One problem many traders encounter is staying too long in a profitable position that they don't realize when the tide turns and the downward trend begins. There may be reasons why a trader can overstay in a position until it becomes too late or unprofitable and some of them include:
Failure to have predetermined exit criteria: There are many traders who don't have any developed criteria regarding when to know it is time to leave a certain position. You must have a strategy to determine at what point you are going to leave a position no matter how lucrative it appears to be lest you see the profits you have slip through your fingers again.
Fear that he won't capture all the profits: When you have no established parameters regarding at what point you are going to release a position, you may be overcome by greed and fail to know that you can always leave and enter a trade again especially if you realize that the profitable trend is continuing. Profits in forex trade are made as a result of continued personal research but nor by necessarily selling at a high what you bought at a low price. You must avoid being lazy or too comfortable so that when you hit your exit criteria you can leave without having any feelings of guilt. The plain truth is that a greedy trader will want to hold on to a trading position for so long that they end up not making as much profit as they could have had. Any profit in forex trade becomes yours only after you have closed a trade.
Staying in a losing position too long: Just like there are forex traders who stay in a wining position for too long that they end up losing any profits they could have made; there are also those who will stay in a losing position for longer than they should because of panic; it is a poor trading strategy to wait until loses begin coming before you decide to quit a position. When you find yourself in a slow market, you must avoid becoming emotionally involved so much that you become frozen even as your money goes down the drain. You must also avoid the temptation to step away from your trading strategy with the hope that things will work themselves out somehow.
Afraid of losing face: There are traders who will not want to appear embarrassed and as such they end up staying in apposition longer than they really should. You must remember that the market is a trading partner who is not emotional, not judgmental and will respect your every choice and decision.
Find out more about trading psychology and learn how forex trading success can be more about your mindset and less about the markets.
Article Source: http://EzineArticles.com/?expert=Joseph_CK_Chua
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