Have you ever faced this scenario: you wake up and scan the markets, read some economic news and forum posts, analyze the chart for your favorite currency pair, determine an entry point, wait for your setup, and trade? the first couple minutes are not eventful, or may even show you a little bit of love, but then the trade starts to wander in the wrong direction before taking out your stop.
Oh, wait, you did not have a stop? In that case, you probably started praying once those pretty green profit numbers turned into red loss numbers. Perhaps at this point you set up a stop.
Oh, wait, you start moving your stop farther away once the trade threatens to take it out? In that case, you probably lost all your money, didn’t you? Ugh, tough break.
After you finish cursing your luck and swear that the Forex gods have it out for you today, you go back to look at the trade again, try to find out what you did wrong, maybe you even post on the Forex forum and reassure yourself when you see that others got hit as well, but you are jittery now because you know your trade will have to do twice as well next time in order to make up for your loss.
This scenario describes why the odds are against new traders turning a profit. When people get positive results they tend to pat themselves on the back as being brilliant or particularly astute, but when they lose due to the lack of a trading plan and money management strategy, they fail to accept responsibility.
Poor trading psychology leads Forex traders to think the answer lies in buying the newest Forex software, reading more articles, developing a more sophisticated technical analysis set up, or even switching to a different broker. The reality is, when you evaluate what was going on inside your head before, during, and after the trade, you probably failed to take responsibility for your mistakes.
The point is, in order suit to succeed as a currency trader, you need to have your entire attention on the trade, and accept what is actually happening rather than making up a narrative about what you want to happen or what should have happened.
Once you understand how your own psychology affects your trading skills, you should begin to see more profitable trades. Until then, it might be a good idea to go back to your demo account.