A Guide to Thinking like a Professional Forex Trader
The way that a professional Forex trader thinks about trading the market is quite different from how an amateur trader thinks about it. It is mainly this difference in perspective and psychology that separates winning traders from losers. So, how can you start thinking more like a professional and less like an amateur?…
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– Don’t make trading more complicated than it really is.
One of the first steps to thinking like a pro trader is to simply remove the clutter from your charts. It never ceases to amaze me how many amateur traders simply will not let go of the Forex indicators or Forex trading robots they are using. These things are unnecessary to become a consistently profitable trader, in fact they will actually induce over-analysis and hesitation, and they will work to create the wrong trading mindset.
Making the process of trading more complicated than it needs to be is one of the most prevalent trading mistakes that amateur traders make. Making consistent money in the markets is not easy, I am not going to lie to you, so don’t make it harder than it needs to be by using ineffective and overly-complicated analysis tools like trading robots and tons of indicators. The best analysis tool is, and will always be, simple price action trading strategies, this is because price reflects all market variables and provides us with the most relevant and accurate view of any financial market.
– Stop worrying about the news and fundamentals.
There really is no need to commit too much of your time worrying about or analyzing Forex fundamentals or news. While it is true that these variables are catalysts for price movement, it is also true that it
is far more efficient and easier to just learn to read the price action, instead of trying to trade based off news.
Most successful Forex traders are trading very simple technical strategies and are not worried about news events, because they know that any global Forex news event will be reflected via the natural price movement on a plain vanilla price chart. So, if you want to start thinking like a professional Forex trader, spend more time learning to trade based off price action and less time worrying about news events. Price action shows the end result of a news event, and it is this result that matters, not what “might” happen based on something implied by an impending news event.
– Learn to trade higher time frames first.
Professional traders know that higher time frames provide a clearer and more useful view of the market. If you want to start thinking like a professional trader, you need to learn from and truly master the higher time frames before you even think about trading lower time frames. Your primary focus should be learning the daily chart first. The weekly chart is a great “helper” chart for longer term trend analysis and market bias, but as a beginning trader it is very important to your psychological development that you learn to trade the daily chart above all else. I still mainly use the daily chart and rarely look at lower time frames other than the 4 hour chart.