In Indonesia, people who are new to trading whether it is stock, forex, or crypto market, often ask me "Dre (my name), lu main forex, ya?" (Dre (my name), you play forex, right?) without knowing that play and trade are two different concepts. Well, I do not blame them for not knowing it because I was one of them until I learned that play and trade are different and it can affect your trading psychology in which if you have a concept of play in your head, you will approach the forex market differently than if you have a concept of trade in your head. For further explanation, you can see it below here.
Play Concept In Forex
To have a clear understanding of a concept of play, let us take a look at the definition of play where this is explained by Cambridge Dictionary that play is where you take part in an organized activity such as a game especially for a child and in return, that child will be entertained by it. Now, this is where the trick is put where if you only seek entertainment in forex, then, you should find other activities and get out from the forex market because when you apply this kind of mindset to approach the forex market, eventually, you will only bring disaster to your finance.
Let me explain it further, say that you have this play concept in your mind which unconsciously affects your psychological conditions by believing that forex is a game, and by that mindset, you only want to win without losing (in forex, losing is normal even for professionals). So if you lose, you will try to beat the "game" no matter what happens next. Certainly, this is bad because once you meet your losing position such as a floating loss in a long position, for example, the chance is high that you will close that position and open the opposite direction, which is a short position based on your feeling of hating to lose, unknowingly that a few times later the price suddenly goes up to the opposite of the short position (and the cycle will then be repeated until you understand the trade concept).
Trade Concept In Forex
Trade concept which is the right concept to use in forex will be the turning point of your trading career if you apply and immerse it into your brain in which just as I wrote in the first paragraph of this content, you will approach the forex market differently. But before that, we should know what is the definition of trade. The definition from what Hayes (2021) wrote in Investopedia, trade is where you conduct an activity of buying and selling by a buyer and a seller where the buyer will get the goods and services from the seller. Simply, if we connect it with forex, then, in the forex market you conduct buy and sell activity to gain profit by buying low and selling high the price of currencies.
So, how does the trade concept make you approach the forex market differently? Well, because when you apply this concept, you see and treat forex not as a game but rather as a business wherein game you seek for entertainment (or rudely for fun) but in business, your approach to the forex market will differ as you take it seriously by mastering every nook and cranny of forex. Besides that, you will approach the forex market rationally knowing that in trade there are profit and loss where those two are completely normal in business. Thus, when you meet a floating loss in your position, you analyze it first and then make a decision based on your analysis (whether you close the position or not) and not by the emotion of feeling losing the game.
Conclusion
In short, play refers to a game in which game will make you fun and entertain that can bring disaster if you apply to your forex real account while trade refers to a business which will then make you take it seriously by continuously studying the forex market as well as considering the future of the forex market. So, if you have finished reading this, then, next time you meet up with your relatives, friends, or whoever it is who has the same passion for financial markets, especially the forex market, you should change your play concept to the trade concept which eventually makes your brain thinks that the forex market is a business. Hence, you unconsciously train your mindset to be nailed by the trade concept. Aside from that, if you meet professional traders and you use the trade concept instead of the play concept, they will respect you more because they know that forex is a business.
Written by Andre I.
References
Cambridge Dictionary. play. Retrieved from Cambridge Dictionary. (Accessed 12 March 2022): https://dictionary.cambridge.org/dictionary/english/play
Hayes, Adam. 2021. What Is Trade?. Retrieved from Investopedia. (Accessed 12 March 2022): https://www.investopedia.com/terms/t/trade.asp