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Emotion in Forex trading

kieran (snapdragon1970)
Nov 29 2018 at 18:32
1946 posts
Paquito posted:
I have been trading a while and met a pro trader (for a bank) the other day. It wasn't a pleasant experience. He knew so much about markets, economics etc and it made me feel pretty small and ignorant. He seemed to think that without years of knowledge of economics and a team of people analysing the fundamentals it is impossible to make money trading. He thought that all day traders were just gamblers.

Most day traders risk profile would give a pro a heart attack ,its there job to know more than retail ,its all they think about.
"They mistook leverage with genius".
Professional4X
Nov 30 2018 at 10:53
1189 posts
snapdragon1970 posted:
Why is my post linked to your answer, your talking about a completely different subject.

The topic of the discussion is the use of emotions in trading.

You said:

snapdragon1970 posted:
Its not something that is a must have but it sure does help, especially for longer trades.


You provided no other information in your post, nor did you quote anything that you might have been responding to, so it can only be construed that you were talking this subject. To which I responded they have no place in trading.



If it looks too good to be true, it's probably a scam! Let the buyer beware.
Pentz Consulting
ForexScreamer
Nov 30 2018 at 10:54
49 posts
Paquito posted:
I have been trading a while and met a pro trader (for a bank) the other day. It wasn't a pleasant experience. He knew so much about markets, economics etc and it made me feel pretty small and ignorant. He seemed to think that without years of knowledge of economics and a team of people analysing the fundamentals it is impossible to make money trading. He thought that all day traders were just gamblers.

There are professional gamblers that make good money. They understand the odds, what situations give them the greatest advantage. I'm thinking about games like craps, blackjack, poker, where there IS strategy.

Forex is very similar. You use a strategy to put the odds more in your favor. It sounds like the professional was implying day trading is like flipping a coin. No. Even in gambling there are strategies.
kieran (snapdragon1970)
Nov 30 2018 at 12:34
1946 posts
Professional4X posted:
snapdragon1970 posted:
Why is my post linked to your answer, your talking about a completely different subject.

The topic of the discussion is the use of emotions in trading.

You said:

snapdragon1970 posted:
Its not something that is a must have but it sure does help, especially for longer trades.


You provided no other information in your post, nor did you quote anything that you might have been responding to, so it can only be construed that you were talking this subject. To which I responded they have no place in trading.




 I think most people would come to the conclusion that I wasn't talking about emotions but my answer to the question about econ background.
"They mistook leverage with genius".
KzakSerik
Dec 02 2018 at 08:41
10 posts
ForexScreamer posted:
Paquito posted:
I have been trading a while and met a pro trader (for a bank) the other day. It wasn't a pleasant experience. He knew so much about markets, economics etc and it made me feel pretty small and ignorant. He seemed to think that without years of knowledge of economics and a team of people analysing the fundamentals it is impossible to make money trading. He thought that all day traders were just gamblers.

There are professional gamblers that make good money. They understand the odds, what situations give them the greatest advantage. I'm thinking about games like craps, blackjack, poker, where there IS strategy.

Forex is very similar. You use a strategy to put the odds more in your favor. It sounds like the professional was implying day trading is like flipping a coin. No. Even in gambling there are strategies.


Most traders think in terms of individual wins and losses but you are right the focus should be more about probabilities. Trying to wait until the odds are staked in your favour is the best strategy but there can always be losses even in this situation
Allan (Arcferreira)
Dec 02 2018 at 12:24
50 posts
KzakSerik posted:
ForexScreamer posted:
Paquito posted:
I have been trading a while and met a pro trader (for a bank) the other day. It wasn't a pleasant experience. He knew so much about markets, economics etc and it made me feel pretty small and ignorant. He seemed to think that without years of knowledge of economics and a team of people analysing the fundamentals it is impossible to make money trading. He thought that all day traders were just gamblers.

There are professional gamblers that make good money. They understand the odds, what situations give them the greatest advantage. I'm thinking about games like craps, blackjack, poker, where there IS strategy.

Forex is very similar. You use a strategy to put the odds more in your favor. It sounds like the professional was implying day trading is like flipping a coin. No. Even in gambling there are strategies.


Most traders think in terms of individual wins and losses but you are right the focus should be more about probabilities. Trying to wait until the odds are staked in your favour is the best strategy but there can always be losses even in this situation

According to FXCM, 79% of traders lose money in CFD and Forex market. Why?
Because trading is about odds. And odds are math, not emotions.

You see a support line in EURUSD at 1.121, and a resistance at 1.143. Prices were at 1.140. You think, prices are going up, let me buy this stuff. Your emotion took control and you saw only the possible profit in a breakout. A pro trader would take the risk (30 pips) to sell this one. After this sell, he would close 50% of his trade at 1.136 (another support), and keep the rest of the trade with zero risk. Near 1.121 he would buy this stuff. If prices brake 1.121, he would sell the breakout.

Remember, 70% of time, prices keep ranging. Trade brakes or bounces. Mostly bounces than brakes. If your emotion, fundamentals and news tell you sell, look for a good support with tight SL to buy. Small SL means that a small bounce gives you 2:1 or 3:1 reward/risk.
In the long run, you will realize that math is in your favour

It is not easy to trade like this. Because your winning ratio will be near 30%, if you use 3:1 reward/risk. But after 100 trades risking 1% of account, you will get 20% return.
Trade safely... Remember, a high Drawdown means a high risk!
kieran (snapdragon1970)
Dec 03 2018 at 13:31
1946 posts
We saw what happened last week when Powell spoke, investors sold USD on fear ,emotions are always in the market , sometimes this can work against us and sometimes in our favor , support lines are subjective ,its what happens at that level is important , math's does work sometimes but not all the time because markets are irrational at times with levy flight.Good money management and risk reward as you have mentioned above are corner stones of professional trading.

I read somewhere that most retail traders get there trades right most of the time it was the money management that killed there accounts, it might have been FXCM report a few years ago.
"They mistook leverage with genius".
Amancio
Dec 04 2018 at 10:59
10 posts
What does that really mean when people say 'Good money management and risk reward as you have mentioned above are corner stones of professional trading.' - surely when to enter and exit a trade is more important than risk management and picking a Lot size
vontogr (togr)
Dec 04 2018 at 13:14
4862 posts
Emotions in forex make it adrenaline ride, all the profit and losses, all the waiting for the pair to move up or down.
But solid trading should be emotionless and executed exactly as planned. That's why I prefer algo trading and as you can see from my profile it beats manual trading https://www.myfxbook.com/members/togr
growthera
Dec 04 2018 at 13:45
86 posts
Dear Amancio, let me nuance that a bit. Entry and exit are indeed important, but many accounts go bust having that right. It is important but by far not enough. Without using a disciplined proven and tested approach to risk (including lot sizing, win/loss ratio etc..) no one will succeed for many years in forex. This is the only thing I know for sure besides death and taxes.
vontogr (togr)
Dec 04 2018 at 13:57
4862 posts
Arcferreira posted:
KzakSerik posted:
ForexScreamer posted:
Paquito posted:
I have been trading a while and met a pro trader (for a bank) the other day. It wasn't a pleasant experience. He knew so much about markets, economics etc and it made me feel pretty small and ignorant. He seemed to think that without years of knowledge of economics and a team of people analysing the fundamentals it is impossible to make money trading. He thought that all day traders were just gamblers.

There are professional gamblers that make good money. They understand the odds, what situations give them the greatest advantage. I'm thinking about games like craps, blackjack, poker, where there IS strategy.

Forex is very similar. You use a strategy to put the odds more in your favor. It sounds like the professional was implying day trading is like flipping a coin. No. Even in gambling there are strategies.


Most traders think in terms of individual wins and losses but you are right the focus should be more about probabilities. Trying to wait until the odds are staked in your favour is the best strategy but there can always be losses even in this situation

According to FXCM, 79% of traders lose money in CFD and Forex market. Why?
Because trading is about odds. And odds are math, not emotions.

You see a support line in EURUSD at 1.121, and a resistance at 1.143. Prices were at 1.140. You think, prices are going up, let me buy this stuff. Your emotion took control and you saw only the possible profit in a breakout. A pro trader would take the risk (30 pips) to sell this one. After this sell, he would close 50% of his trade at 1.136 (another support), and keep the rest of the trade with zero risk. Near 1.121 he would buy this stuff. If prices brake 1.121, he would sell the breakout.

Remember, 70% of time, prices keep ranging. Trade brakes or bounces. Mostly bounces than brakes. If your emotion, fundamentals and news tell you sell, look for a good support with tight SL to buy. Small SL means that a small bounce gives you 2:1 or 3:1 reward/risk.
In the long run, you will realize that math is in your favour

It is not easy to trade like this. Because your winning ratio will be near 30%, if you use 3:1 reward/risk. But after 100 trades risking 1% of account, you will get 20% return.

It is like in roulette, the chance to win or lose is not 50:50
As you have to always pay spread and commissions.
So even with strategy which have 50% win rate and stop loss equal to profit you will lose.
So you need better strategy to make profit.
To make good profit you need excellent strategy.

SaltaLargo
Dec 10 2018 at 13:26
11 posts
Yes, I thought that a 1 pip spread wouldn't make much different but even with 50% strategy the spread will really eat into your profits.
vontogr (togr)
Dec 10 2018 at 15:10
4862 posts
Anyway regarding emotion in trading
I am short EURUSD on one account
and long on another
Each account runs different EA.
So should I hope EURUSD to go up or down?
:)
No space for emotions just exact pips calculations.
JanSzyman
Dec 11 2018 at 14:49
4 posts
Currency markets don't forgive emotionality.
You always need to be like a cold-blooded machine and forget about emotions.
GalacticFx (Kelvin012)
Dec 12 2018 at 07:40
1 posts
I have traded with emotions at times. I made losses in most of these trades.
Visualise - Execute - Control
Pacifico
Dec 12 2018 at 11:08
10 posts
JanSzyman posted:
Currency markets don't forgive emotionality.
You always need to be like a cold-blooded machine and forget about emotions.

Trading has no place for emotions. It is all probabilities so some will win and others lose. Once that is accepted then you can become a cold-blooded machine
PinguPeter
Dec 13 2018 at 11:16
11 posts
That is difficult to do in practice though. Humans have emotions so to become a machine is tough even for the best of us
Irins EA (irinsexpert)
Dec 13 2018 at 14:52
6 posts
Emotional situations depend on the person it self. The really important thing is to know your self better, either you are trained so well or not for trading.
nick3232
Dec 14 2018 at 08:26
162 posts
try to banish any emotions ,made a few big mistakes in the past,now controlling it better ,but you must know your trading system perfectly in order to to know the max dd that it can takes without disturbing you
Professional4X
Dec 14 2018 at 08:37
1189 posts
irinsexpert posted:
Emotional situations depend on the person it self. The really important thing is to know your self better, either you are trained so well or not for trading.

Emotions have NO PLACE in trading.
If it looks too good to be true, it's probably a scam! Let the buyer beware.
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