Show Buttons
Share On Facebook
Share On Twitter
Share On Google Plus
Share On Linkdin
Share On Pinterest
Share On Reddit
Share On Stumbleupon
Hide Buttons

Tag Archives: knowledge

How To Control Your Emotions When Forex Trading

Learning to trade Forex is hard enough, but that is only half the battle. Learning to control your emotions when you trade is another skill that you need to master in order to become successful.

Many traders can trade demo accounts quite successfully, but when it comes to trading with real money they fall apart. This is because they trade emotionally when real money is involved.

I have been trading for many years but even i trade emotionally from time to time. I think it is impossible to completely remove emotion from your trading, but learning how recognize it and how to control it will be a real benefit to your trading.

If you find that you are having problems with emotional trading there are things you can do to help.

Fear and greed are the 2 main emotions that you have to deal with when trading. Lets look at fear first.

Fear is basically a fear of losing your money. If you are struggling with this then the first thing to do is to reduce your lot size, or your price per pip. If you are trading with more money than you are comfortable losing then you will be trading emotionally. I don’t like losing, and to be fair i don’t have many losing trades, but they do happen, and every time you enter the market there is a chance that your trade will be a losing trade, and if you are not comfortable with your potential loss you will trade with the fear emotion.

The next thing you can do is to take more trades. I know this may sound a bit weird and a lot of traders will tell you to take less trades, but this in my opinion will just compound the problem, as taking less trades will make you focus more when you do trade, and make the trades you do take more emotional, and you will also miss out on some good set ups, which will again add to your frustration. Taking more trades with smaller lot sizes will help your emotional trading problems.

Lets now look at greed. Greed is harder to master than fear in my opinion. Lots of traders will talk about risk reward in Forex trading. Where you have to have a 2 to 1 risk reward ratio to be able to take a trade. This strategy will compound your greed problems. A good way to deal with greed is by taking less pips profit per trade.

For example if you are targeting 30 pips per trade take 25 instead. If you are targeting 15 pips take 10. Get used to taking less pips per trade and you will feel good about it, and be more in control of your trading. A winning trade is a winning trade no matter how small the win. Waiting for your target to get hit will not help your greed problems, especially if the market reverses 5 pips from your target. Taking less pips and getting more winning trades will also help your fear problems too, so its a win win scenario.

Knowledge is also a big part of helping to combat your emotions. If you are trading with a tried and tested Forex trading strategy, and you understand what is going on in the market, then dealing with your emotions is a lot easier to do.

I hope that this post has helped you understand the importance of controlling your emotions in Forex trading, and given you some ideas on how to manage your emotions.

For further help with managing your emotions please consider my Forex training and mentoring course info here.

What Is The Best Forex Trading System

Good question.

First of all you must define the word system. Does system mean an automated trading program? Or does system mean a manual method that produces consistently high results?

I am not a big fan of automated trading programs, trading software, expert advisors, or whatever else you want to call them. They are very good at emptying your trading account, and the brokers love them, as they put a lot of money into their pockets.

Having said that, a good proportion of Forex trading is done by automated trading robots, but the banks that use them spend millions of pounds developing them, and they are constructed by the best trading brains around, and use complicated algorithms that trade by the millisecond. They work very well but you are not going to see those automated trading programs selling on the internet for a few 100 dollars im afraid.

So what are your options if you are looking for the best Forex trading strategies. The only real option that works consistently well for the retail trader is a manual trading system. I use a manual trading system. I like to call it a method rather than a system. I think the word system sounds a bit like trying to beat the house at roulette, which is not what i do. I do the exact opposite actually. I don’t try and beat the house, as you will never beat the house, the house always wins. What i do is trade with the house. The house makes money, i make money.

So how do you devise a trading method that will produce consistently high results? Well first off you need to know what you are up against. When you trade Forex you are trading against other retail traders, banks, hedge funds, brokers, market makers etc. Now statistically 95% of retail traders lose money trading, so you need to be in the 5% of traders that make money. To be in the 5% you need to know exactly how the markets work. When you have that knowledge you can work on your trading method.

A lot of traders say that to be successful you have to have patience and discipline. I will agree with that. But think of it like this. Trading Forex is like crossing the road. When you were little you did not know how to cross safely, you had to be taught. When you had learned how to cross the road you could cross even the busiest road safely, because you knew when to cross and when to wait. You don’t have to practice that much patience and discipline when you cross the road, you just wait until its safe to cross. Trading is very similar. When you have learned how to trade correctly you just have to wait until its safe to trade. Patience and discipline is a lot easier to manage if you are educated. Why would you want to enter a trade if you run the risk of getting hit by a 30 ton truck? You can see how important education is in any walk of life, and Forex trading is just the same.

When you have the education and you know how the Forex markets work, you no longer have to look for the best Forex trading system, as you already have it. The best Forex trading system is knowledge, and always will be.

If you want to educate yourself and learn how to trade like a professional Forex trader, please consider my Forex training and mentoring program here.