1. Invest in forex education
Forex trading education is very critical ingredient for overcoming the above-mentioned psychological impediments. With proper training, you will gain essential skills for making good decisions, instead of relying on your gut feelings and prediction.If you want to blindly enter and exit trades without having sufficient reasons for making the decisions, you’ll become emotional, and hurt your trading capital. You need to understand how the forex market is being operated and the factors that cause its movements. For example, if an economic news report had been released, you need to know how it is likely to affect movements in the market, instead of becoming fearful and starting to close and open trades whimsically. A proper forex education will help you in creating a strategy capable of generating consistent profits. Trading without a profitable and inconsistent strategy gives too much room for disaster. However, a reliable and proper trading strategy will help you to relax and be calmer, as it reduces your risk and your anxiety.
2. Follow your trading plan
Trading with a robust plan lowers risks and assists you in keeping your emotions under control. Typically, a trading plan consists of a set of guidelines and perfect strategies for executing trade decisions.A trading plan is usually created after doing extensive analysis and a lot of study about the market behavior. It is what you need to maintain consistency and profitability in your trading.For example, a good trading plan should answer the following questions.*How many pips should I target per trade?
At what times do I trade?
Do I follow the risk management properly?
What rules should I use for entering trades?
How should I manage open trades?
What rules should I use for exiting trades?
Emotions can wreck your control if you let doubt and fear live freely. However, a well designed trading plan will assist you to stay focused and trade profitably without being sidetracked by your gut feelings.Trading without a plan will leave you at the mercy of your emotions. Consequently, you’ll be taking trades based on your gut feelings and without making any meaningful analysis of the market behavior.With a plan, whenever there is a sign of trouble in the market, you’ll not need to adjust your trade decisions fearfully or greedily. All your choices to enter and exit the market will be based on your predefined set of guidelines—giving no room for any kind of emotion to cloud your mind.For an example, if your trade plan specifies that you will be entering retracement trades whenever the market bounces off one of the Fibonacci levels, you should stick to that rule as much as possible because constantly changing of plans is too much harmful.
3. Practice risk management
Proper risk management is a must. It distinguishes a trader from a gambler. If you expose too much capital to the market because of revenge, you could end up with immense losses and probably you’ll blow your account. To avoid becoming an emotional trader, do not risk an amount of cash in your account which you cannot lose comfortably. A common rule of thumb is to risk only 1% of your capital for each trade because it’ll not affect you much. Apart from using leverage wisely, you should also avoid fearfully moving or ignoring stop losses and take profit targets and definitely closing halves. Emotionally managing trades increases risks and detrimental for your account too.
4.Change your mindset
An overwhelmed mindset is a major cause of emotional trading. If you are not focused on your trading decisions, you will easily gather the dangerous habit of being fearful, greedy, revengeful, or euphoric. You need to have a realistic mindset and become an emotionally mature trader. You should train yourself to approach the market with discipline and avoid decisions based on your gut feelings or any other emotions. With a clear and logical mindset, your emotions will lack enough strength to control your trade decisions and you can be strong all the time.
Conclusion
The psychology of forex trading is very important for becoming a successful trader. For most traders, this is what triggers the biggest percentage of trading mistakes. Therefore, you need to strive to keep your emotions in check. If you fail to control them, they will surely control you—and after that, you’ll regret it all the time. The success or failure of your forex trading career depends on your expertise at eliminating emotions from trading decisions, and in that case PRICE ACTION FOREX will be always with you.
