Greed and fear in forex trading are two major deadly feeling which if not checked will lead to your ultimate failure. Virtually 99% of traders find themselves battling with these two emotions. Well, guess we are naturally inclined to act in fear and greed.
Believe it or not, the difference between the successful traders and the unsuccessful ones is that while the former has learnt effective techniques for controlling emotions when trading, the former is just clueless about it. I shall be sharing with you tips which when followed will help you put these emotions under check as you pursue success in forex trading.
Get over your losses as soon as they come
Some traders make the classic mistake of waiting for long after incurring losses in the hope they would do well. In reality, the dynamics of the market move so fast that such traders find themselves losing several more points. Even when they eventually rise, they will still maintain an unprofitable position. Always bear in mind that not every trade will be profitable. Your goal should be to profit from at least half of your total trade. When you have eventually found your winning campaigns, focus more on them as doing so would lessen your losses.
Never allow your emotions to interfere with your trading
Decisiveness is key to every business dealing, including forex trading. Successful forex traders are those who are decisive enough to respond quickly to trends that alter the dynamics of the market. Once your original analysis has changed, change with it.
The forex market is filled with uncertainty – the good and bad will always happen sometimes when you least expect it. It is beyond your power to accurately predict the market, and you have to accept that.
Work with a plan in mind and not with hindsight
Most forex traders see forex as more like shopping rather than trading. By shopping, I mean spending your dollar without planning on stuff when the sudden feeling to do so arises.
So, instead of trading based on your instinct or feeling, it is better you have a plan and stick with it. Your plan must take into account stop loss and profit target. A plan makes it easy for you to get out on time when the market moves against you, and to amass profit when it moves in your direction.
Having a plan that hints you when and when not to trade is the best way to deal with harmful emotions that plague forex traders.
This technique works because you want to make a personal judgment for your trade!
Depending on your instinct and gut feeling may work but only in short term – you need a solid plan to succeed with forex trading in the long term.
Observe all forex trading rules
Before placing a trade, check to see if you have met all listed condition, otherwise, you will have yourself to blame.
Truthfully, there is nothing difficult about following rules. As easy as this may sound, some traders often times fall for the trap of placing a trade without first knowing all the required condition. As a rule, never get carried away with excitement, the influence of others or fear as they are all deceptive.
Don’t place your trades all at the same time
The forex market is very unstable in nature, and no one can exactly predict its direction. It is filled with series of uptrends and retracement, and so what successful traders do is to wait to see trading signals before placing a trade, and will never trade during times of retracements.
Excessive trading will be of no help. If you have been trading in multiple currency market and yet to record success, the best thing to do at this point is to focus on one or two markets and forget the rest. The fewer the trade you follow, the easier it will be to track your success and losses. Lessening your number of trades makes it easy for you to spot out unsuccessful trades.
However, it is important you pay close attention to the market you are trading in. What matters most in forex trading is keeping up with market trend and conditions. During unfavourable market condition, you are better off staying away from trading.
A good money management technique is way better than a forex trading technique
Trying to make so much money within a short period of time puts you are grave risk, and you are very likely to wake up one day and discover that all you have is gone. There are no shortcuts in life, and forex trading is no exception. Never be carried away when someone comes telling you how much profit they have made consistently during the months because it is most likely a scam.
Your success in forex trading starts the day you learn to master your emotions. Simply put, never allow yourself to get dragged down in the event of losses, neither should you get over the roof in times of profits. When profits or losses don’t move you, you will eventually get to overcome the emotion of fear. When you look closely, you will discover that most mistakes traders make are made out of fear.
Conclusion
To become a successful forex trader, you must first master your emotions and put them under check. Failure to do so will inevitably lead to your failure, making success elusive.
Credits : Franco
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