Gold Psychology Principles

Trade with the trend only

Stay focused on the large market trends and do not try to react to every xauusd gold price action move. "The trend is your friend!" follow it. Investors need to follow the trend when trading online. One of the principle of market psychology is to always trade with the market trend.

Most beginners will enter the market when the price chart shows a steep movement. These traders don't even take the time to understand what forces are causing such a movement and thus make the mistake of being too eager to enter into the Market: they want to rush and be the first ones to enter the market after an economic info is published, without any regard to the direction of the trend only to finally realize that it was just a trading whipsaw when they are already in a losing trading position. In such situation, most seem fearless, not fearing making losses & only worrying that others are making profit while they sit on the sidelines. In Trading Psychology this is the in the opposite trend market trend market trend of what they should be doing. In your trade plan sample you should write down clear guidelines within their plan on how to avoid this type of mistake.

In XAUUSD, the rule is to never be too eager to enter the Market: learn to overcome the feeling of worrying that you'll be too late to make a profit. Take time to analyze & interpret what is the impact of the economic info released.

Sometimes this breaking news does not dictate the forecast of the likely price direction. You have to analyze & interpret carefully if it will have a big impact on the prices. Most often, these info generates false entry signals.

It is important that you overcome your eagerness to be the first one to enter the market using Gold psychology. You have all the time to analyze & interpret the impact of this breaking news before entering the market.

It might take more time but your trades transactions will be heading in the right direction. This is what we call following the trend.

Trade with a disciplined plan

Investors should not base their trading positions on a just a hunch. Positions should only be executed using a well systemized plan. Plan should specify the trading rules of entry and exit. Use the psychology section to specify your mindset when opening trade transactions.

Investors should examine all of the factors carefully before opening a position and they shouldn't let fear or greediness or anybody else's influence to cause them to enter or exit a position before their trading strategy gives and generates a signal. Do-not let the temporary situations erode your conviction, use discipline to follow your trade plan.

Using a consistent and disciplined plan eliminates the need to make rush decisions based on short term price action moves.

Cut your losses & let your trading profits run continuously

Some traders hold onto their losing positions for a long time in the hope that these positions will move in their trade direction after a period of time. However, this never happens and the market keeps moving against these losing trading positions & makes them lose even more.

The other mistake which traders make is to not take the profits at the opportune time, all investors should try to maximize profit per trade but at the same time be aware when the market trend changes & close trades at that time and not to wait while their trading positions in the market are open. Only keep positions as long as the trend is in place and close once the trend displays signs of slowing.

Losing Gold investors see loss as failure. Winning investors see loss as a studying experience, this is one principle of market psychology which helps them to improve their profits.

When winning traders accrue a loss, they have not failed, they've just learned something new about how the way the market works. Winning traders always look at the big picture and stick to their Gold plans.

Many traders in a losing trading position wait for the best time to cut a loss. However, the best time to exit never comes & the trade position continues to lose money. The best time to exit the trade is when the loss is low i.e. Less than 30 pips but not when the loss is hundreds of pips. Your account might be wiped out while still waiting for the trend direction to move in your favor.

A losing position from the begin is likely to stay like that - A Popular Saying by Traders.

Use psychology & learn to cut losses and avoid holding on to losing trading positions because of the hopes that the markets will move in the other direction. There is always a new opportunity to trade as long as your margin isn't tied up in a losing trading position.

An investor should get released from a negative psychology and apply the money to do another trading trade. An investor should cut the losses quickly and move to profit making positions. Some investors will end up sitting on a losing position; they usually and generally allow the price to move against their position many pips while hoping that the trend direction turns and goes back in their favor.

Profits are made when trades are closed not when they are opened, henceforth be ready to close out your open position transactions as many times as possible.

It is a wrong belief that each trade will gain profits. One can still make money even if only half of his transactions are profitable. Question is how a trader can make profit with only half of his trade transactions winning, the answer is that one should keep the losses at a minimum & open other profitable trade transactions. This way the greater No. of profit transactions offset the losses.

To learn more about psychology and how to transform your mindset using a trading plan go the tutorial XAUUSD Plan.

Gold Psychology Principles of Market - What is XAUUSD Psychology?

Gold Plan - Psychology Section

Study More Lessons:

Trade Gold Trading

Gold Psychology Principles

Trade with the trend only

Trade with a disciplined plan

Cut your losses & let your trading profits run continuously