- The life of a trader, at times, shares similarities with a roller coaster ride
- You need to develop the flawless trading psychology
- Entering revenge trades are signs of focus deterioration
What is The Mental Battle when Forex Trading
Trading the markets can be a very intensive occupation, part-time job, or hobby because we have to consistently interpret our emotions and needs. Keeping track of price movements, setting up trade plans and executing setups are all activities that drain our focus, patience and energy. However, this only occurs if we don’t correctly maintain our life balance. Here are the Forex psychology tips that will help you in trading
How Does the Mental Battle Affect our Trading
The life of a trader, at times, shares similarities with a roller coaster ride. We see many peaks and valleys, witness many scary and funny moments, and ultimately expect a safe journey. These ups and downs in trading psychology , win streaks, drawdowns, and good and bad trades are all part of our daily/weekly routine.
This can work perfectly well for months on end. In fact, being in a state of ‘flow’ helps concentration and makes everyone work more efficiently. However, the thing with Forex trading psychology is that ultimately we risk running out of steam and letting our focus slip if we do not recognise the symptoms on time.
What kind of signs? Well, if you see charts and price movements in your dreams, or have nightmares where one trade goes terrible and wipes out half your account, then you might be staring at the charts a tad too much.Trading Forex psychology in a wrong way means running out of patience with trades and entering revenge trades are, of course, also signs of focus deterioration.
Stay Away From Negativity
Don’t fall into the trap of destructive emotions. Real Forex trading mentality means less Forex trading stress.
By developing bad habits, you are making them a daily routine, and you will not improve. Remember, your daily routine is what will differentiate you from a trader with a good plan, from a trader with a bad one, or even one with no plan at all.
Now you might say, ”this doesn’t apply to me. I am a very confident trader”. That’s great because confidence is needed if you want to produce good results. However, overconfidence may lead to failure. Psychologists observe that most people are overconfident; they tend to overestimate the precision of their knowledge and the level of their abilities.
Have you ever caught yourself thinking that you might be trading based on your beliefs? Overconfident traders are often so sure that what they believe is right and are more likely to act on their feelings. The result is overtrading.
Overconfidence and lack of positive habits are bad behavioural patterns. Try developing the skills to identify and change the way your mind works. Maybe you will need to change your routine. OK, do it! ASAP! You will never break the habit until you decide to break it.
Develop a Proper Trading Mindset
Our mindset is important. If you use the approach: “I need to make money from this”, or “I want to quit my day job and become a full-time Forex trader”, then you are developing an improper trader’s mindset, and you are again moving towards developing bad habits.
Less is more in the Forex market. If you are receiving bad results, you might think that you aren’t putting in enough time or perhaps not trying hard enough. Forex trading stress management means coping with emotions when trading Forex, so stay focused.
That would naturally lead you to push harder and put in more time studying and analysing various systems, searching for a holy grail, and perhaps even revenge trading. Bad idea! Emotional trading may make you lose your focus, lose your nerves and fail in trading. We can also compare trading success to that of human relationship patterns.
The best relationships with Forex trading emotions will not require much work on behalf of either individual once a certain level of understanding has been achieved. Trading success comes from discipline. You should always have a routine and don’t let failures touch you. If you do, you will feel like a failure. Emotion control in Forex equals to stress control trading Forex
Develop Positive Habits
Don’t forget to develop positive habits, because this will help you to succeed. Don’t be afraid of losing. It has always been part of trading. If you start doing things right, you will soon realise that your wins have overcome your losses, and in return, it will make you feel great. Try to control stress while trading Forex by developing good habits. Stress in Forex trading will take a toll on your health too.
Practise Daily Routines
A few critical yet straightforward daily routines already do wonders. Moving at a minimum of 30 minutes per day, drinking a steady dose of water, performing non-pc related hobbies, relaxing, meditating – these all help keep the mind and body focused today, tomorrow and beyond. Occasionally taking a day off from trading is also needed. Coping with stress while trading Forex can be overcome with a proper Forex stress management
This provides a mental break and allows traders to regain their focus. A good day for that could be a trading day with an NFP (Non-Farm Payroll) news event or the FOMC (The Federal Open Market Committee) statement.
In Forex trading – less is more. Stress management in Forex means trying less and putting in less time doing technical or fundamental analyses might improve your trading. That is why analysts are there – to help you and give you the cues for direction, trend, targets and entries.
Practise on Demo Account
…but treat it as if it were a live account. Practice does not make perfect.
Only perfect practice makes perfect. We often recommend trading on a demo account before going live. It is a good way to learn the ropes of Forex trading as many successful traders became full-time traders after a year as a demo trader.
What Did we Learn Today – How to Win the Mental Battle
Experiencing a loss can impair your judgement. You may even start revenge trading after a particularly bad trade. Emotional trading is a quick way to failure. Treat each trade as a separate event, with its own circumstances and motives.
Don’t feel like you made a wrong decision and take responsibility for your losses. Try to use all the tips mentioned above to improve your trading abilities and become a winner in Forex trading. Of course, failures and mistakes will happen but try to control them.
We don’t mean you should feel guilty or punish yourself, but every mistake is a potential learning experience.
Try to think about what factors affected your results.
- Did you miss some important news?
- Did you misinterpret some economic event?
- Or maybe there was nothing you could have done to improve the situation.
Common Questions on Winning the Mental Battle when Forex Trading
How do you handle stress in trading?
A proper way to deal with Forex trading stress represents a series of actions which we take in order to overcome it.
Don’t forget to develop positive habits, because this will help you to succeed. Don’t be afraid of losing. It has always been part of trading. If you start doing things right, you will soon realise that your wins have overcome your losses, and in return, it will make you feel great. Try to control stress while trading Forex by developing good habits.
How can trade stress be reduced?
By trading on a demo account before going live. It is a good way to learn the ropes of Forex trading as many successful traders became full-time traders after a year as a demo trader. However, demo trading brings results only if you treat it as live trading.
If you believe you’re trading with real money, you can’t simply dismiss your bad trading habits and win the mental battle.