Forex Trading: Overcoming Inner Roadblocks

The psychological sphere is dominant in Forex Trading. Psychology, understood as a discourse on emotions and cognitive processes, plays a crucial role and affects profit prospects. This is part of every trader's experience, no matter what the collective imagination says, which instead associates the trader, and in particular the winning trader, with an aura of rationality and perennial coldness that cannot be undermined. Therefore, one must inevitably deal with psychology and specifically with one's inner world. Not so much to repress emotions, which is simply impossible and perhaps detrimental, but to manage them. Looking inward means, first of all, verifying the presence of certain emotional-psychological factors that can compromise hopes of success. And, once their presence has been verified, neutralizing them, mitigating their effects. Traderpedia has naturally and simply addressed these internal factors. Here is a summary.

Emotional fatigue

Emotional fatigue is one of the most common disorders in Forex Trading. Some traders, in reality, are more exposed than others. For example, intraday and especially scalpers. In a sense, the probability of emotional fatigue onset is correlated with the number of positions opened and closed within a given time frame. In a nutshell, the more you trade, the more you risk falling into the trap of emotional fatigue. Moreover, this disorder is among the most recognizable of all, so in a sense, it is also easy to combat. The symptoms are clear, and so are the causes. What is emotional fatigue? Simply put, it is the feeling of mental, or rather emotional, tiredness that affects those who trade. Every trade generates a certain amount of stress, and a series of emotions are correlated with that stress: generally anxiety, but also adrenaline, enthusiasm. Even fear. From this perspective, the trader's mind acts like a muscle. If overstimulated, it exhausts its energy. Because, on this aspect, it is necessary to be clear and concise, doing Forex Trading is a tiring activity. Of course, the fatigue is not at all physical; in fact, it induces a certain sedentary lifestyle. It's a mental, emotional fatigue. The symptoms of emotional fatigue are very recognizable. Simply put, one goes from a "normal" phase of feeling to an "acute" phase. Emotions are amplified, stress increases. Specifically, the mild and even positive anxiety experienced during trading becomes radical anxiety. The fear of losing becomes panic (or almost). The sadness resulting from a defeat becomes despair. In this phase, the risk of acting in the opposite direction to what is necessary is high. For example, if one is afraid of losing, one might tend to keep the position open even if it's losing, hoping that, perhaps against all evidence, the wind might radically change. How is emotional fatigue resolved? There are many remedies, ranging from mindfitness to psychological training. Very simply, it is enough to unplug for a while. This means missing opportunities, stopping earning, but it is certainly an investment in the future. The risk, if anything, is falling into another trap, that of withdrawal (we will discuss this in the next paragraph).

Trading addiction

We said that one of the solutions to emotional fatigue is to unplug, take a long break. It is indeed an effective solution... Almost always. In one case, it can even be detrimental, as it produces discomforts that recall the concept - perhaps a bit overused - of withdrawal. Exactly, the risk is falling into withdrawal. This happens when, in addition to emotional fatigue, one suffers from another disorder, which at first glance seems contradictory: trading addiction or, to put it better (in more acute cases), dependence. Emotional fatigue and addiction can be concomitant, in trading as in everyday life. Those who smoke often have had enough of smoking. The same goes for those who drink, for those who compulsively play video games. Addiction is accompanied by emotional, and in some cases physical, fatigue in maintaining the vice. Addiction is also quite recognizable, although in cases where one is winning, or going through a period of abundance, the symptoms may be more hidden. Very simply, those who are addicted or suffering from a real addiction struggle to detach themselves from the pc. Mind you: the line between professionalism/workaholism and addiction, at least from the outside, is blurred. Of course, if you objectively feel the difficulty in unplugging, even to go to rest, the disorder is there in full. Addiction is always negative, even when appreciating results in monetary terms. It is not necessarily so from the point of view of trading, but rather of one's social life. The risk of living for trading in this case is rather high. And then, in the long run, the disorder degenerates into a kind of burnout that can compromise past and future profits. Healing from addiction is not very difficult. It is, however, difficult to get out of it when it has degenerated into a real addiction. From this point of view, the techniques do not differ much from those used to resolve traditional addictions: gradual abandonment of the activity, inclusion of alternative moments to the activity itself in the day, recovery of the social and emotional fabric. In short, there is a good deal of work to be done.

Trading stress

Stress, rather than a real disorder, is a physiological response to a need caused by the external environment. In reality, it has a precise purpose: to force the body to produce sufficient performance to carry out a complicated activity or solve a problem. Therefore, in a sense, it is beneficial. It is also beneficial in Forex Trading, which in terms of complexity and ability to pose problems, or simple situations to be solved, is second to none. This is the "beautiful" face of the coin. There is the "ugly" face, the one that, despite being an internal element, can compromise hopes of success. So there is good stress and bad stress. Very simply, good stress is the one that infuses energy, that puts you on alert. Bad stress is the one that produces physical problems (a phenomenon called somatization) on one hand and on the other hand, instead of stimulating action, it inhibits it. Or, instead of inhibiting it, it directs it on the wrong, not quite rational tracks. All traders suffer from stress, also because they all operate under tension. It's the side effect of the market, of all markets and not just Forex, to put tension. However, bad stress can be profoundly harmful. Eliminating stress is not possible, nor desirable. However, it is possible to bring it back to its normal form. The solution, from this point of view, is not readily available because it requires doing some work on oneself. In short, it is necessary to convince oneself of the goodness of some assumptions. Defeat is part of trading. It is the most difficult concept to internalize. Yet it is the most truthful. Defeat is actually a frequent occurrence, even for the most winning traders. The sooner one associates the concept of defeat with the concept of normality, the sooner one can heal from "bad" stress. No loss is irreparable. Perhaps this is not always and in any case true. Or, to put it better, it is true only if the trader behaves in a rational manner, thus following a decent money management plan. If prudence is adopted in the use of money, it is true: all defeats can be compensated by a victory (by definition). Losing does not mean failing. It is the most important thought. One of the causes of stress is tying self-esteem to victory. Given the unpredictability and risks taken in Forex Trading, it is one of the worst identification processes one can make. So, take a less drastic approach from this point of view. In general, as can be very easily inferred, these thoughts are aimed at emptying trading of the excessive importance that stressed individuals confer on it.

Trading anxiety

Finally, there is anxiety. Everyone, traders and non-traders alike, sooner or later have experienced anxiety. Unlike stress, anxiety is never good. In a sense, it even represents its pathological degeneration. If stress, even bad stress, is a temporary condition, anxiety is a perennial condition. Anxiety is fear mixed with stress. It's paralysis. Nevertheless, it can have devastating effects on the body, in a spiral of somatization that is difficult to break. Anxiety in trading manifests as a never-ending terror of losing money, also because the trader is pushed to trade despite everything, because he senses that, by remaining still, he would lose opportunities and therefore money. Anxiety, the serious kind, is a pathological disorder and cannot be resolved by making some provisions. Often specialized support is needed. However, its effects can be limited with some practical measures. Reduce exposure. Investing less, not in terms of frequency but in terms of capital, could be a good temporary solution. In this way, the trader pursues his activity, and does not experience the fear of losing the possibility, and at the same time, by minimizing the risk, he reduces the extent of the much-feared defeat. Betting everything on the surplus. This method, simple and almost trivial to tell the truth, consists not only in reducing exposure, but in investing only the profits previously acquired. In this way, a perception of "non-loss" is produced, even in the case of a losing trade. Another solution could be to change money management, favoring a more restrictive approach. However, this is a solution to be taken with a grain of salt, as the anxious individual is tendentially averse to change.

How internal factors are connected to each other

To better understand how these factor-disturbances can compromise one's Forex Trading activity, it is good to take stock of the relationship between them. Often, in fact, one is the cause of the other, and they all appear together (or almost). Generally, it all starts with emotional fatigue. It generates, as we have already specified, an amplification of emotions. At this point, here comes the "bad" stress. Bad stress, if not treated or at least kept at bay, very easily turns into anxiety. As for addiction, it can be considered as a second starting point. The one that, placing itself in parallel with fatigue, or even as an obstacle to its resolution, is able to generate stress and anxiety. In short, the psychological sphere must be taken into consideration, also because it is very fragile. All this reveals a small great truth: Forex Trading, even before being technical, is a human fact.