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Forex Psychology-Controlling Emotions at Forex
Forex Psychology- CONTROLLING YOUR EMOTIONS AT FOREX, You can have huge financial resources, great trading strategies and systems, but if you cannot control your emotions while looking at your charts – you will lose!
The following article was written by one of the members, Dan Low. Dan is a self- improvement & behavioral expert and his resúme is at the end of the article.
Certain negative and positive emotions can cause havoc in our trading. Negative emotions like anxiety and fear can lower immunity systems, expose us to health hazards, lead to muddled thinking, but how can positive emotions cause havoc?
Remember the times you felt elated and thought nothing could stop you and through over-confidence, you started doubling your stakes? Well, that can cause havoc when you run into a series of losses and begin doubting your strategies or yourself. You may even panic when incurring heavy losses suddenly.
So what do we do to control emotions?
One effective way: avoid looking at your charts too often once you entered your trades. Since we are in a subconscious state in front of our computers, emotions are likely to swing up and down at what we see.
How many times have we suffered through the day only to end up winning! Was it worth the anxiety and stress inbetween? It is time and energy lost while we indulge in the emotional see-sawing. It is OK only if we are masochistic and relish in self-inflicted pain!
As you understand, emotions are powerful resources that drive you either up or down. They drive you up when you find yourself elated. They drive you down when you are
depressed or discouraged.
Whether we are driven up or down is a matter of random triggering of data or perception in the subconscious mind. In the subconscious mind are spontaneous thoughts of the past and the future.
If you regret having lost yesterday you are dwelling in the past. The past is gone and is now a passive "illusion" having no correlation with the present. It is just a thought or a series of random thoughts that can trigger regrets, discouragement or discontent.
If you worry about tomorrow you are projecting into the future which is also an illusion, as no one knows for certain if he or she would live to see another day. Hence, thoughts of the past and the future are just passive illusions. However, not all illusions are negative.
If you had a series of wins yesterday your passive illusions could influence your conduct today, making you more confident or content. But what if you had lost? How would you deal with a negative past situation which can be harmful to your trading today?
Let's imagine that if you physically turn your head to the left you would be turning to past or future thoughts. If you turn your head to the right you would be turning to the present – here and now. You can turn your head to the left as long as you are focused on past or future positive data or experiences. But the second you get hit with negative emotions or feelings you should turn your head to the right – be here and now! And leave the subconscious world of illusions.
You are here and now when you focus intensely on one or two objects around you. You can consciously turn your thoughts to what you have now. This very moment you have time. You have energy. With these two precious resources you can create fresh opportunities, plan new trades.
No matter what happened in the past you put your counter back to zero and set new strategies in action. Of course this would mean turning your head again to the left, but you would then have greater control as your thoughts towards the future are focused and not random.
This left/right head turning exercise is one way to control your emotions at Forex. By shifting and focusing on the moment you are also mastering illusion. As mentioned earlier, all our thoughts of the past and of the future are nothing but illusions.
To understand this better here are two examples of past or passive illusions.
A man was locked in by error in a cold storage room. Believing himself to be a prisoner of the cold, this man instantly felt its deadly effects – he froze up and became paralyzed.
During his agony, he managed to find enough strength to write his impressions on the wall with a piece of chalk. When his body was discovered the next morning, it showed all the signs of a man frozen to death.
This tragic accident turned out to be extraordinary when it was discovered that the electric generator of the storage room was out-of-order, and that therefore the man should not have died from cold. Yet, he killed himself... by the sheer force of his conviction. Or illusion!
Second example: John got fired on Monday. But last Friday (3 days ago), the president of a rival company had signed with a recruiter to hire John with a 50% increase in salary!
Unfortunately, the recruiter fell ill over the weekend, and John will not be given the good news till a week later. Imagine how John is feeling today, tomorrow, and the day after. He already feels bad, his productivity drops, and he has a despondent expression all day long.
John, like the man who froze himself to death, is suffering from an illusion, an illusion that has nothing to do with reality. That is, he has a job offer in the works far superior to what he is presently earning. He should have a cheerful expression! But John has fallen victim to his own illusion, just like the man who killed himself in the storage room.
Passive illusions are all the past experiences recorded in our subconscious. If we think we can't do anything or believe we can, we are dwelling within our passive illusions, as we are reacting subjectively to past experiences. Hence, we could have positive or negative passive illusions – depending on our experiences.
Whenever we are in the process of doing something, like changing our behavior, or simply trying something new – we are in our active illusions. Once we have acquired these experiences – positive or negative – they form our body of passive illusions. You can therefore create whatever active illusion you want – and test it.
In other words, you are the producer, director, and actor of your own life. Whichever active illusion you create and put into action will be your reality, because you will be mentally and physically living it. By mastering illusion you not only control negative emotions but pick yourself up each time you lose at Forex. You stay cheerful, knowing that you have time and energy to create new opportunities and play again.
Important factors that help control emotions while you trade are your ability to:
put your counter back to zero by turning your head from left to right
not look at charts too often once you entered your trades
not be greedy and double your stakes through over-confidence
accept losses as part of the game
not get into situations where you are pressured for results
stick to your plans and strategies.
All these could be made easier if we can also be patient and disciplined. However, these two key factors are often absent in traders. You may want to read the article on "How To Develop Discipline & Patience In Forex".
Lastly, we need to know what types of emotions are common. The Diagnostic and Statistical Manual of the American Psychiatric Association lists four major emotions which give people the most trouble: anxiety, fear, anger and depression.
These are often triggered by the Gang of Four (G4). The four most dominant subconscious thoughts roaming the back alleys of our minds while we trade: You want / You can't / What's going to happen / You're going to lose.
As we all know positive emotions such as joy and enthusiasm are to be encouraged, but emotions like anxiety, fear, anger and depression are counter-productive and need to be
contained by understanding how they are triggered.
Take anger for instance. If you lose a trade and feel revengeful and seek to take back what you lost by overtrading, your emotional level spikes up immediately. This could worsen into anxiety and depression if you lose again, and again. The G4 is great at dumping us in hell!
What you need is a DDD pill.
DDD stands for Desireless Diet Day, a psychological pill that stops our negative emotions and puts us in a positive thinking mode. You simply cut down on desires you can't immediately fulfill, like wanting to win, hoping the market would go your direction. And many other desires outside trading. A pill a day makes you happy and gay!
So, just focus on what you have now. As long as you can continue to trade you will be in a You want / You can mode. This way, you will be less likely to be attacked by the Gang of Four.
You will feel good each time because you are focusing on what you have – not on what you would like to have: more money!
This means managing paradox. Your goal may be to make money but to do so you need to completely forget about it, and simply enjoy the process: planning the trade and trading the plan – with patience and discipline – and no emotion!
__________________________________________________ ________________________
Dan Low, a self-improvement and behavioral expert at SelfGrowth.com, is also a corporate trainer. He spent more than 25 years helping individuals control negative emotions and life situations through Eastern / Western behavioral modification techniques and is the author of «Maximize Your Potential with Powerful Tools... And No Stress».
Discover how and download your free PDF copy at: Maximize Your Potential With Powerful Tools
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Originally Posted by marc walton
