirements between staff and client.

How do we protect your information?
We implement a variety of security measures to maintain the safety of your personal information when you enter, submit, or access your personal information.

Do we use cookies?
We do not use cookies.

Do we disclose any information to outside parties?
We do not sell, trade, or otherwise transfer to outside parties your personally identifiable or business information. This does not include trusted third parties who assist us in operating our website, conducting our business, or servicing you, so long as those parties agree to keep this information confidential. We may also release your information when we believe release is appropriate to comply with the law, enforce our site policies, or protect ours or others rights, property, or safety. However, non-personally identifiable visitor information may be provided to other parties for marketing, advertising, or other uses.

Third party links
Occasionally, at our discretion, we may include or offer third party products or services on our website. These third party sites have separate and independent privacy policies. We therefore have no responsibility or liability for the content and activities of these linked sites. Nonetheless, we seek to protect the integrity of our site and welcome any feedback about these sites.

Childrens Online Privacy Protection Act Compliance
We are in compliance with the requirements of COPPA (Childrens Online Privacy Protection Act), we do not collect any information from anyone under 13 years of age. Our website, products and services are all directed to people who are at least 13 years old or older.

Your Consent
By using our site, you consent to our web site privacy policy.

Changes to our Privacy Policy
If we decide to change our privacy policy, we will post those changes on this page.

Contacting Us
If there are any questions regarding this privacy policy you may contact us using the information below.

Back to top

© 2019 Forex Trading For Profit. · Disclaimer · Privacy policy