Skip to main content

Forex Trading Psychology What Makes A Successful Forex Trader

The Forex market has changed through the years, growing in volume and expanding across multiple time zones.


Brokerage houses have changed, too, going online with sophisticated software and powerful servers.


Economic indicators and technical analysis have become more sophisticated, too, until the Forex market of today bears little resemblance to what it used to be.


But there’s one thing that hasn’t changed: most traders lose.


Despite all the advances in the Forex marketplace, the ratio of winners to losers remains low. Experts agree that the most hopeful number that can be advanced is a measly 10%, which means that 90% of all traders on any particular day will lose.


Experts also agree that the reason most traders lose is because they allow their emotions to cloud their judgment.


Most people trade on hope and fear, rather than facts. Rather than basing their trades on what the charts and the indicators actually say, these people trade on what they want them to say. They hang onto a losing trade and follow the graph down, hoping the currency pair will turn around. Or they exit a trade too soon, fearing the trend won’t last, and are satisfied with pennies that even the best Forex money management cannot balance against their losses.


Other people lose through greed, by trying to pick the highs and lows too nicely to maximize their profits to the penny. Rather than waiting to place a trade when the indicators confirm the market’s movement, they jump in too soon and are disappointed when the anticipated break-out never occurs.


Remember, there is no magic software or fool-proof trading scheme. If you cannot control your emotions, then you cannot become a winner despite yourself. But there are things you can do to improve your chances of being one of the winners, and the most powerful is to follow these rules of Forex trading:


Prepare a trading plan, using good Forex money management skills and the trading strategy of your choice—then trade your plan. Don’t alter your plan or fudge your criteria if you don’t see a good trade for a few days; wait for the market to fulfill your requirements before risking your money. Remember the law of averages: sooner or later, the market will come around.


Use stops, and trailing stops when possible, to control losses and protect your profits. Remember to set your stops far enough away from the entry price so that you aren’t closed out by normal market jitters.


Paper trade with a demo account until you are efficient and feel comfortable in the market.


When you move on and start trading with real money, it feels different than paper trading! But this is no time to change your plan. To minimize the effects of emotion, set a small, realistic initial goal and trade until you achieve your goal more often than not. Use small sums in micro or mini accounts. Only when you are comfortable risking your cash and sometimes losing it should you attempt to trade with larger sums of money.


Study your trading record and try to figure out what went wrong when you lost. To put it simply, learn from your mistakes. That alone will put you ahead of the crowd!

Popular posts from this blog

How To Start Trading The Forex Market Part 4

How Currencies are quoted and what moves individual currencies? ONE of the best advantages in FOREX Trading is The amount of money you need to place a trade (known as "margin") is all that can be lost ! You have to know, that despite the super-high leverage offered by some Forex brokers up to (400:1); meaning if you put up $ 1000 the broker will allow you to trade like you really have $400.000). Forex trading is still less riskier than Stock or Futures Trading, where you can loose more than you have deposited in your account. This type of LEVERAGE does NOT EXIST in the equities or futures market In the Equities or Futures markets, very often, sudden and dramatic moves occur, against which you can’t protect yourself, even by having placed your protective stops. Your position may be liquidated at a loss, and you’ll be liable for any resulting deficit in the account. But because of the FX market’s deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit m

Is It Safe To Invest In Shares Or The Forex

You feel yourself financially able and personally qualified to invest. You can meet the conditions of reasonable stability, reasonable flexibility, and reasonable caution. But nagging doubt remains. Wouldn't you really be better off with your extra cash in a savings account? Or a piece of real estate? In short, is it really safe to invest? Well, how much safety do you require? Since there are no absolutely sure things anywhere, safety must be looked at as a matter of degree. There are no guarantees of success in stock ownership, no guarantees against loss. Even the thoughtful, conscientious investor can be taken to the cleaners. It should be remembered, however, that investment in stocks is a way of sharing in the profit potential of American industry. Is the American economy safe? It seems to be. Since 1900 it has been rising in productivity at an average rate of 4 per cent per year. Our Gross National Product is now nearly $480 billion. By 1965, according to quite conservative es

Enhance Your Forex Trade With Official-Forex-Trading-System

Forex trade is a part of stock exchange market business that decides the fate of various industries. Given the amount of risk currency trading caries, it makes it an extremely volatile industry. However, if you are a novice who decides to jump into forex trade, make sure you are well versed in the intricacies of the stock exchange along with the trade policies in order to benefit with forex deals. In order to provide you the best forex strategy system, official-forex-trading-system mechanical trading algorithm that provides trading alerts for two denominations of currencies such as USD/EUR and USD/GBP in the West Economic region in the morning. In the night, the alerts are based upon JPY/USD and JPY/GBP according to Asian Economic region pairs. With the help of official-forex-trading-system, you can avail the facility of short and long day trading positions. Some of the highlights of forex trading signal include two alerts, along with news dives market action that reads and analyses th