When you are learning forex trading, you have certainly learned various financial theories and risk management to maximize profit potential. However, outside of these financial theories, other factors can increase your risk of trading.
These factors are emotional factors that you might feel every day. To avoid losses due to these factors, you can limit your trading activities while experiencing the following things.
Don’t trade when you’re in these following conditions:
Just losing
A trader who has just experienced losses, especially in large numbers, would want the lost money to be returned as soon as possible. Unfortunately, opening a trading position immediately after experiencing a loss increases your risk of loss.
Unconsciously, you will tend to make bad trading decisions due to the desire to avenge your losses immediately. You will ignore trading signals and analytical results that emerge, so the potential risk will be even greater. According to The Balance, as a rule, never let a bad day cost you more than you make on an average profitable day.
Tired
When you are tired, your analytical skills will decrease. It will certainly affect your ability to estimate the direction of price movements. To reduce the risk of loss, don’t trade if you are tired.
Just getting big profits
Not only big losses that can make you rash in making decisions. You should also avoid trading as soon as you make a big profit.
This is due to the feeling of euphoria that you feel tends to make you feel too confident and make inappropriate decisions in trading. To avoid this, stop trading for a moment and manage your finances. It is strongly recommended not to take advantage of all the profits you get to open a new trading position that is bigger at once.
Sad or agitated
Emotion is the biggest opponent of logic. Thus, you should avoid trading when you feel strong emotions, like sad or anxious. Therefore, a strong emotional drive will make it difficult for you to do a good analysis. Without sufficient analysis, your trading risk will increase.
Read more: Improve Your Trading Skills with Successful Trading Mindsets
