It’s important to know about the emotional and psychological part of trading. If you think strategy matters your partly wrong. You need to be smart, patience, disciplined and have the right mindset to be a successful trader.
Don’t get me wrong. There are a lot of webistes trying to sell a robotic, profit guaranteed, system. Ever thought why? All they want is for you to buy their product. They give you the illusion that their system is 100% waterproof so you buy their product. But let’s think a bit longer before buying these systems. If they are 100% successful, why is the price just a few hundred dollars? If it gives a guaranteed profit it should be valued much and much higher. If you have a system that will guarantees you a profit, would you sell it for a few hundred? Just what I thought, you won’t.
As experienced traders we tend to tell you the truth and the truth only. The thing is. Starting traders more often realize that their so called “guaranteed profit” system doesn’t work the way they hoped it would. That’s why we give you this decent course. Having an effective trading strategy is just a small piece of the big puzzle. Again, balance your emotions and be aware of your mental process is vital in this business.
The truth is a majority of all traders keep losing. There is a simple explanation: They enter the Forex market with wrong expectations. They think it’s a getting rich quick system. Traders like that have the thought by investing a thousand ($1,000,-) they will make $1.000.000 in a week. That’s just unrealistic. The Forex market is not a casino.
These unrealistic expectation can and will work against you and will brush your whole account away in a heartbeat. Again, don’t let emotions get the better of you. Ask yourself the question: “what am I willing to lose?” Always have the rule that you can explain why you make a certain decision. Your thoughts have to be robotic and emotionless.
Start trading with money you can lose. Since losing money is part of this business. We can have a good guess what is going to happen in the future but still we can’t predict it for a full 100%. N the beginning the emotions will probably get the better of you. You open your account after you’ve red some about Forex and bought your winning system. You are all excited to become rich and live that lifestyle you’ve always wanted. At that moment you need to start thinking clear and trust in yourself and always explain to yourself why you made a certain decision. Don’t get caught up in your dreams like all the other traders do. Think a head and you will have a bright future!
“Practice makes perfect”.
Let’s take a look at the emotions that influence your trading:
The worst you can do is doubt yourself. When you don’t have faith in yourself you start asking other traders or online forums to search for answers that aren’t there. Remind yourself, your opinion is the one that counts. Trust your guts and judgement. Learn to live and love it!
Try not to look at other traders or what their doing. They might have a slight different strategy. For example you are looking for a 5 PIP profit and trying to compare yourself with a trader that is looking for a 50 PIP profit. You see the danger in this?
Every trader has a different experience or a different way of analyzing. What doubt does. It makes you listen and value the opinion or strategy of the other trader more. You stop following your rules and this might very well led to a big loss or even bankruptcy.
After a few losing trades it’s likely to doubt yourself and you strategy. Mostly you think you don’t have what it takes or something in the area. Advice is to look at your mistakes and learn from them. Let these mistakes adjust your strategy a little bit. Maybe you conclude that it wasn’t a mistake and simply bad luck. If that’s the case keep doing what you did and trust yourself that the outcome will be profitable on the long run.
“Move on, understand what happened in the past but do not have an emotional attachment to it.”
For beginning traders it’s so easy to have fear. Fear of the market not moving the right direction. After all your playing with real money now. Starting traders with no effective strategy of trading plan should stay away from a real account. Simply because your just gambling and probably don’t know why you are making certain decision. You are just clicking buttons in the hope you win.
Fear can occur after a streak of losing trades. You start doubting yourself again and so no light at the end of the tunnel. Start realizing that a good trader makes 20% losing trades. As I said before. It’s about minimizing you losses and maximize your winning trades!
Fear can also influence your trade if you put too much at risk. Think of that feeling when your gambling at one of the tables and have only $100 left for the rest of the week. You decide to put it all on the line knowing that you simply can’t lose or else you have to live on cheap noodles the rest of the week. When you put too much at risk your decision will most likely involve some emotions. That is exactly what you don’t want right? Fear affects your brain and won’t give you a clear vision of the market. This will lead to missed opportunities cause you are afraid to step in at the right moment. Haven’t we all been there?
No one likes losing money. Even the richest of the rich hate losing money. So fear will always be a part of this game. Key is to find a way to switch it off and believe in yourself!
The Forex market is like any other business, most business aren’t profitable in the first years so don’t expect a miracle starting at the Forex market. However, with the right skills and mindset you can be successful in a few months.
Don’t rush success. It’s like surfing. Learn to ride the waves and fear will be in your past. Once you know how to ride the waves of the market or the sea you have little to no fear to take them on!
An emotion that is as old as Santa and the pope combined. After a losing trade it’s pretty normal to feel revenge. You want to make up for your losses. People that have been to casino’s before probably know this feeling really well. It’s also just the way our fantastic brain works. To protect yourself keep in mind there is no such thing as a guaranteed winning trade. So don’t take it personal when it is not your fault at all. For example: You’ve just made a trade GBP/USD. You’ve bought a lot USD. An hour later something like 9/11 happens again…. Obviously the position of the USD is going down. Was their anything you could do about this? No! Unless you work fort he CIA or something like this. Than again if you have a job like that you probably shouldn’t focus on trading. Point is. Sometimes there is just noting you can do about it. Why would you be hard on yourself and try to make up for it. That’s the point were emotions are getting involved and you start losing more.
Revenge can lead to more negative outcomes. So don’t punch your screen or throw away your mouse or phone (Yes I’ve been there during my poker career). It doesn’t help you at all. In fact it puts you down even more. Now you’ve lost money on a trade and a broken phone that will cost $200 to repair. So who are you kidding?
Greed is arguably the most dangerous of all emotions. When you experience an upswing or streak of winning trades it can give you that wonderful feeling that you are the king of the world. The feeling of: I told you so! Maybe you think, oh well, this is just so easy let’s take some more risk. I’ve proven to right all the time in the past. Why would I be wrong this time…? The human brain simly want more and more of that success. This is were you need to stay humble, take your winnings, give yourself o pad on the shoulder and move on to you next winning trade.
There is the possibility to add more money to a successful trade. This means higher the initial risk as well. If you do this just out of greed your making a wrong move. If you hae a good reason for doing so than you’ve made the right decision.
When your account balance goes up doesn’t mean the size of you trade needs to go up as well. When you know your goal and when you’ve reached it you probably won’t be tempted to risk your whole account blindfolded.
The avalanche effect of greed will occur when you hear success stories of other traders that make you want to have the same success as well. Always remember that, even good trader, will only make 80% winning trades. Meaning he losses 20%. These 20 out of 100 losing trades can very well may be all in a row. Does that mean you’re a bad trader? Not if you stayed with your plan and strategy.