If a trader is full of fear and emotion, even the best forex trading system, it is useless. Is this not a bold statement? It might be true for a beginner trader. If you’re an experienced trader, you will probably know how true this statement is.
Many forex trading strategies are sold without regard for dealing with emotions and fears that can come with trading in the markets. These sellers market incomplete strategies and are untrustworthy at the worst. You can promote a forex trading system by not teaching basic concepts about trading psychology.
Lets define “trading psychology.” Trading psychology, for me, refers to all the emotional aspects of financial trades that are not governed by the trading system rules. It encompasses every emotion and fear a currency trader may experience when placing or exiting trades. It is crucial to be able to deal with fear and emotions in a way that makes forex trading profitable.
How is this possible, when trading can be difficult and you need to manage your emotions and fears. The seller doesn’t have an obligation to explain trading psychology to buyers in order to buy a trading platform. The goal of a seller is to sell, and not educate, train, nor enlighten.
It is essential that traders improve their knowledge of trading psychology. They should search for and perform simple trading exercises that can drastically affect their mindset, their enjoyment trading, and their profitability.
First, you must be aware of the need to have a trading psychology strategy. Novice traders must recognize and accept that the mental component of trading is a common and real obstacle to success. At some point, all traders must raise the red flag to recognize the powerful mental forces that could be hindering their success in the forex markets.
Once we are aware of the necessity for a trading psychology plan to be consistently profitable, we can set some goals.
Goal # 1: I will keep my entry rules in place.
Goal # 2 – If I don’t get my entry in, I will wait till the next setup
Goal #3: My exit rules will guide my trades, not my guessing of the market’s movements.
Goal #4: I will not trade based upon my feeling, only what I see
Goal # 5: I will never trade with emotion or fear.
Goal #6: I will not take on more risk than what my trading plan allows.
The goal setting process will help you to understand your mental trading challenges.
We understand the importance trading psychology and have established some goals to help us get rid of fear and emotions in our trading.
How do we get there? A strict, live trading routine is one of the best ways to start your journey to achieving your trading psychology goals. This will force you into adherence to your trading plan and rules without fail. This means that you must practice your system consistently for at least 100 trades. When we practice, it is important to record every trade taken (entry/exit, time, results). Trade microlots with real money or $.01 each pip.
Practice well and you will soon notice a reduction in stress and fear associated with losing trades. This process can be repeated until trading rules become second nature. You’ll feel the exact same feeling at the end of each trading day, regardless of whether you win or lose.
To be successful in trading, it is crucial to understand and acknowledge the impact psychology has on trading. Face the challenges of trading headon will allow you to be a more profitable trader. It will also make your trading experience more enjoyable. After this realization is made write down your goals and then focus on what will help to overcome the fear and emotion that comes with trading the markets.
Practice and record 100 trades in a small, live trading account is the first step towards managing your fears and trading with no emotion. Follow these simple steps and you’ll be part of that 5% of traders who are consistently successful.
Forex trading doesn’t have to be difficult, but can be. Big Brain Forex provides a straightforward and elegant trading strategy that will allow you to make steady gains in forex markets.
