Euphoria and panic as demons of trading psychology
Panic and euphoria are known to be some of the many demons of trading psychology identified by some traders at cfd trading South Africa. And thus, it is important that you know more about them:
It is believed to be the queen of the forex demons. It is a creature which promises wealth which is unlimited and ends up delivering destitution and misery. Euphoria works hard in ensuring that wherever you look, you get to see nothing but prospects which are wonderful for profits that are limitless. It is as if the trader has been blessed somehow with great light, with success being the consequence that is natural of their routine behavior.
Under ordinary circumstances, euphoria has little relevance for majority of traders as most tend to be aware that success in trading in fore is not easy. While great profits in the short term are something that you can get, such gains might be as a result of a period of practice and study during which the false promises of the euphoria are proven several times not to have any meaning.
In such a case of the beginner, who don’t possess such background of hard work as well as study, euphoria might result from several profitable trades, as the trader comes to believe gradually that their understanding of the markets is something which is impeccable, with an analysis which is flawless.
The main thing here is the knowledge of the first condition of having an analysis which is flawless which begins with the assumption that there is no analysis which is flawless. The successful trader or analyst consequently becomes skeptical of the value of the explanations, although not hesitating in acting on them as they base their work on logic only.
The potential of the profits of the next trade which is taken is independent of the profitability of the previous one. With that, there seems to be no sense of trying to get excited about the string of profits as it is possible for the next trade to be profitable or not, depending on your diligence of the market study.
Thus, it might be best to avoid the euphoria by understanding that a string of losses or wins doesn’t impact on the outcome of the next trade which you are going to make.
Panic is known to be the opposite of euphoria, in a situation which is panicky, the trader is able to see nothing but losses happening in the market without a possibility of concluding a trade which is profitable.
It is a strange way of thinking which is unacceptable in the forex market as by definition, someone’s loss is another person’s gain. When you are losing a large sum of cash on a currency trade, there is someone else gaining and making large profits.
Periods of market volatility might cause panic mode, making it a catalyst of the same. A fluctuation in price increases in frequency and depth, with the prediction values going down.