This article is updated simultaneously with the WeChat public account: Huijia Century Studio.
Why is it difficult for good analysts to become good traders? This topic has always puzzled many traders. Today, I will analyze it from several perspectives. Let's see if you agree with me.
Why do Forex analysts often fail in trading?
Successful trading often involves adopting the correct emotional strategies or methods.
Trading goes beyond analyzing charts or tracking the latest news. It is inherently complex, requiring consistent strategy formulation, market research, and, most importantly, discipline.
Traders must control their psychology and emotions to make profitable trades. When you are attached to your trading positions, it can be very difficult to conduct accurate and impartial analysis. This is why market analysts do not consider trading themselves.
Once they use trading techniques to test and see their theories turning into reality before their eyes, they lose their objectivity.
Somewhere along the way, they start facing emotional issues, and as the Forex market fluctuates, their psychology fluctuates as well. In rare cases, traders may find themselves becoming egotistical. However, in most cases, it bruises or distracts traders.
Although it is difficult to measure how profit or loss affects a person's psychology, it undoubtedly affects every trader in different ways. After experiencing success or enduring losses, any decision can be overshadowed. This means that once you have doubts, greed, or fear, any strategy/technique you once firmly believed in may suddenly go wrong.
Typically, analysts study the Forex market and evaluate the impact of various investment opportunities.
Additionally, risk managers assist in setting up diversified and scalable trading operations. Finally, Forex traders implement the strategy. Hence, portfolio and risk managers are detached from the responsibility of executing trades.
This maintains the integrity of their investment approach and minimizes the chances of failure due to emotional factors.
Emotional detachment is the key to success
From this, we can see that emotional detachment is the key to successful trading. Traders can improve their trading by becoming their own investment managers.
In fact, traders can use various strategies to minimize market losses. Setting precise targets and using stop-loss and take-profit strategies to automate the trading process is equally important.
Traders must make quick and flexible decisions, as news that seemed effective during the planning phase may not necessarily be appropriate or effective after major news releases or developments.
Adjusting based on market feedback and detaching yourself emotionally from trading is always a good idea. In the long run, this will ensure your success.
First, traders need to acknowledge their emotional patterns. Understand that humans can sometimes become greedy, and you are just an ordinary human being, so it may happen to you too.
Emotionally detach from your trading. This means you recognize that every trader will face losses, and the market cannot constantly favor you. Otherwise, you will either lose confidence or become overly confident. Both are very dangerous.
In the market, there are only possibilities and no guarantees. Therefore, when you have a good strategy, stick to it.
Do not let emotions dictate your actions—fear, doubt, excitement, hope, and sometimes even greed. You need to find a middle ground. The key is to ensure your average profit is higher than your average loss.
To succeed in trading, emotional detachment is one aspect, and having stronger self-awareness than anything else is crucial. This self-awareness will not be swayed by the frequently fluctuating exchange rates, success, or failure.
At this point, many people will instantly understand that most analysts only analyze market trends instead of trading themselves. They do not have psychological pressure. First, most analysts speak ambiguously without a clear direction, so in most cases, what they say has a certain probability of being correct. Traders, on the other hand, mostly trade with their own money and rely on trading for a living, which puts a lot of mental pressure on them. Therefore, most traders need excellent psychological qualities. However, the widespread use of EA (Expert Advisor) programs has significantly solved some of the analysts' pain points, namely execution. Nowadays, many people write their core ideas into EA programs. Some excellent analysts have also become good traders. If you have an excellent strategy, click on my profile, add me on WeChat: Aaron-liu007, and let's discuss optimization together.
