Developing a plan of attack, executing a buy transaction for a particular currency pair, and then following market signals during the course of a trade are all simple enough tasks for the average forex trader to learn and perfect. However, when it comes time to sell, even for the seasoned trader, there seems to be a nagging little voice in the shadows of the mind urging you to hold on for just a little longer. Intuition can be a savior at times, but not if the programming has been dysfunctional. The question remains, “Why is it so difficult to sell?”
The nascent field of investment psychology has actually gleaned a great deal of information from a variety of experiments conducted over the past decade. Clearly, the difficulties a trader faces when it comes time to exit a position are comprised of both external influences and internal drives and motives. We tend to be victims of social imprinting and our negative emotions. In order to survive and thrive in a stressful forex trading environment, we must develop coping behaviors to avoid the potholes our minds have created for us.
From an external perspective, the act of buying is an affirmative and positive statement. It is surrounded with hope and the possibility of good things to come. Selling then becomes identified with the opposite end of the spectrum. It represents stopping or saying no, and we will go to great lengths to avoid being branded a negative person. While buying is imbued with hope, selling, usually done under stressful circumstances, is conducted with palpable fear that we are making a mistake. The sad fact is that we remember our losses more than our gains. When haunting memories of judgment errors persist of when we fell victim to selling out of fear or lack of resolve, we tend to succumb to natural inertia and resist any attempt to pull the sell trigger, no matter what the currency charts are signaling.
Selling is also associated with closure, which, more often than not in our lives, has been a painful experience. There is a profound finality to closure, coupled with a feeling of sadness and regret that we could have done better. Part of this is rooted in the desire for perfectionism, an increasingly pervasive cultural force in our electronic age. Our workplace demands perfection. Failure leads to dismissal. Selling invites failure and inspires us to flee from the possibility of self-humiliation. An aversion to admitting failure is not healthy for our mental psyches. Denial is also a wonderfully handy, although ultimately dysfunctional, protector of the ego. Denial leads to rationalization, which then results in procrastination, another deeply rooted psychological behavior. Refraining from selling has now become a defiant act of a powerless and emasculated ego.
Is there a simple cure for the ingrained and self-destructive behaviors that inhibit our ability to be effective sellers? Self-discipline is the key and must be developed through practice and repetition. Professional golfers have learned this lesson well. When under severe competitive pressure, particularly when putting in a golf tournament, a golfer reverts to a routine that he has practiced for endless hours to perfect. He may take two practice strokes, reset his position, look at the hole one last time, and then putt. His personalized routine is a way to remove his emotions or any external distractions from affecting his execution. You, too, can develop a personalized “selling routine”. Document the steps in your process, consciously follow the process in practice, and over time, it will become ingrained and easily executable. Another “mental trick” worth trying is to ask yourself if you would invest more of your precious cash at the point where you should be exiting the position. This evaluation is a harsh but valid discipline.
Developing appropriate coping behaviors take time and practice. Perhaps your lack of resolve at selling could be handled best by changing your entire trading modality. A very popular forex alternative these days is signal-based auto-trading. These “hybrids” of managed accounts and auto-trading are offered by firms that audit the trades of traders all over the world, and then publish the results of their trading strategies for you to choose from. You review and choose, and then convert the trading signals of your choice to real-time trades in your own account. Your forex experience then “mirrors” the often successful and more experienced trading patterns of global experts, thereby eliminating any selling anxiety on your part altogether.
We should never lose sight that our ultimate goal is to increase our overall cash position. Forex trade positions are only “temporary depositories” that must be converted to cash. If the act of conversion, selling in our case, is becoming too difficult to handle, then self-examination is in order. If self-discipline training does not do the trick, then other forex alternatives may be your best plan of attack.
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