How you relate to your trading results affects your performance. Negative emotions have not been useful to anyone in this matter. There are a couple of tricks to help you gain the right trading mindset. However, the main thing is to accept the fact that this is an important issue and that a solution is quite comprehensive.
Start with Your Inner State
What you feel in your daily life inevitably affects your trading. At least in the beginning, when you still cannot clearly control your emotions. It is important to reduce overall stress levels. Solutions can be individual:
- Get up earlier - in the morning we are more productive and we have more chances to succeed
- Sleep more - lack of sleep affects all aspects of life
- Try to meditate - you can reduce stress and learn to absorb information faster
- Get rid of obvious sources of stress - poor environment, terrible employer, etc.
- Take more time for yourself - find something to your liking, such as sports, walking, music, etc.
You got the idea. When you open the chart your thoughts should be clear. To do this, you need to heal your inner state.
Exit Your Trades Properly
Opening a trade by all the rules is only half the success. You need to understand when to exit. And this applies to both profitable and unprofitable transactions.
I understand that you want to recoup and you expect that your unsuccessful position can unfold at any time. But the chances for that are way too low. It is important to understand when the position is not worth it and it’s time to close it. This way you can control your losses.
The same goes for profitable trades. There are times when you need to close a position even when it makes a profit. This applies to closing trades at the end of the day, week or prior to major news releases. The risk that a profitable trade will turn out to be a failure is very high. Therefore, it is important to overcome yourself and close it on time.
Don’t Quit Learning
The market is constantly evolving. The moment when you can say that you know everything about Forex will never come. The more knowledge you have the more confidence you feel. And a confident trader is a successful trader.
When you have finished mastering basic knowledge you can switch to studying new trading strategies, advisors, indicators. You can subscribe to special channels for traders, listen to podcasts. Thus, you will always be aware of the latest news and developments and be able to benefit from your knowledge.
Learn from Others’ Experience
Of course, the best way to learn something is to experience everything yourself. But isn’t it better to know in advance about gross errors in order to avoid them or about tricks that can be used? All traders follow the same path. So why don’t you take advantage of the experience of other people who have already built a successful career on Forex?
Good literature will help you get into the head of professional traders and tell you how to set up your mindset.
Analyze Your Trading Experience
The only way to evaluate your results is to keep scrupulous notes. Traders have invented a trading journal for that purpose a long time ago. This is an indispensable tool for any trader. It will help you not only monitor your progress, draw useful conclusions and improve your trading system but also teach you how to control your emotions.
The more detailed your journal is the more beneficial it might be. If you know what emotions you had at the time of unsuccessful trade and what provoked them, then in the future you will know when you should avoid trading.
Take Emotions Under Control
Yes, easier said than done. But if you don’t do that then you have nothing to do on Forex. Emotions in trading is a time bomb. Even if you were lucky earlier, in the end, you will explode and lose all your capital.
Accepting the inevitability of losses, as well as understanding that you don’t have power over the market and it owes you nothing, will help control your emotions. Even if you have a losing streak it doesn't mean that the next transaction will reimburse your losses. And this is beyond your control. The only thing you can actually control is your risk levels. Accept the fact that there will be losses and make sure that you lose just as much as you expected:
- Always set Stop Loss. And I mean “always”!
- Set the risk percentage from the total balance for each transaction - no more than 3%.
- Set the risk percentage for simultaneously opened transactions - no more than 6%.
- The risk-to-reward ratio should be at least 1 to 2. And preferably 1 to 3.
- Properly choose the leverage size and the volume of your transactions.
All in All
The way you see the market is of great importance. If you want to succeed you need to understand how the market works, feel its mood, and know how to react to its movements. The experience and right mindset will help you out.
Start with yourself. Don’t enter the market in a bad mood. Don’t let emotions control you. Learn to see only numbers on charts, not money. Only in this case, you can get the right trading mindset that will help you enter the 10% of lucky traders who have built a successful career on Forex.