3 Steps To Profits In Forex Trading
When you are trading real money your perceptions change. Trading a demo account is easy because you do not have a motivational factor- the money! One way to short cut your self to trader profits is understanding your own psychology and having a solid money management plan in place.
Trading psychology and trading psychology issues are the predominant reasons why traders lose. It has been widely discussed in books and lectures that it has been a convenient excuse for losing. What is trading psychology? Trading psychology is an attitude or a reaction that a trader creates from existing personality traits. These personality traits may not be even related to trading or to market, but they surface from trading.
The main emotions brought out while trading are Fear and Greed. Fear of losses makes traders hold on to long to a bad trade. It can also cause a trader to not trigger a trade once his system gives a signal, or worse a trader enters a signal late only to have the market retrace and create a negative loop in the traders mind. Greed comes into play as a trader has a winner they do not escape the trade at the set levels they want the trade to continue to create money for ever. Many traders stay in a trade that is profitable long after the exit signal only to have a good trade turn into a bad trade. Then fear kicks in again repeating the negative loop.Greed may also make the trader seek revenge on the market place and take a trade size that is much to large.
The fear of failure is another emotion that comes into play. Failure in trading is part of the game. No one wins all the time. The way you should mentally process failure is that you will never have it, IF you learn something from the non-performing trade! Lack of discipline is another cause of Fear. If you can t trust yourself to stick to your plan, you end up self sabotaging yourself. You must stick to your trading discipline.
According to the trading mindset psychology, the reason traders lose it because they are not psychologically prepared for battle or for trade. There are traders that are not prepared to accept financial risk for something of which they have no control over the outcome. When a trader experience consecutive losses, methods becomes replaced with a feeling of despair and hopelessness. Traders would have this feeling that it is impossible to do anything right, in this situation trading psychology is more crucial or critical that the trading method.
By understanding yourself you can get out of your own way so to speak. trading is a huge psychological game. Even if you have a first rate system, you will fail at it if you leave your haphazard emotions in charge. So get yourself under control. As I always say to myself, my best risk control…is myself control!
How to combat a troubled trading mindset?
You need a solid trading plan that fits your psychological makeup. Then you have to have all your steps in place before the market open. You will have your predetermined levels to buy or sell at. Then just do it, follow your plan. You wil take profits at set levels and your losses will also be at fixed levels. Practice mental rehearsal to make sure you have smooth execution.
Self- confidence is an important attributes. If you lack confidence then it would show in your deals. Without confidence, you are not likely to trust and follow something that have developed. Successful trading relies on decision making. Because of money and natural instincts, people cannot remove their emotions from their decision making process. You also need to be discipline with your decision making and focusing on the right areas. There are traders who tend to shed much of their energy thinking about the wrong things.
The market is always correct, and having a healthy psychological profile will give you the ability to listen to the market. It makes no difference if you won or lost, because as said before you will never have a loser if you learn something from it. Trader mindset is the key to over all profits.
Want to Learn A Professional Trading System That You Can Make Your Own? Please See Strignano’s Gann System To Get Your Free Report On Gann Market Timing