Having expectations can be a huge influence in one's mood, emotions, and actual experience. For instance, looking forward to a good outcome makes one excited but waiting for a bad outcome leads to anxiety.
Trading psychologists often emphasize the importance of setting realistic expectations in order to have a healthier trading mindset. When our expectations are too high, we could simply be guilty for the disappointment that is likely to follow. Conversely, when our expectations are too low, we are not making challenging ourselves hard enough.
The first irrational trading expectation is that working hard means taking on more trades. This kind of assumption fails to take note of the quality of trades into account. It would also make one prone to overtrading because it says that a larger number of trades could increase the probability of ending profitable.
The second irrational trading expectation is that a good day means it is a winning day. However, the nature of forex trading is that there will always be losing days and even losing streaks. If that's the case, one might wind up feeling disappointed all the time even if the trade plan has been followed. A losing trade could've taken place because of an unexpected shift in market sentiment or surprise market events. One must remember that proper analysis and discipline to stick to the trade plan, even if the trade winded up negative, could still qualify as a good trade.
Lastly, thinking that successful traders are the ones who are able to make a living out of trading is also a faulty expectation. It is hard to achieve that kind of level in trading because it demands a lot of skill and a very large capital.
Take note of these assumptions and try to avoid them as much as possible so you can stay level-headed and on top of your game.
Trading psychologists often emphasize the importance of setting realistic expectations in order to have a healthier trading mindset. When our expectations are too high, we could simply be guilty for the disappointment that is likely to follow. Conversely, when our expectations are too low, we are not making challenging ourselves hard enough.
The first irrational trading expectation is that working hard means taking on more trades. This kind of assumption fails to take note of the quality of trades into account. It would also make one prone to overtrading because it says that a larger number of trades could increase the probability of ending profitable.
The second irrational trading expectation is that a good day means it is a winning day. However, the nature of forex trading is that there will always be losing days and even losing streaks. If that's the case, one might wind up feeling disappointed all the time even if the trade plan has been followed. A losing trade could've taken place because of an unexpected shift in market sentiment or surprise market events. One must remember that proper analysis and discipline to stick to the trade plan, even if the trade winded up negative, could still qualify as a good trade.
Lastly, thinking that successful traders are the ones who are able to make a living out of trading is also a faulty expectation. It is hard to achieve that kind of level in trading because it demands a lot of skill and a very large capital.
Take note of these assumptions and try to avoid them as much as possible so you can stay level-headed and on top of your game.
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