Some people experience the inevitable forex margin call. This is because most people don’t realize that human instinct tends to contradict with logical forex trading principles. Among the psychological functions, the two mental operation systems overcome above others, The defense mechanism and free will. The defense mechanism contains two categories of physiology and psychologic defense mechanism.
The physiological defense mechanism reacts to shield itself physically from all harming threats at any given time. If a situation breaks where a physical threat is inevitable, the body won’t stay still taking the injury.
The psychological defense mechanism relates to self-ego and its nature to carry the information that was accepted previously. For example, if the previous input was that roses are red, and if the other input was that roses are blue, the self0ego will label the other information as false and won’t acknowledge.
Both physiological and psychological defense mechanism comes into play contradicting the mind while trading. As it’s nature, the forex market is profitable when it is active and liquidated. There are countless numbers of things that cause the market price to fluctuate and it is traded at its best when done with a strategical mind. The physiological defense mechanism recognizes loss as a threat and will react to defend the asset. Human’s psychological defense mechanism struggles to follow the constant changes in the market which makes the trading stressful.
The market signals of up and down trends are detected by those who keep their eyes wide open with patience. Every entry and exit points of a trade must be planned from the moment the trend was analyzed. however, with the defense mechanism refusing to accept the change and inclining to act passively, chances of profit opportunity can be neglected.
Every trader must know how to construct a way to bypass this instinctive and natural behavior. We fail to avoid the margin call even with planned strategies because we are just human beings. We are bound to experience and cause mistakes at any time unexpectedly. Humans have free will that can be chosen to be free from restraints.
The only way to overcome the instinctive mind is to create a pattern that can be accepted by the defense mechanism and free will. 3 steps of discipline which are reasons, plan, and execution must be in your mindset for strategical decisions until your mind accepts the fact that restraints will give beneficial gains in the end. You must be prepared and ready to experience struggle and stress from time to time. Keep habits of applying the discipline to the way market moves. Always set your target goals and margin. Once you know how to control these factors, you will start to see gains and will be able to obtain more confidence. Keep your mindset correct and learn to be disciplined. Once done correctly, you will see that you are avoiding margin calls and you are controlling the market.