The importance of forex trading psychology can never be too strongly emphasised, there are good systems out there, there are good mentors, some offering their services for free, and they will go to a lot of bother to help other, they are genuinely profitable, but without the right frame of my all these won’t be of any use to you.
Dealing With Your Trading Mentality.
As a person you will have certain personality traits, you might be too cautious or you might be a bit too much of a risk taker, you need to identify these issues and find ways of dealing with them. You can use psychology tools to help you deal with them direct but also you need to build a system around these traits. Lots of traders spend so much time on finding the right system and tweaking it and over complicating the issue that they plain forget about the whole psychological aspect. It’s not a hard and fast thing to do, forex itself is easy, it’s a game of simple calculation in whether you win or loose, but the psychology of it all is much one of a big grey area. Everyone’s psyche is different so there are no hard and fast set of rules that can be applied to everyone. But what is clear that most traders do not spend enough time on it, if you look at the forex forums you will see there are thousands of threads discussing trading systems, but only a few psychology threads which are very few and far between.
Forex Trading Is 90% Psychological.
Of course we can’t put an exact figure on it but it is a large proportion of trading, you can have the best strategy in the world, but if you don’t execute it properly you might still loose money. One of the worst traits of traders is not taking enough profit from winning trades, you need to do one of two things in forex, when the market is ranging you need to take smaller profits, when it’s trending you want to take bigger profits. You may well enter a range, but eventually the market will trend out of it, this is time to stay in the trade for all it’s worth. You need to overcome closing the trade too soon, one way is to take part profit in stages, so that if the market turns back, you’ve made some profit, but if the market keeps moving in your favour, you still have part of that trade on making a profit for you. Techniques like this which incorporate dealing with psychology through taking consistent profits is the approach you need to be consistently profitable and profitable over the long term.