Having a wide range of knowledge on market analysis or been well educated about forex is not the only criterion that guarantees the success of a forex trader.
You could know about several successful trading strategies and also be very good at using forex trading indicators, but if you’re not fully educated on some vital things about forex trade it will be very difficult for you to make a profitable trade on FX.
Most times traders tend to overlook or completely ignore the psychological aspect of trading when it should be one of the most important things every forex trader needs to learn.
The key success of a good trade is emotional discipline.
It is the ability to manage your emotions; intelligence isn’t all a trader needs when it comes to forex trading, if that was the case then we would have many people making money from forex trading.
There are so many intelligent people out there who end up losing funds in Forex because of emotions such as fear, intense euphoria after making gain in trade, and greed tend to cloud their judgments.
The lack of ability to control your emotions can ruin your trading and cause damage to your trading account, it could lead to the loss of huge funds, that is because when we’re angry, greedy, or depressed we’re bound to make rash decisions without having a second thought.
How to handle emotions
Experience traders that have mastered the art of controlling their emotions very well, know exactly when to enter a trade in the market and when not to enter a trade.
Ways of handling emotions:
- Do not trade out of greed
The best thing to do when feeling stressed emotionally is to avoid placing a trade at the moment, don’t be too greedy because you want to make a huge profit and then make a trade that will make you lose lots of funds in the long run.
- Be aware of the volatility in Forex trade.
This is another crucial aspect of Forex trading that needs to be emphasized. When going into a trade in the forex market you need to be fully aware of the market volatility, this is something any experienced trader is fully aware of.
Irrespective of how perfect your trading decisions are, the market can go away you least expected at any point in time.
When you’ve fully mastered this process then you won’t be shocked when a trade results in a loss. You need to fully prepare your mind for any outcome, be it good or bad.
- Do not expect a quick profit.
This particular topic is somehow related to the greedy aspect.
Forex trade isn’t someplace you can come to make some quick money.
People who invest in forex are people who do so for the long term, now if all you have in mind is investing to make quick money, will end up with you losing huge fund.
When you place trades with huge trading volume and lot sizes, you’re also putting a huge amount of money.
Forex traders who make this kind of trade are only thinking of the possibility of making huge profit forgetting that if a trade doesn’t go as planned it could lead to loss of huge funds, in some cases it could lead to the loss of their entire capital.
An experienced trader will never make such trades. They always abide by good risk management rules.
Avoid making a trade when you’re emotionally unbalanced, always remind yourself of the uncertainty of the forex market, and always practice wise risk management.
Tips on making a good trade:
- Prepare a good trading plan. It is important to make a good plan before entering a trade; it decreases the risk and prevents emotions from affecting your performance. Developing a personalized trading plan and a very good trading discipline is one of the things an experienced trader should do.
- After placing trades don’t give yourself unnecessary anxiety by constantly monitoring the currency movement. Place your trade and move away. If you’re constantly monitoring the trade you might end up making rash decisions out of fear or greed.
- Make use of well-tested strategies. Try not to be too confident, it’s good to use strategies that have been tested and confirmed in the past.
With that been said, we highly recommend joining our community of expert traders. Here the experts will make sure they hold your hands through this crazy financial jungle.
I always try to make people understand this; “a smart person learns from his mistakes, but a wise person learns from the mistake of others”.
Knowledge and experience is the key.
Whenever you are in doubt, consult someone that has done it already and learn from them. It’s that simple!
That’s why you need to join our thriving community and learn from people that have failed countless times in the past and learn from them. With their insights, you will definitely avoid most of the mistakes beginners and even experienced traders face.
Join our Trading Academy here.
If you found this very helpful, you can download our eBook here completely for free where you will be able to get a comprehensive guide on trading in the FX market.
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