“The herding mentality goes on a lot in the (Forex) market.” – Dr. Jason Gospodarek on the psychology of trading
Trade Like a Professional
The proper psychology is very important. You want to avoid the greed and the fear in the Forex marketplace. This is important to become a consistent, profitable and long-term trader in the market.
Think of a traffic jam, traffic is barely moving and you’re wondering to yourself what is causing this. You wait and move slowly for miles only to discover there was a fender-bender. Traffic isn’t even blocked but everybody that drives by is taking their five seconds to check it out. They drive slow and look, needlessly slowing traffic.
The Herding Mentality
That’s the herding mentality. If the markets are relatively quiet for a few hours and then some rumors begin in Europe about quantitative easing. Those rumors start to show up in people’s news feeds, they’re tweeted, they show up in forums and they become an over-exaggeration in the market. The Euro may strengthen or weaken based on that topic because there is nothing else going on in the market and it really is not that big of a deal.
“When you watch the price move, it’s more about what people are buying and selling and what’s going on in their minds than it is about what was in the chart.” – Dr. Jason Gospodarek
Be aware of this. When you watch the charts go up and down, take note that these are people who are buying and selling based upon chart patterns, based upon the herding mentality of people, about fear and about greed.
Take Your Forex Trading to the Next Level
“How much risk can you tolerate before you become uncomfortable?” – Dr. Jason Gospodarek
Some traders risk .05%, 1%, 5% on a given trade. Some will risk whatever it takes so they do not lose. Your trading should be the same whether you are in a profit or you are in a loss, you’re having a good day or a bad day, a good week or a bad week. It’s not easy to do and we go back to psychology. You need to be comfortable in that trade.
To hear Dr. Jason’s personal tips and strategies he uses in his trading, download and listen to Take Your Forex Trading to the Next Level.