Many people lost money in forex trading not because they do not have a good forex trading system, a forex strategy or a set of rules they do not follow, but it’s the psychology barrier that they have to get over it. They cannot beat their emotions and that caused them to make wrong decisions and lose their trading capital in a flash.
Forex trading psychology is the most important factor for trading fx broker success or failure, but it’s sad to say that many traders do not have that factor as priority and instead keep looking for better forex trading strategies.
1. Do what you are supposed to do. When the trend is weakening, you should take steps to protect your profits regardless of the forex systems that you are using. Remember that in forex trading, you should be thinking how to minimize losses first and not thinking how to win.
Even a breakeven trade is considered a successful trade because it’s not a loss. Likewise when the trend goes in your direction, you will want to set a higher level profit target and on the same time protect your floating profits.
2. You do not like, hate or fall in love with your trades. The currencies pairs are not your friends in the forex market and your only friend is forex trading psychology. Trading with a plan is the #1 forex tips because when a trader is already in a trade position, he/she tends to see the market differently from the first time of analysis. He hopes that the trade will move in favor of him and neglect the factors which may change the market conditions.
3. Increase your position size accordingly. Increase your position size when you have an increase of maybe 10% of your account, this is to build up your trading capital. Likewise, you should reduce the lot size that you are trading when your account have reduced by 10%.
4. Expect the unexpected. In forex trading, always be prepared for both good and bad things. Understand those events and be prepared, so that you can take necessary actions when it happens to you. A good forex trading psychology is where you can take into consideration things that are unpredictable in the forex market.
For example, if the trade is going in your direction, you must have a mental preparation that it can go against you anytime, so that you will not be surprised if that really happens.
5. Remain emotionally detached. A good forex strategy is that you don’t check how is your trade going on every now and then. If you keep watching it, you are going to make wrong decisions I can guarantee you! This is because greed and panic may happen and therefore you adjust the trade. Just leave it to the market to hit stop loss or profit target once you have traded.
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