Forex Trading Psychology – 5 Rules That Will Make a Huge Difference in Your Bottom Line.
Want to earn great income from trading Forex? Anybody can. Being successful in Forex is quite simple however, it is not an overnight get rich quick scheme; you will need to get solid education and allocate time in order to really make it!
Read the coming 5 trading psychology tips and put them to use, following them will be vital if you really desire success in this field.
1. Be orderly. Keep a track record; write out which trades you have participated as soon as your work day ends. Do it while it is fresh in your mind. Record all of the data along with your conclusions. Do it on a daily and also on a weekly basis. Reviewing your losing trades as well as your winning trades and learning from them will be really worthwhile.
When I trade, I take screen shots of my entries as well as detailed notes for myself and for my students. I note the reasons that lead me to enter the trades as well as anything that might be valuable to remember.
2. Employ strict money management rules. Never risk more than 5% of your account’s balance. I risk up to 3% of my account’s balance on any single trade, but up to 5% is acceptable.
Example, for a Forex trading accounts with a balance of $20,000, the absolute maximum on any single trade should be no more than $1,000. Also remember that this is ‘up to’ and not a standard 5%. Self control is key.
3. Develop an inclusive Forex trading approach and don’t deviate from it. An inclusive approach should be written down in an understandable and straight forward manner, it must be back tested by you and it has to include the following: where to enter, how you place your stop loss and also an exit strategy. Now that you have an inclusive Forex trading approach and you know that it works (because you back tested it), stick with it!
When these steps are done than you are going to know whether or not your strategy will produce profits in the long run, you will know the number of loses that it might occur and you will be clear about what needs to be done each step of the way. You eliminate many unexpected situations as you go along.
4. Occurring losses is a definite possibility in the Forex game. If you follow a back tested system than you even expect it from time to time. Never let emotions occupy your mind while trading, and never trade based on your emotions. Relax, stay cool and in charge of your emotions and actions.
Don’t attempt to compensate for losing trades instantly, consider your over-all, long-term objectives. Concentrate on you technique.
5. Don’t stop training and acquiring more and better knowledge. As Stephen Covey wrote: “Sharpen the saw”, Forex trading is a lucrative career; don’t tread it any differently. Pursuing your Forex education further will make you more knowledgeable, more confident and ultimately more successful.
Want to discover more about Forex trading? Visit Ruben Topaz’s site on how to choose the best Forex trading strategies personalized to your needs.