Getting it right from the beginning.

Getting the right Forex trading mindset is probably the most important part of the entire trading puzzle. It is the piece which holds every other part of your strategy for trading together.

Unless you can trade with focus and discipline, which is easier said than done by the way, all of the other bells and whistles available to you will be pretty much worthless.

The first mistake that can prevent you from getting the right Forex trading mindset is to view the Forex market as being an entity with feelings. It is not and never will be!

Yes, at times you will feel like the market is personally doing everything it can to ruin your chances of success, for example:

Your stop loss gets taken out just before the market reverses back in the direction you were trading.

Your trade is a couple of points short of your profit target then moves sideways for a while and you do not know whether to take less profit or hold out for your target.

You close out your trade happy with hitting your profit target then watch as it suddenly shoots off in the right direction moments after.

 

Trust me, we have all been there and it can often feel as if it is just you and the market and the market holds all of the aces. This is just plain daft. There are so many other players in the market each of them holding different views and trading positions at any particular time. For every winner there is a loser and the Forex market could not care less which way it goes as it is just a tool for traders to set a price between 2 currency pairs. Nothing more! 

There is no place in Forex trading for emotion.

If you are trading properly, and if you are not you will not be trading for very long, you will have taken all emotion out of your trading decisions. You will have taken into account all of your analysis regarding the current state of whichever currency pairs you are considering trading. If you are using Fundamental Analysis you will have reviewed any upcoming announcements which may affect the market price during the period you will be trading. If you are using Technical Analysis then all of your charts and tracking data will be up to date and reflect which way the market looks like it will be moving.

Next you will have worked out your anticipated profit target in pips and committed whichever % of your trading bank to this particular trade. As you will already know I firmly suggest that this will be no more than 5% of your current bank.

You will also have worked out your risk/reward ratio to determine whereabouts your stop loss order will be set, taking into account recent highs and lows of the market price depending on which way you are considering placing your trade.

You are now just about ready to place your trade and hit the button to make it live.

You will have noticed I sincerely hope that at no stage during this process did I mention anything other than studying the facts. Doing your research of exactly what the market is saying. Making a trading decision based on factual information and your understanding, through proper training, of what the trading charts and all of your tools are telling you.

At no stage were any of these steps treated with emotion.

You did not think which way the market was going to move.

You did not try to guess where to place your stop loss order.

You did not wonder if everyone else was wrong and you were going to make a killing by going against what the charts were telling you.

You did not use your gut instinct regarding how you were going to trade.

Everything you did was based on factual information right in front of you. There is no other way to successfully trade the Forex market.

I really hope that I have got this message over to you loud and clear. At no stage ever during your trading career will you let emotion or feelings play any part in your trading mindset.

Every time you consider placing any Forex trade you will only do so after careful consideration of all of the facts your trading tools and strategies are showing clearly.

Everything you need to assist you in being successful is right in front of you. You do not need to guess.

One final and very important point.

If you have reviewed all of the information laid out in front of you and you cannot see enough information to allow you to place a trade then don’t! There is no rule which says that you must trade every day. This is once again an area where emotion and feelings can kill your trading operations.

You can always look at a different currency pairing as long as you do your thorough research.

You can come back later to see how the market has developed, if at all.

You can make the rational decision that today is not a day for you to trade and come back tomorrow and start your research all over again.

Never, ever enter a trade because you feel that you ought to.

I hope that you have found this information useful and that you will put it into action once you begin your Forex trading career.

As always, please leave a comment or question below and I will reply as soon as possible.

 

 

Filed under: Mindset

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