Trading Psychology


When you first step into the world of trading typically your emotions run high as you believe that all you need to do is simply follow a trade plan and that you will see a great ROI (return on investment). While this is true to an extent, trading is not as easy as that otherwise everyone would be successful. What typically holds people back is themselves.

Once you have learned how to trade Forex, developed a trade plan, back-tested it to ensure that what you plan to trade can indeed bring a positive outcome many believe that the hard work is done, to which 80% of it actually is. However the remaining 20% comes from your own actions and how you handle certain situations because it is you that decides what will happen next as you are the one in control. It is how you react and handle every situation, every decision you make will indeed dictate 80% of your performance it is how you take that plan and use it that will determine your results and level of success.

The problem with many new traders is that they forget that they are the ones who ultimately dictate their own performance as they are the ones making the decisions, reacting and choosing what to do next. Speculating in the the Forex market is very subjective because you are the one predicting what the next market move might be by simply interpreting what is on your price chart and while we do teach you methods to reduce subjectivity through that of a rule-based system a level of subjectivity still remains. This is because you are the one who ultimately decides if; a setup is valid or not, to execute a trade or not, and if your rules are met or not. Our approach of using specific rules will reduce subjectivity but it will not eliminate it, as trading is based on interpretation of what the trader sees so that they can base opinions and make decisions from such interpretation. This is why we implement the use of the 'if...then' thought process as again it helps to remove another layer of subjectivity in your trading as we have covered within our Forex trading course more specifically the Expansion course. The key to being consistently profitable is to remove as much subjectivity within your trading as possible. You want to make your trading systematic in where your rules are simply what allow you to get involved in trades and nothing else. Your emotions will be a big factor too.

Entering the world of trading at face value seems quite easy, as every trader probably thought this at the beginning of their journey or career. The same can be said when even Demo trading or Paper trading as their is no element of real risk yet as you are not trading with a Live account with real capital but once you do, then a switch in your mind occurs. This switch will amplify everything in your psychology and emotions because now there is an element of real risk involved. You will begin to feel emotions you never once did, react differently and even think differently. Trading demands so much of your psychology and results are heavily dictated by your actions and while we can indeed give insight as to how you can handle situations and be prepared it is simply experience that will shape your trading psychology.

We will look at trading psychology in much greater depth, cover specific topics such as emotional trading and you can implement certain techniques to ensure that your mind is your greatest asset not your enemy in your performance.

Trade safe. Fair Exchange FX.


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