4. Euphoria in Trading Psychology

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4. Euphoria in Trading Psychology

Lastly, euphoria can also cripple your trading success. It is the feeling of excitement often realized after experiencing several big wins in the forex market. Your euphoric state convinces you that your understanding of the movement of currency pairs is perfect and your analyses are faultless.

While it is normal to feel excited after winning a trade, overconfidence can result in problems. For example, because you placed a long order on EUR/USD and made a win, this doesn’t mean that another trade will automatically result in a win. The market does not work like that.

Euphoria often leads to a slippery slope of trading errors and losses. After a series of successful trades, a trader can become overconfident and start placing trades without careful analysis of the ever-changing market conditions.

Overconfidence can also cause you to risk too much capital, falsely believe in your analysis, or forget about your trading plan. Having a party after each successful trade is an emotional motive that can increase your trading flaws.

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