Forex trading can quickly get out of hand if you have not yet learned how to control your interactions with the market in a way that benefits you over the long-term. Many traders simply operate on a short-term perspective in the market, whether they realize it or not. They don’t think about how what they are doing in the market right now is going to ultimately affect their trading account in six months or a year.
The goal of any trader is to have long-term profitability that is relatively consistent, being relatively consistent means being profitable at the end of each month, the best traders in the world have losing weeks from time to time, but if you are operating with a long-term perspective in the market, you should eventually be profitable at the end of each month. Unfortunately, many traders cannot see the forest for the trees; so to speak, this is the only explanation for why so many traders do things as illogical as over-trading, over-leveraging, not taking profits, or trading without stops or moving stops further from entry.
If you are in a situation right now where you feel out-of-control with your trading, and you would like some quick pointers to help get you back on the path to successful trading, this article is for you.
1) Consider your Forex trading mindset
If you continually give into every emotional impulse or feeling that you have about the market, you are probably losing money on a fairly consistent basis, and if you aren’t then you soon will. Every trader has emotional impulses and urges to do things in the market that they know they shouldn’t do, whether or not they can conquer these emotional feelings with logic and objective decision making is what separates the winners from the losers. Let’s discuss some practical ways that you can effectively conquer your emotion with logic and rational decision making:
– Learn the importance of patience: The most practical way to conquer emotion
is to learn how becoming a patient Forex trader can lead to consistent long-term trading results. Patience comes from accepting that you cannot control the market, all you can do is control your own interactions with the market and take what the market gives you. Recognizing the importance of having patience is one thing, but it takes discipline to maintain composure and follow through with what you know is logically true. This leads into the next point of emotional control.
– Trade what you see, not necessarily what you think: This anecdote is somewhat vague and general in nature, but its implications run very deep and are important. Traders seem to conjure up all kinds of ideas about what the market “should” do, instead of actually trading off of what the market is doing. The bottom line is that you need to trade what you see, not what you think, you do this by fully mastering your chosen trading strategy.
When you truly “master” your forex trading strategy, you will know exactly what you are looking for each day in the market, you will then be relying on logic and rational decision making instead of emotion and feeling. If you aren’t trading obvious setups that you could easily describe and point out to any non-trader, then you are probably trading what you think and not what you see. Go back to demo trading if you need to get reacquainted with exactly what your trading strategy consists of.
– Have a Forex trading plan: Having a Forex trading plan is something that many traders ignore, yet it is talked about often for very good reason.