It is essential for Forex traders to be able to control their emotions. If you cannot control your emotions whilst trading, you will not be able to reach a position where you can achieve the profits you want from trading.
Emotional traders struggle to stick to trading rules and strategies. Traders who are overly stubborn may not exit losing trades quickly enough, because they expect the market to turn in their favour.
When a trader realises their mistake, they need to leave the market, taking the smallest loss as possible. Waiting too long may cause the trader to end up losing substantial capital. Once out, traders need to be patient and re-enter the market when a genuine opportunity presents itself.
Traders who are emotional following a loss also might make larger trades trying to recoup their losses, but consequently increase their risk. The opposite can happen when a trader has a winning streak – they might get cocky and stop following proper Forex risk management rules.
Ultimately, do not become stressed in the trading process. The best Forex risk management strategies rely on traders avoiding stress.