3 Irrational Trading Expectations

It is true that the expectations we have for ourselves play a central role in affecting our emotions and even our actual experience. In particular, waiting for a good result makes us feel excited while foreseeing a negative result makes us worry.

Experts in trading psychology have highlighted the connection of having reasonable expectations and ending up with a healthy trading mindset. After all, when one sets expectations that are too high, disappointment becomes more likely. On the other hand, when one sets very low expectations, there isn't enough challenge to do better.

One of the irrational expectations in trading is thinking that hard work means more trades. This kind of expectation doesn't at all take the quality of the trades itself into account. As a result, you might wind up overtrading if you think that the sheer number of trades will eventually translate to profits.

The second dangerous assumption is that a trading is good only if one had a profitable day. The problem is that a trader might end up being to hard on himself if he undergoes a losing streak. This is problematic because losing is inevitable in trading and that a losing trade isn't necessarily all wrong. It may have simply been a result of a sudden shift in sentiment or unforeseen market factors. As long as you did your homework and followed your trade plan, you can still consider a losing day a good one.

The last irrational trading expectation is that the measure of success in forex trading is being able to live off the profits. Remember that not all traders are able to end up this way, as it requires a huge amount of skill and capital.

Remember these irrational expectations so you can prevent them from taking their toll on your psyche and actual trading performance. It might be helpful to note these emotional and psychological responses in your trading journal so you can keep track of which repeating patterns you need to avoid and what kind of action steps you should remind yourself to take. Trading psychology articles and books might be helpful in this aspect, as there are experienced traders out there who are willing to share their wisdom that they garnered from years of forex trading experience.

At the end of the day, you must be aware of the impact that your assumptions and emotions have a material impact on the forex decisions that you make and on your overall performance.