Emotional Intelligence and Forex

Forex trading continues to grow in popularity and a reason for this is its profitable gains to the traders. Some traders are however not benefiting from Forex trading and this is mostly because they lack emotional intelligence that could make them soar the heights in the game. Emotional intelligence is important because it is a known fact that the Forex market is highly volatile and leveraged especially given the fact that it is the biggest financial market in the world.

Emotional Intelligence

Emotional intelligence is the identification, tracking and management of emotions. To be successful in Forex trading, the trader should also be able to recognize their emotions, those of others and discriminate the between various feelings. It is also important that they label the different feelings correctly and use emotional information for guidance in their behavior and thinking.

Below are some of the emotions that Forex traders encounter during their trading. Sometimes they come at the same time.


Some of the emotions involved in Forex trading include greed where traders always want more. Most people will increase the risks thinking it will automatically translate into huge profits which is not always the case.


Fear is another common emotion where traders fear losing and are not comfortable with risks inherent with Forex Trading. They therefore place only a few trades and close too early after just posting a small amount in profits. They struggle to make any headway in the Forex market.


Hopeful traders act in the same manner as gamblers because they are always hoping to make money. They, therefore, let their bad trades become worse hoping the situation will change. They also let their good trades become bad hoping the market will offer them something extra to change their fortunes.

How to Use EI in Forex Trading

Keep Emotions in Check

Emotions are categorized as positive, negative and balanced which is also known as neutral. The negative and positive emotions are biased to a particular situation while the balanced ones are neutral to the situation. In emotionally guided trading, you will approach the situation neutrally. You should also accept that trading Forex will take you on an emotional roller -coaster. For example, there will be times when trading strategies will seem to be working and profitability will be high, causing traders to be over confident and risk more capital. In other instances, the trading strategies may fall short and sticking with them can be quite difficult. During such moments, it is only the ability to keep your emotions in check that can help you.

Choose Path of Least Resistance

Many traders adopt one strategy of trading in the first year as they learn the ropes with cmc markets and this is quite sensible as it helps them time to know the steps of their strategy. The problem arises when they face anxiety and fear , especially, when the trades do not turn out as they had expected. Most traders break rules of their strategy when they encounter pressure. You should always choose strategy that matches your ability to risk, personality type and market outlook. You should also be able to see through because abandoning it halfway will result in losing pips and damaged confidence. You can only change strategy after using it for some time and realizing that it needs some changes.

Do not let History Dictate your Future

Some people often allow the negative results of their past experiences to influence their perspective on their strategy of trading. This usually happens to new traders when they lose pips after a four run win. The negative experience often leaves them with doubt about their Forex trading performance and they change their strategy immediately. It is pertinent to note that Forex traders who view their performances in batches make wiser decisions as compared to those who use a trade-by-trade basis.

Keep in touch with Your Mental Habits

It is imperative to be aware of your mental habits on a regular basis; this is especially the ones that hinder their good performances. By constantly practicing self-awareness, it becomes easier for traders to transform their thinking for better trading.

Do not Over trade

Most people think that over trading will make them millions in profits which is not always the case. You can expose yourself to risk by needless over trading. It is therefore, important to know when to stay in the market and when to enter the market as well.