In forex trading psychology, there are 2 destructive emotions that are always present in the world of commerce and that is, greed and fear. I can say that most traders or 99% of the traders are very affected by these two emotions and no doubt that is part of our human nature.
Successful forex traders have those emotions too, but the difference that separates the successful traders and that is not the technique of controlling the emotions well. We will look at some of the forex trading tips that can help you as a trader to control those emotions well and get consistent profits from the forex market.
1. Learn to trade forex with a disciplined plan and not by hindsight. There is a problem with many forex and that is they take shopping more seriously than forex trading, and I mean it! An average shopper will not spend $100 on something without much research or if he/she has made some comments on it. But I have seen people risking their trades with a couple of hundred dollars, based only on their intuition or ‘feeling’.
So what people need to do here is have a trading plan at the starting of the day and follow it throughout the day. The trading plan should consist of stop loss (it’s a must!) and the profit target levels, so your trade is planned to become taken out early when the market goes against you and yet also there is a profit target of two aim for if the market goes in your direction.
2. Be sure to follow the forex trading rules. A forex trading system is meant to help you make accurate trading decisions, so please make sure that all the conditions are met, even before you a trade.
Sounds easy? In fact, it seems very easy for anyone to follow a rule right? But there are many traders who can not control their temptation to trade when not all the rules are met, they often trade earlier even before forex signals are generated. This is also an important part of forex trading psychology, you should not easily excitement, fear or other people’s affect ruin your trading system that works.
3. Successful forex traders do not trade all the time. A good trader will understand that the forex market does not move in a straight line, it moves in waves. For example, the trend can be bullish, but there will certainly be retracements, so conservative traders may only want to wait for forex trading signals to buy and will refrain from selling during retracements.
Having said that, it all depends on the market conditions and if it allows you to trade in large retracements, so be it. You have to learn to judge the market condition on whether it is trendy or choppy. For me, I’ll always avoid trading when the market is choppy because it is too unpredictable.