The psychology of behavior of people is a key to understanding of an event on financial markets. All usual, daily feelings and aspirations are shown in rigid market fights as a chemical solution on a litmus piece of paper. Sensations are in all of us – fear, greed, hope, etc. – in a fast rhythm of exchange trade make at times advancing impact on behavior of the trader. Weak and self-confident, greedy and sluggish, all these people are doomed to become victims of the market. The knowledge of own abilities and preferences, positive and negative qualities can help to avoid ruin. If you add ability of an adequate estimation of a psychological condition to it and corresponding behavior of market crowd the success to you is guaranteed.

Emotions and their control:

Greed.

Driving power, which forces us to work on speculative financial markets, is greed.

If your greed is insignificant, you will make little bargains, missing many good moments. In this case it is recommended to attend to other quieter kind of business.

If your greed knows no limit, you will try to make maximal bargains, subjecting yourself to risk of not clear prospects. For you it is better to play a casino, it will be closer and cheaper for you.

Result of action of greed will be the motivation to the making of bargains.

It is possible to allocate two kinds of motivation:

• The rational motivation – usually it occurs at young trader, and also at work of the professional trader;

• The irrational motivation – is expressed in passion of the player and is present practically at each trader, however one supervise the passion, and others are slaves to emotions and are doomed to loss.

To reveal under the influence of greedy passion you play or not, it is possible by means of following signals. If the trader asks others: “What do you think about it?”. If he tells other traders about open positions. If the trader does not have the plan of operation constituted to the conclusion of bargains – all it means that this person works, most likely, under the influence of passion, instead of mind. The best medicine from passion is scheduling of the conclusion of bargains (the activity financial scheme).

Hope and expectations.

The following factor moving the trader on the conclusion of bargains, the hope is getting the profit. Naturally, the sense of any work consists in earning money. However, at a prevalence of hope over account you risk to overestimate own possibilities at the analysis of a situation and to transform small “fly” – a reality into “elephant” – dream. The hope should be in the subordinated relation both to account and to greed. The huge hope leads beginning traders to ruin.

The hope advances behavior of the trader in two basic cases:

• At the moment of starting to work in the market. Only the hope of getting profit can force to make the person concrete action on a financial market;

• At the moment of getting losses, when there is a hope of situation change to the best. Here the hope passes three stages of the development and existence.

At the first stage when losses are insignificant, the hope is inevitable and can be justified (if you are assured of the forecast and work according to the plan accepted earlier).

At the second stage, at the further growth of losses the hope goes back to the peak. During this moment it is the most difficult to trader to separate the hope from real actions of the market. The question decision is to close an unprofitable item or to keep everything as it is – will depend generally on that, how much hardly the mind of the trader supervises his desires.

The third stage is characterized by critical losses, when the hope already leaves the trader and it changes on the despair (especially strong showing of despair is at weak and beginning traders). To the majority of market players familiarly this sensation of emptiness, when it seems as if all world works against you. The person, who all the same has gone through the last stage of hope, can safely consider himself as the trader. In future trade event of the third stage will have an effect in a fear.

Fear.

The fear arises, when you receive losses. Some people are paralyzed with fear; also they cannot stop in time and lose everything. Other people are forces with fear to move and conclude at times mutually exclusive bargains that also usually only brings the failure faster.

At the critical moment it is better to make something, than to be idle and observe how dreams of the fine future evaporate together with change of quotations. At the same time do not panic. Work accurately and follow your plan (accordingly before fear occurrence).

Before you decide to make a forex investment or start forex trading yourself, better find a good forex book and read more about the currency exchange market – this will save you from tons of troubles and traps.