Psychology of Gold Trading Market
The reason why 90% of gold traders lose can be summed up with 2 words:
XAUUSD Trading Psychology
Many people fail on the gold trading psychology front and only a few take the time to transform their mindset. The reason why most people make losses is not that they cannot beat the xauusd market, but because they do not have the right mindset. Gold psychology is all about transforming your mindset.
In Gold, you must first master your method and then put in many hours of learning how the xauusd market works.
The gold market is too complex and there are many factors that have a huge impact on the daily fluctuation of xauusd prices. Traders should understand how the online gold market works through studying gold trend characteristics and also how these fluctuations take place.
Psychology and Emotions
When it comes to the xauusd market, winning is a matter of the mind. Studying the psychology of the xauusd market takes into account what influences others - including the mass psychology of the people that trade gold on a daily basis. Anything involving winning or losing large sums of money becomes emotionally charged. Winning depends on knowing your own mind and also understanding how mass psychology moves the xauusd prices.
In most cases when traders invest in gold, they invest more than just money - they make an emotional investment. This is where most go wrong; being right becomes more important than making money. When the transaction goes wrong since they have already made an emotional investment they let their decisions to be ruled by their emotions and they hold on to their losing transactions in the hope that it will bounce back. Unfortunately their losses become greater and they find it even more difficult to close their xauusd trade orders.
Even when traders make money & let their emotions get in the way, they either become greedy or over-trade.
Gold psychology will form a good foundation for profitably - it is about learning how to keep emotions out of the picture, & not to letting these emotions control your gold trading transaction decisions - trader behavior changes very little with time, as humans will always make the same mistakes over and over again.
You can learn how to control the three most dangerous emotions that tend to cloud judgment & cost you profits. These three emotions include:
- Greed
- Fear
- Hope
Six Tips for Transforming Your Mindset
1. Define your goal.
There are many important Gold questions that you need to answer before jumping into the gold market. Creating and defining agoal will give you a start point to your success.
2. Keep it simple.
Some people use more than 5 indicators on one chart analyze and to inform them of their next move with no success or even breaking even. The thing is that more indicators do not equal more accuracy.
The Three most powerful tools to use are:
- Candlesticks (buyer & sellers behavior),
- Gold Price action (such as support & resistances), and
- Gold Trend-line (up, sideways or down).
3. Don't get emotional.
If you are attaching emotions to your gold trades because there is real cash involved you need to change your trading mindset & start following your trading plan. If you are a beginner trader with no previous experience always begin with training & learn until you begin making profits on you Gold demo xauusd trading account before investing your capital.
4. Nothing wrong with breaking even.
Not all your trades are going to be winners. It is better to break even than to lose. If you know that a transaction has turned against you do not begin praying for a miracle hoping for the xauusd price trend to reverse instead cut your loss and move on. There are endless profitable opportunities.
5. Speculation is your worst enemy.
Don't speculate on where xauusd price maybe heading. Always use your xauusd charts and your plan and study the gold trend before opening a transaction. The gold trend is your friend, so make good use of it by following the xauusd price charts.
6. Do not allow your winning orders to turn against you.
If you have an open winning transaction at hand do not allow it to turn against you. It is better to place a stop 5 pips above the entry opening point & break even/or win little than to let it turn into a loss.
For how to utilize these tips look at the Gold plan tutorial: the section about this is shown below.
Psychology Section on Gold Trading Plan
