As you might have heard psychology plays an important role in forex trading. There are many psychological factors like greed, fear etc that effect your forex trading. The following is the one of the forex trades, I lost, because of one of the phychological factors that is “FEAR”.
The following is the EURCAD hourly chart. As you see from the chart there is a very good trend line formed at the bottom of the chart. I placed the Commodity Channel Index indicator and MACD indicators at the bottom of the chart. There are two entries possible to enter a buy trade.
1) The first one is when the CCI crosses and moves above the “-100″ line in the indicator, which is exactly at the trend line. But I was at work and I could not take this entry.
2) The second entry is using the MACD indicator. When the moving average line in the MACD indicator leaves the histogram bars we can enter the trade.
I got back from work and at the same time I observed the moving average was leaving the histogram bars. After that candlestick completed, I entered a long(buy) trade. This point is shown in the picture as the 2nd entry. I used a stop loss of 15 pips below the trend line and below the recent low. I waited for 3 to 4 hours and the chart was not moving up. Slowly I got a feeling that this trade may not work and the trend may reverse. This slowly converted my feeling into fear. I closed the trade with a loss of $99.
But after sometime the graph started raising and in two days it went up to almost 250 pips. I should have left the trade as it is but I closed it purely because of my fear.
Entered a buy trade at the 2nd entry point but closed it with a loss of $99 because of fear
EURCAD trade lost $99 because of fear
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