Category: Forex Psychology

Trader’s psychology is the main driver of the markets: Greed and Fear were the two main forces already signaled by Jesse Livermore as the main culprits of the traders’ failure. In this section, we present the best education on psychology to help our readers master their minds and control emotions while trading. We will dissect the main tasks of trading, analyze the psychological elements of risking and how the mind behaves under situations of uncertainty. We present also techniques to control stress. A section will be dedicated to losses and how this element of the trading profession has its roots in psychology. Another section is dedicated to the development of discipline. Finally, we explain the process to make sound decisions.

Forex Psychology

Important Questions Every Forex Trader Should Ask Themselves

Post author By Forex Academy
Post date 26 August, 2020
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Becoming a successful forex trader takes a lot of hard work and determination. It’s easy to get so caught up in things that we can miss signs that we should be doing things differently. This can result in bigger problems down the road and cause us to lose money or become stuck in the same […]

If you’ve already started your forex trading career, you should use our self-evaluation checklist to see if you’re making any common mistakes. Hopefully, this checklist will help to outline problems that you may not realize are hurting you. Ask yourself these questions:

What tone does your inner voice take when you’re trading? Is it angry and frustrated, or relaxed and focused? If someone could hear your thoughts, what would they say to you?
Is your strategy based on solid facts about the market, or do you make loose decisions that are based on thin air? Could your strategy use some improvement?
Do you ever take the time to improve yourself when it comes to forex trading? Do you invest time in learning new things and perhaps practicing on a demo account, or are you stuck in your old ways?
Do you think your losses could be lowered with better risk-management precautions? Do you ever throw caution to the wind when it comes to risk-management and later regret it?
Once you incur a loss, do multiple losses tend to follow? Could it be that you allow emotion to cloud your judgment when you’re down, or do you fall victim to risky tactics like revenge trading?
Can you recognize when you need to take a break from trading? Have you ever continued to trade while feeling anxious or fearful, only to make bad decisions? Has a stressful life event ever caused you to become distracted while trading, resulting in losses?
What is your general mood when you finish trading? Are you fulfilled and happy, or overwhelmed and stressed?
Could you possibly be addicted to the rush of trading? Are you often borrowing money from others or using money that is needed for bills and necessities to trade with?
Do you make trades because they are good moves, or because you’re craving the excitement or self-esteem boost that trading can provide?
What are your short-term and long-term goals? Do you think those goals are realistic or far-fetched?
Are you investing enough time into trading? Are you focusing on trading full-time, or is this just a part-time activity? Are your expectations in tune with the amount of energy you put into trading?
Do you think you have the right attitude to be a successful forex trader? When you lose, do you beat yourself up or learn from your mistakes?
Do you keep a trading journal? Do you think that your strategy could be improved by taking the extra effort to document your decisions?
Can you find the humor in losing and move on easily, or do you become fixated on everything you lose and allow bad days to overcome you?
How focused are you when you’re trading? Are you in the zone, or are you often distracted by background noise and other thoughts? Would a quieter environment benefit you?

Answering these questions honestly can cause substantial growth in your Forex trading career. Only when one can look inward can true improvement be made.

Tags Forex Advice, Forex Questions, Trading Guidance

Forex Psychology

Self-Improvement Steps for the Fearful Forex Trader

Post author By Forex Academy
Post date 26 August, 2020
No Comments on Self-Improvement Steps for the Fearful Forex Trader

Forex traders are no stranger to the rollercoaster ride of emotions that come along with trading, as many have experienced excitement, greed, anxiety, anger, and even fear at some point in their careers. Today, we will focus on fear and how it can affect your trading decisions, along with some ways to cope with it. […]

While trading, fear can come from the possibility of losing money, as you never know for sure if your trade is going to win. Some people feel this way at all times and are very careful about how much they risk, while others might only struggle with feeling fearful after taking one large loss or multiple small losses in a row. At this point, the trader is more likely to think of how much money that they have just lost and might even feel as though they are having bad luck. The fear then leads the trader to close their position too early, even though it was a valid trade that could have made more money. After a few hours, the price shoots up and the trader is left feeling angry with themselves for closing out the trade when they could have made more money. Sound familiar? Many of us have been there before.

So how do you deal with feelings of fear while trading and avoid closing out trades too early? Try following these steps:

Step #1: Identify Your Fear

First, you need to admit to yourself if you’re feeling uneasy and figure out why. Are you simply afraid to lose money in general, or has something made you feel this way? If you’ve been on a losing streak recently, this could be a contributing factor. A large loss could also make you feel more worrisome. Or perhaps you’re generally an anxious person that is feeling more on edge from normal trading emotions. Once you’ve confirmed that you are feeling fearful, remind yourself that this is a perfectly normal emotion in trading that can be dealt with.

Step #2: Don’t Let Fear Stop You

Once you know where your fear is coming from, you can think about the emotion more clearly. Say that you’re preparing to exit a trade. At this point, you should ask yourself if there are valid reasons to exit the trade, or if you only want to close out because you’re afraid of losing money. If it’s the latter – you need to stay in the trade until you have a reason to exit. Know that it’s ok to step away from your computer if you start feeling overly fearful or anxious in these moments, as a quick break can really help you calm down. Staying in the trade for longer is the option that is more likely to bring you in more money, as long as you have evidence that the trade will be successful.

Step #3: Start a Trading Journal

It would be nice if every forex trader kept a trading journal, as these handy little record keepers can provide deep insight into what is going right or wrong with your trades. Sadly, a lot of traders don’t use a trading journal, or they might start out with one only to abandon it down the road. For those that have been feeling fearful and closing positions too early, it’s a great idea to either start a journal or to make sure you’re logging everything in detail in the one you have. As you work to deal with overcoming the fear you’re feeling, the journal will help you to see if you’re making improvements or stuck making the same mistakes.

Tags Forex Advice, Forex Guidance, FX Trading

Forex Psychology

The Inherent Dangers of Revenge Trading

Post author By Forex Academy
Post date 26 August, 2020
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Revenge trading – it’s one of the many things that can stop a successful trader dead in their tracks on the path to success as if traders weren’t already dealing with enough negativity. Before you can learn to stop revenge trading and how to avoid it, you’ll need to understand what it is. Allow us […]

The term revenge trading refers to a common problem where a trader becomes angry after losing money and attempts to take revenge trades in an attempt to recover their losses. With emotions like anger and frustration clouding the trader’s mind, they are likely to make decisions that are closer to gambling without following their trading plan. There are two reasons why this is a big problem:

First, revenge trading causes the trader to throw their discipline out the window. In the heat of the moment, trading plans and strategies are often ignored, and the trader might base their trades off nothing much at all. When your head is stuck on those losses and how badly you want to make the money back, you aren’t likely to follow your strategy or to think about risk management.
A trader that isn’t making good decisions and that makes large trades without accounting for their overall risk is likely to lose more money, thus repeating the cycle that started the revenge trading in the first place.

As you can see, revenge trading can cause issues with one’s logical thinking in the same way that many other emotions like anxiety, fear, etc. can wreak havoc on trading decisions. Below, we will provide two common scenarios that exemplify revenge trading:

In the first scenario, trader A has invested a chunk of money into a trade and wound up losing $97. This leaves trader A feeling frustrated about the fact that he was wrong and anxious to make his money back. In the same ways that someone who is having a bad day might get road rage or become snappy with a loved one, trader A begins to take out his aggression on his trades. He impulsively makes larger trades out of desperation to win that money back, but he winds up losing even more. In the end, trader A loses $200 instead of the initial $97 loss.
In the next scenario, trader B loses $40 a few hours after her stop-loss is hit. Although she would usually only risk $50, she decides to double her risk to $100 out of frustration and in an attempt to win that money back. As soon as she makes her $50 back, she cuts her winning trade out because of the fear that she will lose money again, even though she could have made more money.

Although both of the above scenarios differ, each trader has fallen guilty to revenge trading. Trader A lost more money than he would have because he was chasing his losses, while trader B doubled her risk and closed out her winning trade once she made what she had lost. Bost traders lost money they could have made, as trader A could have stuck with the initial loss and trader B could have made more money on the winning trade.

Now that we’ve covered what revenge trading is and provided a few examples, we will offer a few steps that can help traders overcome this problem:

Step 1: After a frustrating loss, you should step away and clear your head. You could try doing something that makes you feel relaxed, like listening to music, exercising, or even spending a few minutes outside. Once you’re calm, you’ll be ready to think more rationally.
Step 2: Next, it is helpful to determine the reasons why you lost the trade. Was this an error on your part, or did you make a trading move that seemed reasonable? Instead of betting yourself up over the loss, you simply want to figure out what went wrong so that you can avoid making the same mistake. Also, try to identify any triggers that you might have that signal you’re about to start revenge trading. A fast heartbeat or biting fingernails are a couple of examples.
Step 3: Always follow your trading plan, no matter what. If you have a plan and strategy, you shouldn’t deviate from it because you’ve lost money. If you usually only risk a certain percentage on a trade, don’t risk more just because you’ve lost money, as this is likely to cause more loss.

If you follow the above steps by clearing your head, determining what went wrong, and sticking to your usual self-given trading guidelines, you should be able to stop revenge trading without much effort.

Tags Forex psychology, Forex Trading, Revenge Trading

Forex Psychology

Tips for Remaining Disciplined While Trading

Post author By Forex Academy
Post date 26 August, 2020
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Discipline is often listed as one of the most important traits that a successful forex trader should have. After all, without discipline, one is likely to make decisions based on their emotions and might not stick to a trading plan at all. This makes trading more like gambling and guarantees that success will be hard to come by. The disciplined trader has it all – they can keep their emotions in check (even after large losses or a bad day), they set a plan and follow it consistently, and they don’t spend time worrying about past mistakes. Instead, they learn from their mistakes and move on.

Of course, being a disciplined forex trader is easier said than done. Anyone who has traded before has likely felt a rush of emotions, considered deviating from their trading plan when the market was unpredictable, and they might have even thrown some of their self-imposed rules out the window. If you’ve been there before, then there are some things you can do to help yourself stay disciplined.

Tip #1: Practice

Controlling your emotions can be difficult when money is on the line. This is why you need to practice keeping your cool in the beginning until it feels more natural. It’s normal to be more on edge in the beginning of your trading career, or perhaps after changing something about your trading plan or strategy. You can always start by practicing on a demo account to make yourself feel more confident about your plan or abilities – but be aware that a demo account can’t prepare you for the rollercoaster of emotions that come with trading. This is because a demo uses fake money, so while it might show you that your plan needs some work, it isn’t the best if you’re working on managing your emotions. When practicing on a real account, try taking smaller position sizes and risking less so that the emotional fallback is less if you lose money. Then, you can slowly work your way up to larger trades once you feel that you won’t take those losses to heart.

Tip #2: Critique Yourself

Go back and take a look at your results once you’ve been trading for a while. Have you made money or lost it? The best way to do this is to keep a trading journal and write in it religiously. This means you’ll log every trade you make and include details like how much you made or lost, the reasons why you entered or exited the trade, and so on. This helps you to understand your strengths and weaknesses and shows you where your strategies do and don’t work. Once you tweak your trading plan to perfection and have data that proves it is trustworthy, it will be easier to stick to it in the long run.

Tip #3: Stop When You Need to

Sometimes, you might just need to stop trading altogether. This could be applied to two different situations; in the first, the market might just not be right for trading. They don’t say that it’s better to trade less for no reason, this saying actually has to do with the fact that traders come out better when they know when to sit out. If you force trades, you aren’t doing yourself any favors. The second scenario could come into place when your emotions are just too overwhelming and you can’t calm down. The best traders know that it’s ok to step away from your computer and take a breather if this happens, rather than to continue allowing yourself to make clouded trading decisions. Take as much time as you need to and come back once your level-headed. This will make it easier to stay true to your plans and strategies without making cost worthy mistakes like revenge trading.

Tags FX Trading, Risk management, Trade Discipline

Forex Psychology

Changing Your Ways: How to Break Bad Trading Habits

Post author By Forex Academy
Post date 24 August, 2020
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In order to find out your bad trading habits, we need to have a trading journal set up and for it to be full of information. The information is stored in this journal should include things like your entries, exits, any changes to trades, the results of the trades, how long the trade was held for, and much more, basically as much information that you can fill it with. You can then use this information to look for habits, things that you have been doing consistently, and in the case of bad habits things that have consistently been having a negative effect on your trades.

As a side note, if you have not started to record your trades in a journal, then ensure that this is the next thing that you start to do, it is an invaluable source of information and can be used on a regular basis to improve your trading and to make you a better trader.

When looking through your journal, you may find quite a few things that have caused your trades to go bad, it may look like a lot of work, but it may not be quite as bad as you think. A lot of bad habits often stem from the same thing, there could be a single underlying habit which is then causing everything else to take effect. So take a look through to see if there are any characteristics of these trades that are similar to each other. As an example, if we think of a few different issues that can very easily arise, you close a trade early, set your stop loss a little too tight and avoid taking a good trade setup every now and then. Those seem like three completely different issues which by themselves they are, but there is a single underlying factor that links them all, a fear of losing.

We can use this and by dealing with that single underlying issue, it can help us to get over al three of those issues, there may, of course, be something else in there too, but the major factor that links all three together is the fear of losing, so dealing with that will help reduce the likelihood of all three issues recurring. It is all well and good identifying the issue, but we then need to do something about it, and that is where this article comes in. We are going to be looking at some of the things that you can do in order to help get yourself out of these bad trading habits and then become a much more confident and consistent trader.

Use a trading journal:

We touched on this earlier, but you need to be journaling your trades. You just need to. A trading journal gives you so much information, it gives you such a fantastic insight into your trading and your trading habits. You will not be able to deal with your bad habits if you do not know what they are. Just take a few minutes before and after each race to jot things down, it won’t take you a long time to do, in fact, once you have been doing it for a while it will be like second nature to you and can be done pretty quickly. When you are feeling uneasy, write it down, when you come out too early, write it down, just write everything that you do down. It isn’t hard, it does not take too long, so just do it, if you want to be a successful and profitable trader then you need to be doing this.

Talk to yourself:

You have probably been annoyed at some time in your life when you have been trying to do something but the person next to you is reading aloud or talking to themselves. They aren’t necessarily doing this because they are a little crazy, they are most likely doing this as a way of confirming the information or what they are doing with themselves as a way of being sure that they are doing the right thing. There is no harm in this and if you experience a number of bad habits, doing this yourself could help you get over them and nip them in the bud early on.

If you talk to yourself and question what you are doing, it makes you think about it more, this can help you to recognise that one of your bad habits is trying to rear its little head. At this point, you can realise this and then take action to avoid it. This is your first opportunity to tackle a habit, so do not be afraid to talk to yourself or to even question what it is that you are doing, and doing it out loud just makes it a little more real.

Talk to someone else:

Just like when talking to yourself, when you talk to someone else, they may well be able to see and recognise habits that you could not otherwise see, which can then allow you to deal with these habits. Talking to others who have experienced similar things can also help you to work out what you can do to try and avoid those habits from happening again. Getting experience first hand from other people is a fantastic way to get around them as it confirms to you that you are not alone, this habit is normal and if others have gotten over it, so can you.

List the triggers:

It is a good idea to write down the triggers for these bad habits so that you are always aware of what they are. The thing about habits is that they often happen without us knowing that we are doing it, so knowing what he triggers will allow you to work out if you are about to move into one of these habits or if you are already doing one. Just write them down and pin them up as a reminder of what you are looking out for.

Walk away:

Sometimes you need to take the more drastic measure of simply walking away, this may seem counterproductive because you are simply walking away from your bad habits rather than trying to deal with them, but it is not quite that straightforward forward and it depends on what your habit is. There are many traders that are fantastic when they start out, but after a couple of hours in front of the computer, their habits start to come out, cutting corners or getting anxious. This is a good time to take a break, simply walk away from the computer for a short period of time in order to calm yourself and to compose yourself again, this simply removes the opportunity for the habit to occur. It may seem simple, but it is an extremely effective way of avoiding bad habits.

So those are some of the things that you can do to try deal with your bad trading habits, there are of course other things that you can do, and some habits simply work themselves out, what is important is that you are able to recognise your bad habits and are then willing to try and work on them to ultimately remove them from your trading arsenal completely.

Tags Forex Guidance, Forex Habit, Forex Trading

Forex Psychology

How To Deal With The Pressures Of Trading

Post author By Forex Academy
Post date 24 August, 2020
No Comments on How To Deal With The Pressures Of Trading

Stress and pressure is an unfortunate part of trading, and it is one of those things that is inevitable and impossible to avoid completely. It can be caused by a number of different things from your own trading decisions to things that are completely out of your control such as unannounced news conferences or natural disasters. There will always be pressures, what is important is that you develop and understand different ways that you can cope with that pressure or ways that you can help to alleviate it.

Step away: This method may seem a little obvious, but you would be surprised how many people actually struggle to do it, many people when under pressure will actually start to spend more time at the computer or trying to work out where things may have gone wrong. Instead of doing that, take a step back, close down your platform, and walk away. You need to be able to clear your mind, coming back with a clear and fresh mind will enable you to look at things from a different light and it may well make things easier for you to work through whatever was causing the stress.

Accept that you aren’t perfect: No one is perfect, so there is no point trying to be or convincing yourself that you need to be. Instead, you need to accept that you will make mistakes, and you will have losses every now and then. Being able to do this will stop yourself from being so hard on yourself and trying to push yourself too hard to be perfect and to never make mistakes, accept what you will and it will be far easier to move on from any that occur. If you feel that you may be pushing yourself too hard, or that you are doing too much, tell yourself to stop, move away, and then come back.

Create a plan: Sometimes stress can come from the unknown, if you do not have a plan set up for what you will be doing or how you will be making your trades it can be incredibly stressful. Creating a plan enables you to understand exactly what you need to do, it will also help you get a better understanding that losses will happen and may well help you get past those losses and to not blame yourself for them.

Do not compare yourself to others: Many people, especially when starting out, will have someone that they look up to and someone that they may wish to imitate, while it is great to have something to aim for, it is not healthy to constantly compare yourself to them. There are many different things that could be different when you compare their circumstances, such as account balances, experience, and so many other things, so concentrate on your own abilities and the trading plan that you have created for yourself instead of putting yourself under pressure to be like someone else.

Getting through a period of increased pressure can be a fantastic feeling, it will give you energy, it will help you push further and ultimately you will feel good about yourself, however, it would always be beneficial to try and avoid those situations entirely, so do what you can to reduce the occurrences, but if you do get into a period of stress, be sure that you are aware of the ways to get back out of it, you will feel a lot better for it.

Tags Forex Stress, Forex Trading, Trading Pressures

Forex Psychology

Keeping Your Confidence Level Up During A Slump

Post author By Forex Academy
Post date 24 August, 2020
No Comments on Keeping Your Confidence Level Up During A Slump

There will be times during your trading career when you go through a trading slump, it is inevitable and will happen to every single person who has been trading for a longer period of time. These slumps occur when the market conditions change into a scenario where you are not as comfortable with it, your strategy is not as effective in these conditions and so you make more losses than usual. Again, everyone will go through this, multiple times during their career, so it is nothing to really worry about, although we do anyway.

You often hear stories where people have had tense of profitable months in a row, even years without a losing month, then things start to change, the markets shift and that person will struggle to put more than a single winning month in a row together. This happens and it will happen to you. It can be really disheartening, stressful and this makes it incredibly easy to start blaming yourself for it, to blame yourself for what is going wrong and this makes it very easy to simply overlook the things that you are doing really well. That is simply part of human nature, to concentrate on the bed.

The problem with this sort of attitude and outlook is that it will simply make things worse. When you are performing badly at something, and someone tells you how badly you are doing, what is your reaction? For many it is to simply shrink down inside themselves and to just try and get through it without putting in much more effort, for some, they completely give up and walk away. This is what your own mind will be doing to you when you are going through one of these slums. The negative thoughts and emotions will flood in, concentrating on what is going wrong will only cement these thoughts into your mind.

This is why you need to be able to focus your mind on the positives, things were fantastic before and so they will be again, you are clearly doing things right so we need to look at that. It can be very hard to keep your confidence levels up during a slump, but we have come up with some ideas that could potentially help you to remain a little more confident during one of these slumps. They may not work for everyone, but it is certainly worth knowing that they are there to try, as you never know which one will work for you, so let’s take a look at what some of the things that you can do are.

Don’t Dwell, Act!

When you are in one of these little slumps, it is easy to simply sit there thinking about the negatives and everything that is going wrong, this is natural. You need to think about how this will help you, the short answer is that it will not. Sitting there and just thinking about the bad will only make your confidence drop even more, or even make you want to give up and quit completely. What you need to do is to take action. You should have a trading journal, use that to find out what is going wrong, and then do something about it. If you do not try and change whatever it is that is going wrong, then you will find it very hard to get out of this slump any time soon. So do not simply sit there thinking, act on it, get rid of the bad habits, and whatever else could potentially be causing the slump that you are in.

Look at What Went Well

It is important that you are able to shift your focus every now and then, shift it to look at what has been going well. This is easier said than done but it is vital to getting out of that slump that you are in. You will have had some trades that worked, take a closer look at them to see why they worked well, parts of your strategy will still be valid and so should still be used. Remember that you were able to be successful in the past, so you will be able to be again, this can help to give you a little boat to your confidence levels. So remember to think of the positives, not just the negatives when you are in this sort of situation.

Change Strategies

Sometimes these slumps are no fault of your own if your strategy works in specific conditions but the markets have now moved away from those conditions, of course, it is going to struggle to remain profitable. This is where you need to step in, it is always good practice to have a good understanding of a number of different strategies, they can then be used during different market conditions. So once a single strategy stops being effective, you can simply switch over to a more appropriate strategy without having to go into a slump at all. There will still be performance slumps, but being able to switch over should make it far easier to be able to get out of it, or to at least limit the damage of it. So if you only know one strategy, get learning another one or two.

Find a Niche

A niche is basically a specialisation, it is where you focus your trading on a single or specific aspect of it. This can help to make you an expert at a certain style of trading and helps to avoid the mismatch or blur of different strategies and ideas. You need to get an understanding of what it is that you are good at and then use that as the trademark of your trading, to have that at the centre of your strategy. Once you have it, stick with it, work with it and you may find your trading to be a little more enjoyable, even during a slump.

Talk to Others

When you are going through a slump, it is more likely that someone else will be too. Being part of a trading community will allow you to communicate with others, to get an idea of how others are doing too. It may sound bad, but knowing that others are having a difficult time too can help to build your own confidence as you know that you are not alone in your experience. You can then also use these people to generate ideas of how you can get out of this situation. Find out what they have done in the past to get through it, work out if you can do similar things to them, or make adjustments to take their ideas into account. Do not let it change your style completely, you need to remain true to your overall strategy, but there is no harm in getting ideas from others. It is also a good way to vent your frustrations.

So those are some of the things that you can do to hopefully keep your confidence during a slump. It is never a good situation to be in, people have lost a lot of money in them or even quit trading completely. Try to stick with it, look for your positives and there is absolutely no reason why you cannot get out of a slump, it may take a while, but you will get through it so keep your head up and keep on trading.

Tags Forex Confidence, Forex Guidance, Trading Psychology

Forex Psychology

Losses When Trading Are Not Personal

Post author By Forex Academy
Post date 24 August, 2020
No Comments on Losses When Trading Are Not Personal

Let’s get this out of the way straight away, the markets do not care about you, when you take a loss, they are not doing anything against you, in fact, they do not even know that you exist. When you take the loss personally, it is only putting the rest of your balance, money and […]

It sounds a little extreme to call it a psychological collapse right? Well, the fact of the matter is that that is exactly what it is. When you take a loss and then take it personally, you are going to want to do whatever you can to get it back and to get even, but you are doing this against something that doesn’t even know you are there. If this was a football match, the opposition scored, it is perfectly normal and fine to want to get even, in fact, that would be the entire aim for the rest of the match until you do. However, for trading, this is not the case, if you make a loss, your main aim is not to simply win that money back. It is to continue with your current strategy and not to let that loss get the better of you.

You need to be able to separate the feeling of a loss and the fact that someone did it against you with the idea that it is simply part of your strategy. Losses should have been built into it and so they should not be taken personally, as soon as you look at it in a way that the markets purposely hurt you, things will only begin to go downhill.

Trading can be hard and you will make losses, a lot of them, there are no traders that do not make losses, what is important is that you do not see them as a failure, they are not personal failures and you should not treat them like they are. A single loss means very little in the long run, by following your trading plan you will be able to make back the money lost very quickly. These feelings of things being personal only really come from a loss when you win, the strategy is working and that is it, but when you lose, you must have done something wrong, which is a long way from the truth. You will feel frustrated, you will feel like it was your fault and that can lead to some very bad decisions on your next few trades, decisions that could potentially put the rest of you account in danger.

Some that knee jerk reaction is always the wrong one, but what should you be doing? Your reaction to a loss should simply be that you want to find out why it lost, there is often a logical explanation (although at times the market can be a little crazy). Review what happened, find what went wrong so you can try to avoid it in the future. As soon as you make rash decisions you will make further losses, then more and more until you are done, analyse and look at things calmly and you will be able to work out and avoid similar losses, of course, that is often easier said than done when you have just lost some of your money.

When you experience your first loss it can be hard when you experience your first consecutive loose sit can be even harder, but you need to be able to look at them as learning experiences. Someone who has the experience of losses will be able to look back at what they die after the losses, was their ration right and do they resolve anything, looking back and using past experiences can allow you to better overcome any future ones. Did you manage to recover? The fact that you are still trading tells us and you that you did, so you will be able to again. Use past experiences to help you get over current ones.

We have mentioned how regular losses will be, everything one should be helping you to improve the way that you are able to cope with them, making it easier for you to get past them. Again, losses will happen, it is important that you are able to deal with them without letting your emotions and feelings get the better of you.

If things are getting a little tense, take a step back, move away from the markets in order to clear your mind. Come back with a clear head and then do not just start trading again, instead look back to the loss and try and work out why it happened, with a clear mind you will be able to look at it without feeling that it was personal and so it will be easier for you to work out how you can deal with it in the future and how to avoid getting caught up emotionally in the losses.

Remember, the markets are not there to hurt you, they are not there to take your money, there will be wins and there will be losses, working out how to deal with the losses is a vital part of trading, just remember that the markets are not targeting you and your losses are not personal, they are just part of what trading really is.

Tags Forex Information, Trade Psychology, Trading Losses

Forex Psychology

How To Get Your Trading Mojo Back

Post author By Forex Academy
Post date 24 August, 2020
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Your trading mojo can be a brittle thing, but what exactly does it mean, we have heard it in everyday life, someone has lost their mojo. Well to put things simply, it is another way of saying that someone has lost their confidence or their abilities to do something as well as you used to, […]

For any trader, there have been times where your confidence has been hit, either through a number of successive losses or even from taking a break. Being away from trading for a while and then coming back you will have no doubt forgotten something, this can also have a negative effect on your confidence and your own abilities to successfully analyse and trade.

The problem with losing your mojo is that it often escalates and continues in a downward spiel So you have had a few losses in a row, you now lose confidence in your strategy and begin to make trades that are not in line with it, these then continue to lose and put your account into the red, this further compounds the lack of confidence and can lead to either giving up or even obsessive trading without any real strategy which can increase the risk of blowing an account.

So how do we get this trading mojo back, how do we get out of the rut? The first thing that you will need to do is to take a step back, you need to be able to look at the trading that you have been doing so you can try and work out a few different things. Have you been trading differently? Are you still following the same plan and strategy? Has anything happened around the world that may have influenced the markets? Are you doing anything wrong?

Asking yourself these simple questions is a good place to start. It is part of the process of mending your confidence and will also allow you to work out whether you have changed anything giving you the opportunity to potentially change it back.

So taking a look back at the trades that you have taken. Hopefully, you should have been keeping a trading journal of the trades that you have previously made. You need to be able to look at which trades won and which ones losses, the setups for each one, and any outside influences that may have caused losses. It will take a lot of time but it will be worth it. Doing so may help you to identify certain patterns, both on the markets but also from your own behaviour. Being able to identify these will enable you to stamp them out, it may also go the other way and show that nothing that you did cause them to lose, if it is from outside sources out of your control, then it can be a way of confirming that what you are doing is actually right.

Check your stops and your take profit targets, could they be the cause of your losses, many people either set them too tight or too loose which can lead to missed profits or larger losses. Many people don’t start out with the right figures, it can take a bit of time to adjust them. They also need to be adjusted per trade, different pairs and different market conditions require different stops, so sticking them all at the same levels will no doubt lead to confusing results.

When losing, the worst thing you can do is go larger, instead, look at reducing the size of your trades, this can help ease any concerns that you have about losing more money. Knowing that any further losses will be much smaller can help you to get back into trading and to be a little more confident when trading. It is important to remember that when using smaller trade sizes, stick with them, don’t suddenly put them back up after a win or two, stick to the lower sizes until you have built your account back up to an acceptable level, at this stage you can begin to slowly increase the trade size again.

So those are a few ways to bring back your mojo and confidence, there is no doubt that you will lose it at some point, it is important to be able to recognise it and work on getting it back once it does happen to you.

Tags Forex Mentality, Forex Trading, FX Basics

Forex Psychology

Are You Guilty of Trading Bias?

Post author By Forex Academy
Post date 21 August, 2020
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Biases can have an effect on anything in life, from the food you wat, the places you visit, and when we are looking at Forex, the trades you take, and the reasons behind them. We have looked at some of the more common biases that you find within the Forex trading world. Confirmation Bias This […]

Confirmation Bias

This is something that you get in any industry, you see it most often on the internet or during an argument where someone will come up with an idea that sounds a little far fetched, they will then look over the internet to find sources of information that match what they have said while looking for evidence is good, it’s not when you skip over 10 different pieces of information that counter yours, just to find the one that confirms it.

The exact same thing can happen in trading, you have done a little bit of your own analysis and come to a conclusion, so you want to confirm it with others, when you look online for it, you will automatically be looking for analysis that is the same, so if you thought something was bearish, you will be looking for bearish information online, even your search may contain that exact word. So you may find an article that matches yours, but the 10 articles around it may state that the market is bullish, ignoring those counter-arguments can cause an increase in losses. Looking for unbiased analysis is the best way to go, although we know it can be quite difficult to find.

Herding Bias

This is often referred to as a Sheep mentality, have you ever found yourself doing something simply because other people are? If a Sheep decides t ogo somewhere, another may follow, then another and another until the entire herd is doing that action or going t that place, that is where the term sheep mentality comes from.

This behaviour can be seen in trading too, if the majority of people are going long, then it is far more likely that the next person to come along will also go long, then the next and then the next. It’s natural to think that if the majority are going one way, they must know something, but this is not the case. You have done your analysis, it all points to a short position, so take that short position, why did you waste all that time just to be persuaded by a group of people, most of which most likely did not actually research anything. Take the trade the way you analysed it, if it’s wrong, then you can learn from that mistake through your journal, but if you go long because everyone else did, you learn nothing as you do not actually know why you took the trade in that direction.

Attribution Bias

This is all about what you feel is responsible for a loss or a win, when we look at trading, when we win, we often congratulate ourselves on a great trade, we analysed things well and it paid off. When it goes wrong, who is to blame? It was what Trump said, it was a freak movement in the markets, it was anything but me that caused it.

It is very natural for humans to want to blame someone or something else for their misfortune, however, it is important to be able to look at something without this bias, being able to determine exactly where the trade went wrong, and what you did wrong is one of the best opportunities that you have agave to learn. Simply putting it down to an uncontrollable outside force does not teach you anything, it does not help you to adapt and it does not help you with becoming a more profitable trader.

Addiction Bias

This one is all based around excitement, the thrill of getting a big win, the idea of getting a big win. Our minds will always want to retain memories of those most exciting trades and the ones that made us the most money. This can often lead to something called an addiction bias, where we want to try and recreate that exciting experience. Having that huge trade in the back of your mind can make you break out of your sensible strategy in order to put on a larger trade to try and recreate that feeling, this is never a good idea, it goes against your risk management and into a territory of trade that is outside of your strategy, making it harder to predict and a lot more dangerous for your account. Use those large trades as a reminder of what you can achieve, but do not try to fast track yourself to that outcome.

Recency Bias

This is about thinking about the most recent thing that has happened and making decisions based on that one event, rather than looking at things as a whole. This can be quite prevalent with news traders, especially now Trump is the president. If there are a number of news events coming up for USD, the overall markets are bullish at the moment, the most analysis points to a bullish movement, the news comes out and it is negative (bearish). What do you do? You put on a sell because the news can move the markets down, but, nothing happens, it continues to rise, why? The reason is that the markets are still bullish, one bit of news won’t change that, you have looked at the most recent event to happen and ignored everything else. You need to maintain a view of the entire picture, not just the most recent even to happen.

So, those are some of the biases that we see both in life and in trading, are you guilty of them? I know I have been, it’s ok to have these biases, what is important is that you are able to identify them, and then work on avoiding them in the future.

Tags FX Trading, Trade Bias, Trading Mentality

Forex Psychology

How to Successfully Avoid Trader’s Regret

Post author By Forex Academy
Post date 21 August, 2020
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Have you ever made a purchase and then instantly regretted it? Wondered why you just spent that money on whatever it is that you purchased? It has happened to all of us, it is called “Buyers Regret” and it is something that everyone experiences. It is the feeling of regretting the fact that you just […]

This same feeling can happen to traders in the form of “traders Regret”, it works much the same way and can have potentially devastating effects on both a trader’s account and also the trader themself. This feeling comes simply by the fact that you are risking your own money when trading, each and every trade that you make is a potential loss and will potentially cost you that money, this can lead to a few different things.

First, let’s look at what sort of trades can often cause this, we all should have our strategy and trading plan in place if you stick to it, it is far more likely that you will not experience this very strong emotion. However, if you have been listening to others and placing trades based on something you have seen or heard then as soon as you make that trade, you may wonder why you have done it. The same feeling can happen when you decide to step out of the comfort zone of your training strategy, as soon as you place that trade, you know that you have moved away from your strategy and put your account in some additional risk.

The feeling can also come when you have done nothing wrong, this is more obvious for those that are risk-averse if you do not like risk, then placing any sort of trade which adds an element of risk will potentially cause traders regret, this feeling can actually make it far harder to place trades in the future as the feelings that you had can linger in the back of your mind for quite a while.

The problem with traders’ regret is the fear that it can cause, it can make it far harder to make additional trades, it can prevent you from wanting to have that feeling again and so you begin to miss great trading opportunities, even those that are fully in line with your strategy and trading plan. Sadly, sometimes traders’ regret can get the better of you, as soon as that trade is open, you get the feeling and close it for a small loss, the trade can then go on to win. The next trade, it’s the same feeling and so you close it again, this can continue for quite a while. Most people will look at that and think that you probably shouldn’t be trading, this is not the case, what is needed is for you to work out a way to get over this feeling.

So let’s think about ways that we can help to avoid this feeling or to at least reduce it once a trade has been opened. The first thing that you need to do is to set up a trading journal, this is something that you can use to write down every trade and every decision that you make. This is perfect for reviewing our trades, and can also be a deterrent for traders’ regret, mainly because when you are worried about something you can look back at your previous trades to see why they were taken which can give you more confidence in the ones you are now making.

Having a solid trading plan can also help, if you have done the analysis and it is fully in line with your strategy then there should not be anything to fear. Knowing that proper analysis has taken place and that it is your decision should help alleviate some of the anxiety once the trade has been opened. This is a far better way of managing your trades when compared to copying trades that others have suggested.

While it may not be a good way to reduce the anxiety, a way of avoiding the potential of closing trades early is to simply input a stop loss and a take profit, place the trade and then walk away, leave the trading terminal, let it do its thing If you are not near the platform then you cannot close it, it will allow your strategy do what it was designed to do, after a while of doing this you will come to realise that your strategy is working, using itis giving you overall good trades, so it will help to alleviate some of the anxieties around placing trades.

Traders’ regret is a big thing, it can be very damaging, doing what you want to alleviate the feeling is important, it can take time, a lot of time, but the more confident you are with your strategy and trading plan, the easier it will be to avoid this very strong feeling of regret. In the end, you need to try and ignore the feeling and just make that trade.

Tags Forex Advice, Forex Mistakes, FX Trading

Forex Psychology

Forex Trading Psychology 101

Post author By Forex Academy
Post date 21 August, 2020
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A lot of trading comes down to your mind, you can have the perfect trade setup, but if you are not in the right frame of mind then you can still get it wrong. There are a lot of different psychological pulls when trading including stress, anxiety, excitement, and overconfidence. Some are good and some are not so good for you. There are hundreds of different things that we could talk about when it comes to psychology, too many for us to list in just one article, so we are going to be looking at some of the more prevalent psychological issues that could arise as well as different ways that you can mentally prepare yourself for the hardships and ecstasy that is trading and forex.

Taking the Trade

It is fantastic that you are using a number of different aspects and elements of the markets to analyse your trades, the problem is that there are hundreds and thousands of different things that you could be looking at. As soon as you start to look at too many, the trade may well have gone, sometimes you need to look at a few and then take the trade. The more that you look at the more time it will take and also there will be a much higher chance that you could start to question your initial thoughts, resulting in no trade being put on at all.

You can never look at everything and you can never prepare for all potential outcomes. As long as you have done your basics and you have some of your rules in place that you are following then the trade should be good to go. Do not fall into the habit of over-analyzing everything before you do it and even over analysing it once it is on, this can result in not trades and also the closing of trades early which is generally something that you want to avoid doing as much as you can. Do not be afraid to skip a trade or two if things don’t seem right, but if they do, do not then go out there looking for things that could be wrong, just take the trade.

Not Every Trade Must Be Perfect

This kind of goes against a lot of the advice that is often given out, in fact, we have done some articles which say differently to what we are about to say, but not every trade needs to be perfect. If you are always looking for the perfect trade then you will be putting on very few trades if any at all. A perfect trade will potentially only last a few minutes, the markets will be constantly changing and you will need to adapt with it, part of doing that will be taking trades that are not 100% perfect, it may have been at one point but not anymore, this does not mean that you do not need to take it at all, you can still take the trade and it can still be a good one.

Remember that a lot of your job is to simply manage risk, there is no way to completely remove it, this sometimes involves making trades that do not fit your strategy completely, but with proper risk management, they can still be successful and profitable trades. Do not be afraid to revisit some of the trade ideas that you made or that you have had in your head, you can always alter the take profit and stop loss levels, doing so allows you to take not so perfect trades but then make them good.

Avoid Biases

There is such a thing known as recency bias and it is one of the most common problems that traders come across. To put it simply, this is basically where traders will place a lot more weight on recent events, so making them seem more important than they actually are. They then allow these beliefs to have an effect on the future trades that they are making. This can have quite severe effects on trading, a bad trade can make you not want to place any more trades due to fear of another loss, while a win can cause someone to become overconfident which can lead to bad trades being made due to the idea that they are great at trading and that their opinion is most likely correct.

If we look at an example, Bob has a perfect trade setup but he hesitated at making the trade because his last trade with the same pair an hour ago lost. This is sitting in the back of his mind and this delay in putting the trade on has meant that the opportunity has passed and the trade is no longer valid. It can be hard to take recent results out of your mind, but it is important that you are able to treat each trade as an individual and not as part of a sequence.

Don’t Panic Over Stats

People often seem to focus on the stats which indicate the past results of a trade, while they can give some fantastic insight into your trading and your habits, they do not and should not indicate what you believe the results will be like in the future. Do not get us wrong, you should be keeping track of these stars and should certainly be recording them, however, do not rely on them and do not focus on them when you are looking for your next trades. Use them as an analysis tool when you have a bit of downtime, not when you are actively trading, it will only influence your trades which is not something that you want to do. So your stats and past results can be useful but do not use them to guide your future and current trades.

Allow for Market Volatility

You can set up your trades perfectly but then as soon as things jump about, the markets are unpredictable and so you need to take account of any potential volatility that could arise. Certain current pairs and instruments are a lot more volatile than others and so you may need to make wider stop losses for those pairs. If you keep things completely rigid and have no room for adapting then things can go wrong. Ensure that you take these potential volatility spikes into account with your trades and this will help to reduce the risk of trades being stopped out too soon and also helps you to be more relaxed with your trading.

So those are some of the basic psychological aspects of trading that you should keep in mind when trading. There Are of course a lot more, and we mean a lot more things to do with psychology, but the majority of them have probably been told to you a hundred times already, so we tried to look at some of the slightly less frequently mentioned ones. Either way, keeping yourself flexible and eager to always learn will set you off on the right foot for becoming a successful and profitable trader.

Tags Forex Basics, Trade Psychology, Trading Emotion

Forex Psychology

Greed: The Most Dangerous Emotion to Feel While Trading

Post author By Forex Academy
Post date 21 August, 2020
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When just starting out, one of the many warnings that people seem to get is to not be greedy, in fact, a lot of mistakes that are made from both the new and experienced can have an aspect of greed in it, but what exactly is greed? Greed is basically a “selfish and excessive desire […]

Greed is basically a “selfish and excessive desire for more of something than is needed” as stated by the Merriam-Webster dictionary. If you think back into your life, I am sure that you will be able to see times where this definition matches your own experiences, in fact, you may have experienced it a large number of times, often it can be a subconscious thing, making decisions without us even knowing, other times it can be an aim, not a good one, but it is still an aim.

Now greed by itself is not necessarily a bad thing, it involves the desire to gain more, to achieve more which is often a good form of motivation, where things go wrong is when this want for more becomes excessive when you do not have a limit to how much you want and so you keep pushing yourself for more and more and it can eventually push you to do things that you would never have done before and that is way outside your strategies boundaries.

So what exactly are the dangers of it? Greed is a very strong emotion that can prompt you to take actions that you would never have otherwise taken when we are looking at trading, this would come in the form of creating additional trades, larger trade sizes than usual or chasing the markets in order to either make more or to win back some of your previous losses. It can cloud your judgment and take you off the path that you have been working on for so long.

So we know what it is, and we know why it is bad, so how do we get over it? How do we suppress that emotion? It can be done, but it will take effort and discipline to do, its not easy, but once done, it will make your trading far safer and far more successful.

The first thing you need to do is take a hit to your ego, you need to have an understanding that you aren’t always right, you have your strategy with its criteria for a reason, if you were always right, you would not need that at all, and you know what? That is a good thing, you won’t always catch the movement of the entire market and you may miss out setups altogether, it is important to recognise that as when it happens, you still need to move on and concentrate on the next trade and not look back in regret.

That is a part of trading, losses and missed trades are as much a part of trading as winning is, looking at your strategy, in the long run, you can make a lot, but greed will tell you to make a lot now and worry about the future tomorrow, not a good tactic if that greedy trade causes you to lose the last months profits. Being able to forget the previous trades and just look forward is a way of preventing yourself from being influenced by our greed and making unnecessary and dangerous trades.

One way that some people prevent greed from coming in is to convince themself that they are more lucky than skilled when it comes to trading, so they do not have the belief that they can just put in trades and win, instead they need to ensure that they follow their strategies and entry criteria in order to trade, something that helps prevent them from making additional unnecessary trades. So ultimately, you need to look to the future, concentrate on your strategy, and avoid those additional trades.

Tags Forex Emotion, Forex Trading, Trading Guidance

Forex Psychology

Taking the Emotions Out Of Trading

Post author By Forex Academy
Post date 20 August, 2020
2 Comments on Taking the Emotions Out Of Trading

Emotions can be some of the most powerful things that you can experience in life, they are what some would describe as the things that make us who we are and what makes us human. As they are a large part of us, it is often strange when people say that you need to be […]

Let’s get one thing straight to begin with, when we are talking about taking your emotions out of trading, we are not meaning that you need to sit there like a roto and to have no emotions or feelings while you trade, that is not feasible and not possible, what we are talking about is all about your decision-making process and the trades that you make, keeping your emotions out of those decisions so no rash actions are made.

There are a number of different emotions that can be very dangerous to your trading, these are things that you should be avoiding at all costs as they could potentially destroy your strategy and any risk management that you have put in place. The first of those is greed and the second is overconfidence. Greed often comes from losses, make a loss or two in a row and you want to win it back, it can also come from wins, you have a win and then want more so you decide to increase your risks and trade larger sizes. Overconfidence has a very similar effect, you have made a few good trades and so you think that you have the secret key, anything you do will win and so you increase the risk, the trade sizes and then no longer pay attention to your strategy and just trade what you think, I am sure you can work out the end results of trading in this style.

So how do we get rid of those two very powerful yet devastating emotions, the fact is that you won’t be able to, you will always have some of those feelings and you may always want to earn more, but what is important is that you are able to get around them, having your trading plan there in front of you each time that you trade will allow you to remind yourself that you need to stick to it, you need to stick to the risk management plan that you have created in order to keep your accounts safe. If you have ever gone against it and made a loss, keep that in your mind and keep a reminder of it near your trading platform, this way you can remind yourself about what can go wrong should you go against your plan.

Creating a routine for yourself can help create the idea of a system for you to follow, having these rules and requirements for the things that you do when trading will help you to be more autonomous, doing what is required and not having to think about things too much. Removing this aspect of thinking out of your trading will give you less chance to develop ideas or to develop stronger emotions towards the trading that you are doing. It also helps you to stay focused and to avoid certain distractions that would otherwise take your attention away from your trading.

One of the things that emotions can cause is a bias towards certain conditions in the markets or ideas that the market will move a certain way. While getting to these conclusions through analysis is positive, emotions can often cause you to believe that they will happen regardless of what the analysis says, sometimes even when the analysis is saying the opposite. This is where you need to ensure that any decisions and trades that you make are based on the facts and the analysis that is available, not on what you think will happen, doing it this way and getting something right can lead to overconfidence and we have already discussed why that is a bad emotion to have.

Staying committed and dedicated to your trading plan is another way to avoid letting your emotions get the better of your trading. You need to stick with it, sometimes it can be hard, especially when things are not going the right way, but you created that plan for a reason and you created it because you know it can work. So you need to be able to stick with it through the good and bad times, only this way can you be sure that you will be able to keep it profitable.

Keeping your emotions out of trading is not easy, in fact, it is one of the hardest things to do when trading, you will want to jump with joy with a win and throw your computer out the window with a loss, but if you are able to control the emotions, stick to your plan, you will be able to be far more successful at trading than if you were to et those pesky emotions get the better of you.

Tags Emotional Trading, Forex Advice, Forex Emotion

Forex Psychology

The Pressures Of Forex Trading

Post author By Forex Academy
Post date 20 August, 2020
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Pressure, the incredibly strong feeling of dread or stress that can come over you when doing pretty much anything when there is something on the line. In regards to trading, that something is your account balance. This is even more apparent if you are currently trading as your full-time job and you are counting on it for paying things like your bills or to purchase your weekly shopping. Pressure can come from both within and from outside sources, so let’s take a little look at the sort of things that can cause pressure and the effects that this can have on both you and your trading abilities.

Have a little think about the sorts of things that cause you to feel pressure, normally it would be some sort of deadline that you need to meet, maybe you are nowhere near making it. This same pressure can come with trading, e briefly touched on the fact that you may be relying on the money that you will make in order to pay your bills or purchase your weekly shop, this sort of pressure can lead you to making rash trading decisions and making additional risky trades that are outside of your trading plan, simply so you can make enough to survive. This sort of pressure is not good at all, the desperation to make enough will make you throw out all caution and will ultimately cause you to lose, which in turn will increase the pressure further.

There is also the sort of pressure that you can put on yourself, if you consider yourself to be a perfectionist, every single loss that you take will be a little hit to your ego and will increase the amount of stress and pressure that you will be putting on yourself in order to do better. There is also the pressure of trading money that you may actually need, the old saying of not trading what you can’t afford to lose is a very honest and realistic approach, as soon as you start to trade with money you need, an incredible amount of pressure will come over you, knowing that if you lose it, you could be struggling in life for quite a while.

Pushing yourself to learn more, and to achieve more can put some unwanted pressure on yourself, there are no time limits, the markets aren’t going anywhere. Take your time to learn, don’t put these unnecessary stresses on yourself, there is no need to and it is completely self-destructive.

These pressures are often caused by some sort of decision that we made at one point in time when it comes to out trading, whether we deposited too much, our trades are using too much risk or we took the step to going full time too soon. It is important to think about each decision that you make, it is all well and good thinking that you will be able to deal with the pressure when it comes, but the best course of action that you can take is to avoid bringing the pressure down on you in the first place, if you can manage to do that, then you won’t have to deal with the crippling effects that pressure can have on someone.

Tags Forex Guidance, Forex Stress, Forex Trading

Forex Psychology

Self-Motivation and Self-Discipline In Trading

Post author By Forex Academy
Post date 20 August, 2020
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Motivation and discipline, some incredibly important traits that you need to have in order to be a successful trader. You often hear that trading can be quite a demoralising experience, especially when things aren’t quite going to plan, so we are going to look at some of the reasons why you need to be able […]

Firstly, let’s look at why motivation is so important. Motivation is defined as “a reason or reasons for acting or behaving in a particular way.”. This is all based around the way that you behave, someone with low levels of motivation will be a lot slower, less engaged, and offer much lower levels of productivity to someone who is highly motivated, putting in a lot of work, getting things done quickly and ultimately enjoying what it is that they are doing.

Motivation can be a very powerful feeling and something that can make you either successful or unsuccessful. The problem with trading is that you are all by yourself, this means that there is no one else around to motivate you. In a regular job (most not all), there will be a manager or a team leader around, one of the jobs that they have been employed to do is to help motivate those around them, to motivate their team to work hard. Without that person around, it is now down to you to do that job for yourself, and this can quite often be a lot harder to do than it is to say.

Think about the ways that you can motivate yourself, what is it that gets you going? For some, it is simply the idea that they can make some money at the end of it, but this is more of a motivational goal, rather than a way of keeping yourself motivated. When you have been at the computer for a number of hours, not much has happened or you have read over some new learning for the third time. It’s boring, you want to stop, how’d you motivate yourself to carry on?

People do this in entirely different ways and it will work differently for different people. Something that you may want to try is to set yourself little goals, these can be daily, weekly or monthly targets that you want to meet. Should you achieve them, then reward yourself with a little something extra, an extra cake, those trainers you wanted, it could be anything but it must be something that you desire, and it must be something that you are willing to go without should you not achieve those targets.

Other ways of increasing your motivational levels are to add a little bit of variety into your learning and your trading, and not to pressure yourself into always be trading. Of course, that will be boring and will cause your productivity levels to really drop, instead, try to change things up, try not to do the same thing for more than one day or two days in a row. This will keep things fresh and you will continue to learn and to be productive in your trading. It can also be important to talk to others, being by yourself lonely and this can bore even the most motivated of people. It is important that you manage to get out and talk to others, talk about anything. It doesn’t need to be just about trading, this interaction can break up the monotony of trading.

We talked about speaking to others. If we take this a ste[p further, a good way of motivating yourself can be by talking with other traders, people who are going through the same thing as you. You can talk about your plans, your results and compare how people are getting on. This can go one of two ways and it will depend on your personality as to whether this is a good idea. If you decide to compare your results with others and you are doing well, this can motivate you to keep working hard. However, if you see your results and you are not doing as well as the majority of others it can either cause you to lose a lot of your motivation as you feel that you are not doing as well, or it can motivate you to work hard to achieve the same as them. This Is entirely down to your own personality, if you are the sort of person to become disheartened then we would suggest not comparing results. If you are the sort of person where it drives you to work harder, then it can be a fantastic motivation builder

So we know a bit about motivation, but what about discipline? Discipline is defined as “the practice of training people to obey rules or a code of behaviour, using punishment to correct disobedience.”. This is often another aspect of a job that is given to a manager or a team leader, but trading by yourself, you are required to take on this role and need to have the ability to discipline yourself should you do something wrong or should your performance levels drop.

When you are working for someone they will be there monitoring your progress and the work that you are doing, trading at home, you do not have someone there to do that, so you will need to do it for yourself. This can be far harder than it seems, as many people automatically assume that they are doing better than they actually are, in fact, the majority of people feel that they are doing far better than they actually are.

The first thing that you are going to need to do is to work out how you are able to assess how well you are doing, this can be done in a number of different ways. Initially, you will need to set some targets and goals that you want to achieve, these can then be used as the overall target that you will measure your progress and performance on. They need to be realistic and achievable, as setting targets too high, will only result in you missing the and then feeling demotivated.

You will also need to think of some potential sanctions should you not be performing to the standard that you feel that you should be or if you are falling far short from your targets. This could simply be something like putting $10 into a saving pot that you can only access once you reach your goals, or that you don’t get that slice of cake that you usually have after a meal, this is all about ensuring that you keep your performance levels up. It can be very difficult to self-discipline yourself.

While what we are talking about is what you do yourself, if you are living with a family member, you could ask them to keep track of your targets and to see how you are getting on it’s not quite self-discipline but it works well for those that are not able to control and discipline themselves.

Self-motivating and self-disciplining is not an easy task and can be very difficult for a lot of people. However, getting it right can make working by yourself and trading by yourself very rewarding and can build up your abilities as an individual and as a leader. If you have what it takes then it can create a fantastic at home trading career.

Tags Forex Emotion, Forex Guidance, Forex Trading

Forex Psychology

Chicken Run – Fear of Missing Out On a Trade

Post author By Forex Academy
Post date 19 August, 2020
No Comments on Chicken Run – Fear of Missing Out On a Trade

Every forex trader will at some point have to face a particular set of fears that will sometimes mean they fail to pull the trigger on a trade. A lot of people talk about missing a trade as some significant moment in their trading activity. They look at the price movements of a currency pair and think it might go a certain way, they might even have an idea of the price it might reach, and they watch it and watch it and lo and behold it goes the way they thought but they didn’t enter a trade. They look at situations like that and hypothesize that they could have entered a trade at such and such a time and then if they had closed it at just the right time, they would have made x amount of profit. But the thing you have to realize is that while we all might fantasize about phantom trades like that from time to time, they are a non-event.

They are truly unimportant in the grand scheme of things because, in reality, nothing happened. You could spend your whole time dreaming up phantom trades like that. You could watch stocks and see potential trades you could have made, you could watch exotic currency pairs you’ve never traded before and see “opportunities” where you could potentially have made thousands, tens of thousands or hundreds of thousands of dollars on a single trade. It didn’t happen. It’s nothing for you to think about, much less worry about. You will miss trades like that literally while you’re sleeping. We all do. Let them go.

Mind Games

One particular reason you should let them go – apart from that way of thinking being completely useless to you – is that there are many more important psychological phenomena for you to worry about. When you ask them about forex trading, most people – and even plenty of traders – would probably tell you it’s all about understanding charts, learning tools and indicators from books, and understanding the theory. Indeed, it is all of those things. But it isn’t one of those processes where you can put in A and get out B every time.

We are, whether we like it or not, squishy ape-like animals that have evolved to be good at a lot of activities but being cold, unemotional machines is, unfortunately, not one of those things. As with anything else in life, our psychology is a big factor in how we perform. As a result, understanding your own psychological or emotional responses to different situations is a key step in being able to control them or curtail them when you need to and to stop them from inhibiting your efficacy. In fact, it often tends to be the traders who think of themselves as unemotional and unaffected by psychological ups and downs who turn out to be the ones who struggle most in certain situations.

Trading has a myriad of ways of drawing you into an emotional response – sometimes when you least expect it – so understanding those potential pitfalls and being aware of your emotional state enables you not only to learn about yourself but also to avoid making the same mistakes again and again. For example, you might be able to explain to a small child that it shouldn’t do something stupid, like touch the flame of a candle, but its only when it realizes it for itself that it will internalize that lesson.

Pulling the Trigger

The moment in a trader’s day that is most fraught with psychological turmoil is when they have to pull the trigger on a trade they’ve planned and for which they have a trade signal from the system they have built up. Not, as in the earlier example, when they think about a potential trade but make no moves towards it. For want of a better way of putting it, the really scary moment is when you have run the numbers, analyzed the price activity, found an entry point, established your target, zeroed in on your timeframe, and set up your stop/losses. Once you’ve run through your whole checklist and even gone as far as opening an order on your trading system, you’ve reached the moment of truth. Do you click the button?

Now, anyone who’s been trading for any significant amount of time will have, on occasion, been wracked by doubt and backed out at this point. Not to put too fine a point on it, they will have chickened out and missed their shot. The sheer tragedy of doing that can unfold very quickly if the price moves the way you expected it to and you watch what could have been a successful trade slip away. Quite apart from really bumming you out, a missed shot like that can have several other knock-on effects. It can slide itself into your subconscious mind and affect the way you think about future trades. Without knowing it, you might still be having lingering thoughts about that moment not just when you make your next trade, or your next couple of trades – it can persist well into your next month of trading, or even longer. The fear of missing an opportunity like that is no small thing and it really can cause issues for your future trading, which is why it is important to have some self-awareness about it and to try to understand what happened.

Being Your Own Shrink

So what are some of the psychological causes of chickening out? A side note here, if chickening out is a bit of a strong phrase and makes it a little harder for you to think clearly about the issue at hand, try thinking about it as failing to pull the trigger instead. One of the big causes, for most traders, is a fear of failure. You look at the trade you’re about to make and you just feel unsure about it. Of course, all your indicators might be screaming at you to trade right now but sometimes – and we all feel like this from time to time so it’s nothing to get too concerned about – sometimes it just doesn’t feel right for whatever reason. There are ways to overcome it and they are pretty fundamental to how you understand forex trading, so don’t worry, we’ll get to them.

In the meantime, another possible reason people don’t enter a trade, when they otherwise think they should, is over-analysis. This is a bit counter-intuitive since analyzing the technical parameters that lead to a trade is pretty much the bread and butter of most traders. That said, there is such a thing as overthinking it. Some of us love nothing more than to get deep into understanding what causes a given currency pair to move the way it does and, for the most part, that makes us stronger traders. But there’s a flip side to doing too much research because the deeper you get and the more information you try to include, the greater the likelihood that some of that information is going to start contradicting itself. Sometimes you’ll have filled your head with so much reading about news events and looked at so many indicators that some of that begins to cause you to doubt yourself. And not only will you begin to doubt yourself, but you will also – just through the sheer act of spending so much time thinking and analyzing one trade – become too invested in it emotionally.

Yet another form of this is becoming unsure about your analysis in the first place. On one hand, this can lead you to try to overanalyze but also it can simply introduce doubt and put pressure on yourself. Of course, this is one of the most natural responses of any trader. In fact, it’s the traders who tell you they’re 100% sure about the outcome of a trade that you should worry about. Put simply, until you get that crystal ball working, you will never know the outcome of any trade. That inability to see the future reduces every trade to a binary outcome. It will either go your way or it won’t. Little wonder then that this is a cause of stress. But this over-focus on the individual trade is what’s holding you back and therein lies the crux of the problem.

Fighting Back

The single most important thing to understand when trying to overcome all of these hurdles is how you approach individual trades and forex trading as a craft.
If you are focusing on and sweating over each individual trade, you’re doing it wrong. The only way to trade forex and be successful at it, rather than burn out quickly or fade over time, is to establish a system and a process. When you understand trades as part of a process, rather than as individual events on who’s success everything depends, you will free yourself of many of these fears. Once you begin to see trading as something that takes place over the long term, you will become a better trader. And once you have a system in place that means you are going to be right more often than you’re wrong, that you make more money than you lose, you will cease to rely on individual trades for your sense of wellbeing.

Approach each trade afresh. Free it of any losses that came before and understand it as one of the dozens, if not hundreds, of trades you are going to make over the coming year. Judge your success not on the outcome of individual trades but on sets of trades over a longer timeframe. Of course, there are some simple, practical solutions to certain issues too. If you are suffering from a crippling fear of failure over individual trades, you are likely committing too much to each trade. It might be time to reconsider your position size and work on your money management. If you are so unsure of your analysis you regularly find yourself failing to pull the trigger on trades your system is flagging up, you might need to go back to the drawing board.

Indeed, better than that, take your system for a spin on the testing circuit. Put the work in and power up a trading simulator or your demo account and test your system, your process, your checklists, and your whole approach. The great news is that thanks to technology, you can now do this more easily than ever. Assess how your system performs over a significant period – say a hundred trades. This will not only give you a greater sense of security but will also help you to see trades not as one-off events but as part of a process. A larger set of trades will really show you whether your system is working in a way that a single trade never can. Having substantiated confidence in the system you are working with is an enormously important aspect of trading that can help you overcome the smaller, short-term psychological hiccups.

Finally, once you have fully internalized the fact that trading is a process and have gained confidence in your system, you will be ready to overcome even the most dreaded of events for any trader: a losing streak. Psychologically this can be tricky even for the most experienced of traders. But the plain fact of the matter is that the more you trade the greater the statistical chance that you will encounter, through no fault of your own, a run of bad trades. The most dangerous thing you can do is start to mess with a strategy you have taken a long time to establish on the back of three or four losses. It’s a trap many fall into. The good news is that if you have managed to free yourself from over-focusing on single trades and if you have confidence in your system, you are perfectly placed to be able to see every new trade as a fresh start.

Tags Forex psychology, FX Trading, Market Entry

Forex Psychology

Three Ways to Boost Your Trading Confidence

Post author By Forex Academy
Post date 14 August, 2020
1 Comment on Three Ways to Boost Your Trading Confidence

Trading is a difficult thing to do, well it’s difficult to do well and to do it well consistently. There are a lot of things that can happen that can really put a dent on your confidence levels, losses are a part of trading, yet every single loss is going to hit your confidence levels […]

With so many things to hit your confidence levels, it is important that you work out ways to increase it again or to keep it high. If you are making profits, no matter how many losses you have you should be feeling confident as this is something that a lot of traders fail to do. So let’s look at a few of the different things that you could be doing that could potentially help you to increase and keep your confidence levels high.

#1 – Practice

One of the more obvious things, the more you do something, the better you will get at it and the more confident you will be at doing it. The reason people get good at things is simply through practice, you will never be able to plan for every scenario, so having p[racticed through them will give you that little bit of confidence and understanding of how you can deal with the situation at hand without having to worry too much.

#2 – Look at the Bright Side

When things go wrong, there are two things that you can do, you can take it personally or you can look at the brighter side and use that loss as a new learning opportunity. There is always a positive to every negative, it is important that you take a little look for it, this will give you a better perspective of what has gone wrong and will enable you to continue to trade without taking that loss personally or thinking that you may not quite be good enough because you are, everyone experiences these losses, everyone even the millionaires, so do not take it to heart and carry on with your confidence high and a new learning opportunity in hand.

#3 – Focus on Your Trading

Try to focus on what it is that you are doing, do not worry about the things that others are doing or what the results of others are, concentrate on you and only you. If you are not comparing yourself to others you will only have your own past experiences and results to go by, as time goes on you will notice an improvement in your results which will help build your confidence through seeing the progress that you are making. As soon as you compare yourself to others, you will find people doing a lot better and this will hit your confidence levels, so stick to comparing yourself to you and not others.

So those are some of the things that you can do to try and help keep your confidence levels high, it is vital to keep it high and to build up, this will keep you motivated and happy when trading, it will also help to keep away some of those more pesky emotions such as stress.

Tags Forex Advice, Forex Tips, FX Trading

Forex Psychology

Excuses That (Almost) All New Traders Make

Post author By Forex Academy
Post date 14 August, 2020
No Comments on Excuses That (Almost) All New Traders Make

If you look around the internet, you will find a lot of excuses out there about why someone may not be trading well or why they have been losing money. The problem with these excuses is that they often show that the user has a lack of understanding about how the markets work, either that or they are in denial and do not want to admit that it may have actually been something that they did that caused the trade to lose.

We are going to be looking at some of the more common excuses that you see posted about the internet on blogs and on various trading forums, we are sure that you would have seen some of them posted before and we are sure that you will also see them posted many times again.

My broker is a scammer!

This excuse could actually have a little merit to it, depending on the broker that is. There are some very shady and dodgy brokers out there, ones that have taken part in some pretty low business operations which have left people without any of their money, or tactics which encourage people to deposit money that they cannot afford to deposit, if this was the case then the excuse would be pretty valid. The problem comes when we look at the more reputable brokers, the ones with great track records that have done pretty much nothing wrong in their entire existence. People still claim that these brokers have scammed them and stolen their money, simply due to the trader losing their money.

This can also be seen with people who claim that all regulated brokers are good and unregulated ones are bad. The regulation covers the protection of their money, it does not always dictate the behavior of the broker, so people claiming that all unregulated brokers will scam you is not the case at all. The majority of traders who use the reputable ones have simply treated badly or gambled, the brokers often do nothing wrong (unless they are an actual bad broker). So be wary when you see people claiming to have been scammed by the broker, it is not always the case.

The markets are against me.

This is something that we see a lot, people take their time to analyse what they think is a good trade, they have put the time and effort in, they then place the trade and it goes the wrong way, or it starts to go well, then suddenly turns and zooms off in another direction. What happened? The markets must be against me, they obviously saw me put on this trade and then decided to go against me so I would lose my money. Reality check, the markets do not even care who you are, they do not notice the little money that you are putting into the markets. There are trillions traded each day on the markets, you $100 trade is nothing to it, not worth anyone’s time or effort to try and trade against it.

Newer traders often don’t realise how many things there are that can affect the markets. You can never prepare for them all, in fact, you cant prepare for even half of them, news events, natural disasters, banks changing consensus, loads of things affect them, just because it went against you, doesn’t mean it was anything personal.

Trading takes too long.

Trading does not take a long time, what takes a long time is the preparation of trading. This is unfortunately the part that you need to do at the start of your career and so it is the part that newer traders see the most. The thing that many do not understand is that once you have gotten through the initial planning and preparation stages, the actual process of putting on the trades does not take time at all. It is common to see it plastered all over the internet and forums that you will not have a life when you start trading or you won’t have time to do it after work, but you can, and many people do. Many people trade part-time after or before work, it is more than possible, people just do not want to put the effort in, or simply look at the start of the process and then assume that the entire trading career will be the same.

Trading is too complicated.

Trading looks complicated, in fact, it is complicated. We will probably give them this one. It takes a lot of effort and time to learn how to trade properly, not something that a lot of people want to actually do. The problem is that from the outside it looks incredibly simple, here isn’t actually that much to it, you guess that something will go up or down and put that trade on. Unfortunately, it is not that simple and once people have started trading they have realised this, do not want to put in all the time and effort to actually learn how to trade properly and simply chalk it up as too complicated and give up.

You can’t make enough to live on.

This is normally something that people say if they have gone into trading with their expectations of what they will be able to do is set way too high. The unfortunate truth is that a lot of people are now getting the idea that trading can make you rich overnight, this view is often formed when people view some of the frequent adverts that are promising less than realistic returns. When you go into it thinking you will have the world, you will be disappointed.

People also go in with the expectation that they will be able to make enough to quit their job within a couple of months, again, this is not something that is realistic. Yes, you may be able to make enough to quit your job, but that will take a long time to happen. It takes a lot of time to learn, not something that some people want to put in, so as soon as they do not make as much as they want, they blame forex and simply state that you cannot make as much as people say that you can.

So those are some of the things that you often see posted around social media or on trading communities. They are often from people who have entered trading without a proper understanding of what is involved or even what trading actually is. If you have that knowledge then you most likely won’t be making the excuses that we went through above.

Tags Forex Information, Forex psychology, forex trader

Forex Psychology

How to Cope With Trading Boredom

Post author By Forex Academy
Post date 14 August, 2020
No Comments on How to Cope With Trading Boredom

Trading can be an incredibly exciting thing, especially when you are first starting out and everything is brand new to you. Even for experienced traders, it can be an incredibly exciting and thrilling thing to take part in, especially when there is a lot of volatility within the markets. The problem comes when the markets […]

Trading boredom can simply be described as the period when there is nothing going on, the markets aren’t really moving and even if they are, they are not moving in a way that is suitable for your trading strategy, and so you are sat there with nothing to actually trade, not much to analyse and nothing to do at all, this is where trading boredom begins to set in.

While boredom can bring our motivation levels down, it can also lead to other problems. It can make us far more likely to be distracted, those little toys that you have in the room, or the TV in the corner will be turned on a lot more often than it will. This creates a really bad habit when it comes to trading. You want to be getting rid of these distractions, so this trading boredom leads us towards a very slippery slope because if you get into the habit of getting distracted, it will be hard to break out of it.

So we briefly mentioned that boredom can actually reduce our motivation levels which in itself is not a good thing. Without motivation, we become more easily distracted and can make us just not want to do it. In fact, a lack of motivation is one of the things that can cause people to quit trading completely, which is of course not a great thing because trading is such a fantastic opportunity and a great hobby to have.

The problem with boredom is that for some it is unbearable and so they decide to try and force some trades, this is never a good idea, neve. All that this will lead to is bad trades and the inevitable losses that come along with them, if you are feeling bored, the last thing that you want to do is force trades, so do not do it, none, not even one, it will lead you down a slippery slope which for many there is no way to return from.

For some it is easy to get through these dull moments in trading, they do not need any added stimulus and can very patiently wait out the slow moments., For many though, it is not quite this easy and these dull moments can be a real killer. We need to find ways to help reduce the feeling of boredom and so we have come up with some ideas that you could try which could help to alleviate that feeling, some may work, some may not, but it is always worth trying as you do not want to be stuck with the feeling of boredom, it will only make you want to put down your trading tools and leave.

When the markets are slow, it is the perfect opportunity to learn a little more, learn something that you do not know much about. This could be a new strategy or just something smaller than can be used to adapt your own strategy. It is also a perfect time to start learning about additional timeframes. These can be used to help you confirm your analysis, as the more timeframes that you understand, the more accurate your analysis can be.

It can also be the perfect time to teach yourself a new skill, patience. Patience is key when trading, these dull moments will always be there, some lasting minutes, others for potentially days. Having an understanding that you have your strategy set, you understand the entry requirements and now are just waiting, do not see this as a time to be bored, think of it as waiting to pounce on the perfect trade. Building up your patience will benefit you in the long run and will potentially help you trade in more strenuous market conditions down the line.

If we are used to the high pace markets, then these slower moments can be even worse, you need to be able to slow yourself down, to calm yourself from all the excitement that you are used to. Take a few minutes before sitting down to trade to relax, take some deep breaths and slow your body and mind, this will allow you to better focus on the issue at hand and to be more in sync with the markets.

There are also a lot of trading forums and communities out there, do not be afraid to join a few. Some people often think that they are a waste of time or that they will not be able to learn anything from it or that they are simply full of people wanting info but not willing to give them. This is certainly not the case, there is a wealth of information out there, you will always find answers to questions and a lot of information that could be beneficial for you, not only this, but it will give you something to do while the markets are quiet, taking away some of that boredom.

So remember, there will be some dull moments, no matter what your strategy is or how long you have been trading, there is always the opportunity for the markets to be slow and for you to struggle to find trades, it is important that you know what to do with yourself in those situations. If you have a lot of patience then it won’t be an issue, but for those that find it hard, keep looking for something for you to do, different forums, new analysis, new strategies, anything that isn’t forcing trades. So have some things planned to do for those quiet moments, that way you won’t be tempted to make those bad boredom trades.

Tags Forex Information, FX Trading, FX Trading Tips

Forex Psychology

Can Stress Be A Positive When Trading Forex?

Post author By Forex Academy
Post date 14 August, 2020
No Comments on Can Stress Be A Positive When Trading Forex?

You no doubt would have heard people tell you about how bad stress is in trading, how stress is one of the worst feelings that you can have and you should do whatever you can to try and avoid stress completely or ways to help reduce it. However, could stress actually be a positive thing, […]

Stress can cause people to break down, it can reduce your attention and can make you make some bad decisions, especially when it comes to trading, however, in life, stress can actually be a good thing, stress is what gives you your fight or flight survival instincts and if you did not have it, you would probably be dead by now, stress will literally save your life.

The problem is that different people will react to stress in completely different ways, stress is like an injection of energy and feelings into your brain, it can make you freeze in place, it can make you jump out the way and it can completely confuse you, what it does to you depends on who you are and so for some, it can be a massive positive, but for others, it can be a disaster waiting to happen.

Before we get into some of the positives of stress, stress ultimately will cause you to automatically make some decisions, which you can imagine that when you are trading, it may not be the best scenario. So when people tell you that when trading you should be trying to avoid stress, you should believe them, while it does have some positives, trading is not something that you want to be making quick and rash decisions when doing, so when you are feeling stressed, if you do not react the right way naturally, try and avoid it completely.

We mentioned above about the fight or flight reaction that people have with stress, there is also the third thing that could happen, you could freeze in place, much like a deer does when it sees the headlights of an oncoming car, the deer freezes as a defense mechanism, although in this scenario it is actually the worst thing that it can do, that is what it has trained itself to do.

Think back to the last time you were in a scary situation, how did you react? Did you try to get away from the situation (run) or did you try to overcome it (fight)? This would be your natural reaction to stress, this is not a trained reaction, this is just6 how your brain automatically reacts to it, but how is this helpful for trading? Depending on your reaction, or your ability to train your reaction, we can use stress to really focus your mind on the thing that is causing it, finding ways to overcome it, rather than avoiding it.

It is important to understand that stress is a part of trading, it will always be there and will be impossible to avoid it completely, it will most likely rear its head when you make a loss, and you will make losses as they are a major part of trading. The thing that we need to do is to train ourselves to use that stress to our advantage. We want to use that stress to focus our mind and to calmly resolve the issues rather than freezing or panicking when something happens which can lead to rash uncalculated decisions and trades.

So now that you have a basic understanding of what stress can do and that losing and stress are unavoidable parts of trading, what do you do with this information? We need to be able to train your mind to react in a certain way when you start to feel some trading stress, a way to avoid making rash decisions, and instead focusing yourself on the issue that is causing the stress.

When we mention reacting to the stress, it does not necessarily mean taking action, for many of us, the best scenario would be to avoid stress entirely, or when it does start to show its ugly head, we are able to get out the way, so being able to recognise those signs is, in fact, a reaction to it, you need to get a good understanding of exactly what stress looks and feels like to you, this will enable you to know when it is starting to approach and will give you time to react accordingly.

For many, simply getting rid of it is perfect, when you start to feel it coming, use that as your time for a break, you always need breaks, so there is no better time to take one, it will give you a break and also help to remove any causes of stress at that point in time.

For those that thrive on stress, you need to use it to focus on whatever is the source, if it is low, use that time to learn why you lost, look at your journal or your trade history, getting an understanding of why something caused you stress will enable you to better understand it and have an understanding of why something happened often enables you to better deal with it in the future should it happen again.

Stress is not an easy emotion to deal with, but it is something that you will come across a lot when trading, in fact, it will be one of the most seen emotions, it is caused by losses, by the markets not moving the way you want it to, money issues, and even a lack of trades. There are many things that can cause it, what is important is how you deal with it, if you freeze or simply begin taking trades without thinking about it, it will only lead to more losses. You need to be able to control it, remove it, or use it to your advantage and focus your mind on the task at hand. Whatever works best for you, it is just important that it is under control, and you do not let this very powerful emotion and feeling get the better of you.

Tags Forex Emotion, Forex Trading, Stress While Trading

Forex Psychology

Psychology That Will Blow Your Trading Account

Post author By Forex Academy
Post date 13 August, 2020
No Comments on Psychology That Will Blow Your Trading Account

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account. So […]

So out the first pitfall is for those people who want to trade forex for the simple reason, to get rich as quickly as possible. Sadly, this is the view of Forex that a lot of people have, mainly because of all those people of social media such as Instagram that are posting their fast cars and million-dollar houses, in case you didn’t know, none of it is real. They do not have this money, they do not own those cars, they have either taken pictures from other people or have rented them for the purpose of the videos, all they want to do it suck people into their affiliate programs. So the mentality that people see and gain fro these is that you can use Forex to get mega-rich, mega quick.

Forex is a long learning process, it can make you rich, but that will be years and years down the line, not within a week. Get that idea out of the mind, you need to treat it like a business, risk management, small profits, and slowly growing.

Are you afraid of losing? Much newer, especially younger traders have the idea in their mind that losing is negative, anything that makes your money go down is bad, but is it really Losses are often seen as the best way to learn, but that mentality is hard to put into someone that has been brought up being told to save their money and to avoid risks. You are going to lose, it is a part of trading, being able to understand that will help put the thoughts of a loss being bad out of your mind and will allow you to adapt rather than sitting in fear.

Do not fight the markets, you won’t always be right and the markets will try to hurt you at times, that is just the sort of asshole it is, knowing when you have been wrong is vital and so is getting out. When your strategy dictates a stop loss at a certain point leave it there, if the markets start moving against you, many newer traders will still believe that their trade was correct so they move the stop loss further down, and then further, and further again because they know the markets will turn in their favor. In the end, it continues down and the stop loss is 5 times large than it was meant to be, it triggers and most of the account has gone. Stick to your original plans, don’t alter them mid-way through as this will only lead to more losses.

A lack of discipline can cause accounts to blow and it is most likely the one that has blown the most. Having discipline means being able to stick to your trading strategy no matter what is happening within the markets or how past results have gone. Many traders when they make a loss will want to get that money back, they do this by increasing the size of the next trade, bad idea, this is known as a Martingale strategy that has blown thousands of accounts in the past. Another thing that undisciplined people do it to leave their perfectly good strategy because it has a few losses, those losses will come no matter what your strategy is, so you need to stick with it and accept some of the losses.

Are you guilty of any of these pitfalls? Take a look at tour past and see if you are or have been, getting them out of your mind is a fantastic step to becoming a successful trader.

Tags Account Protection, Forex Guidance, Forex Trading

Forex Psychology

Take Responsibility For Your Trades!

Post author By Forex Academy
Post date 13 August, 2020
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Do you take responsibility for your trading? We know that you will when it goes the right way, your analysis went well, you knew the movements of the markets on that one. What about when they go the wrong way? We know that some news events come out of nowhere and there is nothing you can do about it, but the reaction and what you do after the news events you certainly can influence. Following a trade loss, do you blame the markets? Your broker? Or the charts? Well you shouldn’t, the news is out fo your control, but everything after that was your doing.

It is easy to blame others or outside influences, but how is that going to help us improve? If we simply blame others, we won’t be looking at it as a learning opportunity, you should already be using a trading journal where you jot down everything you do, using this will help you understand where the trade went wrong and what you can do differently, a far better alternative to just blaming something else.

It is also human nature to look to others when something goes wrong when you make a mistake, you will naturally look for something to blame as this helps prevent you from the psychological strain of a failure, but again, blaming someone else won’t help you improve, you need to take responsibility for your own reading.

If we take a look at traders who copy trading signals or use a copy trading service, they are simply ignoring any form of responsibility for their trading. If a signal goes well, that trader will claim that they chose a good signal to follow if it goes wrong, they will shrug off the loss and put it down to a bad signal provider, after all, it was their trade, I just copied it. They will then go on and look for another signal provider to follow. The trader has no idea what the trades are made and no idea why they won or lost. It is all about having none of the stress and responsibility of losing.

There are others that will simply blame the markets outright, put in a trade but it then gets stopped out, it is the economic news falt, it is the whales stop loss hunting, it is everything but their fault, not a great way to trade and certainly not a great way to learn.

There are then those people that use Expert Advisors (EAs) to do their trading fro them, any losses from the EA are obviously the fault of the EA and its bad programming, nothing to do with the choice to use it or to give all responsibility to he robot instead of yourself. What are you earning fro musing the EA, how has your knowledge of trading improved?

You should never try to avoid the responsibility of a loss, by taking it onto yourself, you are giving yourself the perfect opportunity to learn and develop yourself to be a better trader. While it doesn’t always feel great to take responsibility for a loss, it is paramount that you do it, much like anything in life, a loss is a learning opportunity and the only way to improve is to fail.

Tags Forex Advice, Forex Guidance, Forex Trading

Forex Psychology

Self-Calming Techniques for Forex Traders

Post author By Forex Academy
Post date 12 August, 2020
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Forex trading is known to cause a rollercoaster of emotions – from excitement and self-fulfillment, to anxiety and bitter disappointment, along with every other emotion in between. Sometimes, the best thing to do is to step away and take a break from trading until you can get your emotions under control. However, many traders don’t want to miss out on opportunities, so taking a break from trading might be difficult. One of the best ways to get yourself more level-headed is to figure out a self-calming technique that works for you. Some of these can be practiced while trading, others might require you to step away for a short time. Either way, these techniques can help clear your mind so that you can get back to trading. Here are some popular calming techniques:

Practice Conscious Breathing

Perhaps one of the quickest ways to calm yourself after a big loss is deep breathing. This is a simple, yet effective solution that helps you get your head back in the game without missing anything. You just need to take a few slow deep breaths to expel tension from your body. Most people recommend taking about 10 deep breaths. Then, you can get back to trading almost immediately.

Listening to Music

Music can really help to influence our emotions, so calming or happy, upbeat songs can help out when you’re feeling down. This is also something you can do while trading, so you don’t have to worry about missing a good opportunity. Just try not to turn up the music too loud, otherwise, it could become distracting. You’ll also need to pick the right kind of tune and be sure to avoid depressing songs.

Try Positive Self-Talk

When you’re trading, is your inner voice calm and relaxed? Would you want someone else to talk to you in the same way you talk to yourself? If the answer is no, then you need to be kinder to yourself. Tell yourself that everything is going to be ok and that everyone loses sometimes. Don’t beat yourself up when you make a mistake – everyone does.

Try Meditation or Yoga

Many people swear by calming exercise techniques like yoga and meditation. These practices aren’t only good for dealing with the stress of trading and might actually help with other stressful aspects affecting your life. Of course, this one does require you to step away from your device for a while. In some cases, it might be better to unplug completely for a while after all. Then, you can come back for a fresh start with a clear mindset and more focus.

Use Grounding Techniques

Grounding is an easy task that involves focusing on the physical world instead of your own inner thoughts. This is another quick solution that can help calm anxiety or fear that might be caused by forex trading. Here are a couple of examples of grounding techniques but know that there are more examples online or you can even come up with your own:

Name 5 things you can see, 4 things you can hear, 3 things you can immediately touch, 2 things you can smell, and one thing you can taste at that moment.
Count to 10, or say the alphabet.
Clench and release your fists.
Place a cool washcloth on your forehead.

As you can see, these are all simple but effective ways to calm yourself down and they can be done right from your trading station.

Tags Forex Guidance, Forex psychology, Forex Tips

Forex Psychology

The Dangers of Envious Trading

Post author By Forex Academy
Post date 11 August, 2020
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Have you ever seen a video, social media post, or anything else posted by someone who claims to be a successful forex trader? Often times, these posts show that those traders are living a luxurious lifestyle. You’re likely to see big beautiful homes, fast sports cars, photos from multiple vacations, expensive clothes, and other luxuries that these people are able to purchase. It’s easy to look at this and think that you want that for yourself; after all, there’s nothing wrong with being ambitious.

So, maybe you’ve already started trading, or you’re considering it. Perhaps you even know someone or have a family member that trades. Forex trading can be a profitable income source, but you aren’t going to become rich overnight from doing it. You may already be disappointed with your results, or maybe you’re setting yourself up for failure by entering with unrealistic expectations. Here are a few things to think about when it comes to being envious over the success of other traders:

Many of the people you see promoting how rich trading has made them, probably have income coming in from other sources. They might own a business or even work as a CEO at a company.

A lot of these people have been trading for quite some time. It may have taken them years or even decades to become millionaires. If you have a big deposit, you might get there quicker, but don’t buy into get rich quick promises. It takes time to make it to the top.

It takes a large deposit to make a lot of profits. It’s true that we all start from the beginning. However, some of us start with $5, while others might have $25,000 to invest.

Some of these people might get paid for attracting new traders. Or maybe they have a book to promote. This makes them more likely to exaggerate their results.
This doesn’t mean that you can’t get there someday, only that you need to have realistic expectations before you begin. Giving into envious feelings can be dangerous. It might lead you to make trading decisions that aren’t well-thought-out, to invest money that should have been used on necessities out of eagerness to turn a profit, or you might even fall for a scheme that claims it will get you rich quick.

Some traders might hear someone they know talking about their strategy and try to hastily copy it, only to lose money because they don’t know exactly what to do. Being envious of a more successful trader also might lead you to downplay your results. If you’re making a profit, then you’re off to a great start. Don’t put yourself down because you only made $5 – celebrate those small wins that will one day become much larger gains. Besides, making a small profit is better than losing money.

If you allow your emotions to affect the way you trade, you’re destined to make mistakes. Remember that it is ok to want to model another trader’s success; you just need to understand that it is going to take time and invested money to get there. Instead of feeling the urge to trade more to reach their level, spend more time learning about different strategies and concepts related to trading, and consider keeping a trading journal to monitor your progress. It’s true that trading can make you rich – eventually. If you begin with realistic expectations and keep negative emotions like envy at bay, then you’ll have the best chance of success.

Tags Forex psychology, Forex Tips, Forex Trading

Forex Forex Psychology

The Problem with Overconfidence in Trading

Post author By Forex Academy
Post date 11 August, 2020
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Confidence is usually thought of as a good emotion – if we are confident in ourselves, we feel reassured that we can do anything. This is a great outlook on life, but when it comes to trading, confidence can be a negative emotion. Let us explain why. Once traders become confident, they tend to become […]

Once traders become confident, they tend to become less receptive to criticism and less likely to spend time educating themselves. Some traders might feel that they are on a lucky streak, not unlike gambling. And just like with gambling, this often leads traders to take more risks and to lose huge amounts of money. There’s nothing worse than feeling on top of the world – and then losing it all due to your own stupid choices.

Overconfidence in trading results in something that has been labeled ‘King Kong Syndrome’. A trader suffering from this would experience a series of winning trades, which would result in them choosing to trade more. As they win more and more, those traders pay less attention to the market and convince themselves that they are riding on luck. The winning streak then comes to an end with a difficult reality check where those traders lose everything. The traders that are most likely to fall victim to this demise are beginners that don’t have a lot of trading knowledge. Using too high of a leverage or a huge lot size can contribute to the losses that these traders will experience. Many beginners have emptied their trading accounts because of this and give up on trading for good.

King Kong Syndrome is tied in with trading psychology, which involves the way that our emotions change our trading decisions. Fear and greed are major contributors to how we trade, but excitement and obvious confidence in oneself seems to be the major emotions connected to King Kong Syndrome. Remember that anyone can make this mistake, it isn’t only something that affects beginners. In fact, research shows that men – especially single men, are more likely to fall victim to overconfidence than women are. Beginners may be more prone to this phenomenon, but it can affect any trader out there.

So, how does one avoid making these mistakes and falling victim to King Kong Syndrome? First, you need to understand that confidence in your trades is important, but you shouldn’t feel overly confident. Conducting research and paying attention to fundamental and technical analysis is important, and they can help us feel confident about the trades we’re about to make. But we shouldn’t be too confident – no matter how much research you’ve done, you aren’t guaranteed to get the results you’re expecting. Always set a stop loss and watch how much you’re risking, no matter how much information you’ve gathered about the market.

Simply being aware of this problem is another way to avoid it. Having a good trading strategy also plays an important role. Without a good strategy, you’re basically just gambling with the outcome of your trades. Your plan needs to account for different market conditions and long-term outcomes. Don’t fall victim to overtrading, as most traders amass profits from making smaller, safer trades.

Never make the mistake of thinking that you’re too good to learn something new. No matter how long you’ve been trading, you can always get better and there is more information to learn. Those that give up on trading aren’t always beginners. Many of those traders once considered themselves to be experts or unstoppable, but a few big gambles and the King Kong Syndrome can change that.

Since King Kong Syndrome is tied to one’s emotions, you need to think about the emotions that you’re feeling when trading. If you feel overly anxious, excited, greedy, or anything else, take a break. It’s best to trade with a level head so that you can see the big picture without making hasty decisions. And this goes for overconfidence too – if you’re on a winning streak and you see yourself getting a big head, it may be time to clear your head and take a break. Remember that confidence is important, but too much confidence can cause one to risk too much and make bad decisions.

Being a successful trader involves doing a lot of research and having a well-thought-out trading plan with minimized risks. Good traders can control their emotions and never let them cause bad trading decisions, or they know when to walk away when their emotions are changing the way that they think. Don’t make the mistake of assuming that you’re the best trader out there and never rely on luck. Being a profitable trader comes down to strategy – luck is only an illusion and every winning streak will come to an end if those decisions aren’t made based on facts and data. Be sure to do your research and don’t allow yourself to wipe out your trading account because of King Kong Syndrome.

Tags Forex psychology, Forex Tips, Forex Trading

Forex Forex Psychology

The Psychology Behind Fear in Forex Trading

Post author By Forex Academy
Post date 11 August, 2020
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Trading psychology studies the ways that one’s emotions can affect their trading habits. From excitement and greed to fear and anxiety, emotions can wreak havoc on our results if we let them. Here are a few examples of ways that emotion can interfere with your trades: A trader experiencing crippling anxiety, also known as analysis […]

A trader experiencing crippling anxiety, also known as analysis paralysis, enters trades too late or fails to enter a winning trade altogether, even though they knew it was a good move.

A trader that is excited might fail to exit a trade when they should because they are feeling lucky. This could cause the trader to stay in the trade for too long.

A trader that is feeling greedy might want to make every cent possible and could stay in the trade past their take profit goal. Otherwise, the trader might close out the trade after incurring a very small loss because they don’t want to lose anything more.

While all of these problems can cause serious problems, fear is probably one of the worst emotions that traders can experience. Fear causes us to doubt ourselves and our capabilities. Have you ever allowed fear to interfere with one of your trades? If not, then think of the following ways that fear may have played a role in a bad decision you’ve made:

Have you ever failed to enter a trade even though you knew it was a good move?

Have you ever experienced a series of losses that almost made you feel paralyzed to make another trade? Did you feel as though trading was riskier than normal or your luck was bad?

Has the thought of losing money ever stopped you from making a move that you knew you should make?

Have you ever exited a trade too early because you feared the market would move in the other direction, only to watch that trade go on to be a winner?

If you answered yes to any of the above, then chances are that fear has in fact affected you while trading. There are several reasons that could cause a trader to feel fearful. Losing money is perhaps the most prevalent. After all, it takes hard work to make that money and the thought of losing even some of it is scary. Some fear failure altogether and cannot stand the idea of wiping out their account and failing as a trader. Making a mistake, failure, and other personal issues can tie in with trading because of the uncertainty of it all. Then, anxious traders might also doubt their abilities and overthink their strategy even when it’s a solid one. There are many different factors that can cause fear in a trader, and all of them have to do with the way that person thinks in general and while under pressure.

The first step to solving this problem is realizing that it is affecting you. If you’re reading our article, you’re likely already aware that fear is interfering with your trades. Fear is a powerful emotion that clouds our judgment, but there are ways to stop it from hurting your trades.

If you’re experiencing both fear and anxiety, then you likely have a common problem known as analysis paralysis. Traders experiencing this are like deer caught in headlights. They can’t decide in time, so they either enter trades way too late, or they fail to enter them at all because they cannot make up their mind.

There are ways to overcome this, however. Many suffering from this problem of overanalyzed data. They might use too many indicators, for example. Simplifying the number of indicators you’re using or even trading without them are good ideas if you have a ton of indicators running at once. Having a good trading strategy is another measure you can take to overcome the fear and anxiety behind analysis paralysis. Or you can take other measures, like meditation or yoga, music, or another relaxation technique to help calm yourself. There are lots of resources online related to this problem and how to manage it.

Once you’re aware of the ways that fear is affecting you, you can figure out how to use it to your advantage. Understand that highly driven people are usually driven by fear. If you don’t want to fail, then why not put forth every effort to be the best trader you can be? Instead of being paralyzed by fear, you should let it inspire you to do better. Learn more, perfect your trading strategy, figure out the best ways to analyze data, and so on. Embracing your fear can help you to use it to your advantage.

Every trader should know that fear is an understandable emotion that can stem from several different places when one is trading. Whether you’re fearing failure, worried about losing money, or something else, the first step is identifying where this emotion is coming from. Once you’ve done that, you can work on getting better. You might not be able to get rid of your fear entirely, but there are ways that one can use it to their advantage and continue on to trading success. If you’re suffering from analysis paralysis, then there are actually several different methods that might help you overcome that. At the end of the day, every trader needs to know that fear doesn’t have to interfere with their trades or bring an end to their trading career as long as they learn how to manage it.

Tags Forex Guidance, Forex psychology, Forex Trading

Forex Psychology

The Four Stages Of Loss In Forex Trading

Post author By Forex Academy
Post date 7 August, 2020
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When we look at trading as a whole, losing trades is just as much a part of trading as winning is. In fact, it can actually be a more beneficial experience at the start, as long as your psychological mind can take it that is, when you make a trade, if you win, someone is […]

While we know that it is a major part of trading, that doesn’t make it any easier to deal with, in fact, taking losses is the main reason why a lot of people stop trading, and I am not referring to people who have blown their accounts, but a lot of people who lose motivation or gain some form of emotional trauma from the losses will simply give up due to lack of motivation or fear of losing more.

So why does it have such an effect on some people, if you play video games and lose a game, how do you feel? It’s never a great feeling and this is a game that had nothing at stake, so when there is a monetary value attached to that loss it can magnify those feelings a lot. Unfortunately, the effect that it can have on people varies from person to person, some may shrug it off, others may receive what is known as emotional trauma and would then struggle to recover from the loss, especially if they were risking more than they should be.

With any sort of loss in life, whether it be money, a loved one, or anything really, there are certain stages that people will go through, these are normally called the stages of grief, but we will name them the stages of loss.

Denial

Denial often comes when a loss occurs that you are not prepared to accept, you still believe that the trade was right, it was everything else that was wrong, definitely not your trade. You often hear phrases like stop hunted in regards to this where people believe their broker moved the markets to take out their stop loss. This is a natural feeling to have, it can help you to ease any sort of blow to your motivation or ego.

Rationalization

After you have been denying the loss, the next stage is often rationalization, this is where you start to look at everything that was right about the trade rather than what went wrong, n fact you will try to completely ignore anything that went wrong in a bid to convince yourself that you did nothing wrong. You will look at the smallest of details in order to convince yourself of looking at the strategy, the stop losses, the take profits, and everything in between.

Depression

Probably the most devastating of the stages, this is where you have already looked at everything that there was apart from one thing, yourself. You must have done something wrong, maybe you aren’t good enough, why am I trading? Those are some of the questions you may start to ask yourself, this is a bad stage for your ego and also the stage that kills most people’s motivation to trade. For some, this stage can be relatively short, especially if the next trade wins, however for those that have lost multiple trades in a row, or a larger than the normal amount then this can be a devastating phase that can last for quite a long time.

Acceptance

Realizing that things have gone wrong, but you know it is wrong to blame yourself or anything else for it, it happened, now we need to move on. This is where a lot of traders get out of that depression or trauma and begin to look to the future again, planning new trades to take. Acceptance isn’t about being ok with the loss, you will always wish it had worked out, but it is about moving past it and looking to other aspects of trading and new trades.

The stages of loss that we have mentioned can be experienced with anything in life, but the key to getting over both the loss and these stages is to adapt and learn from the loss, move on and continue with your strategy, hopefully to a more successful level.

Tags Forex psychology, Trader Advice, Trader Emotions

Forex Psychology

Tips for Coping with Trader’s Frustration

Post author By Forex Academy
Post date 7 August, 2020
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When trading, frustrations come with the territory, it is an inevitable part of trading and something that every single trader will experience at some time during their trading career. The problem with frustration is that it can lead to further feelings of not being good enough or wanting to not bother anymore, it can also […]

If you have been trading for a while, then I am sure that you are able to think back to a time when you started to feel frustrated when you did, did you stick with it or did you do something to try and reduce the amount of frustration that you are feeling? The good news is that there are a number of different things that you can do to help reduce the levels of frustration that you are feeling, some easy and some that take a little more effort. What is important is that you do something to reduce the feeling before you start to take shortcuts or make mistakes.

So let’s look at some of the things that you can do to help reduce your frustration levels.

It is not your fault: A lot of frustration often comes from a loss or a few losses in a row, when this happens it is perfectly reasonable for someone to begin to think that maybe it is them that is causing the losses, maybe you just aren’t good enough at this trading thing. What you need to remember so that it is not your fault and everyone experiences these losses. Losses are a part of trading, if you didn’t have any, then you would be one of the greatest traders who has ever traded, so when you experience a few, even if they are in a row, do not kick yourself. Remember back to when you created your trading plan and strategy, you calculated these losses to give you an overall profitable strategy, so when they come, it can be annoying, but it is not your fault.

Losses will happen, do not blame yourself, and just take a look at the trades to work out why it lost, there may be a logical explanation or a clear reason that shows you that it was not you, it was something that happened in the markets. If you are following your trading plan and sticking to the rules that you set, then there is nothing that you have done to merit any blame, so accept the loss and move on to the next trade.

Your strategy still works: When you make a couple of losses in a row, it can make you think that maybe your strategy is the thing that is not working. In reality, this is not the case. In fact, your strategy may still be working perfectly well. The markets are constantly changing, the conditions are changing minute by minute, your strategy will not pick out trades perfectly, no single strategy ever will. So a few losses here and there is part of the process, your strategy was designed to be able to cope with this. Stick with it.

If you are convinced that there is definitely something wrong with your strategy, do not start over, take a closer look at each aspect of your strategy, the majority of it will still be absolutely fine, no reason to start over completely. Just alter any parts that you feel need adapting to the new trading conditions, but your strategy ultimately still works, so do not throw it out for something completely new and untested.

Work out what went wrong: If you have had a few losses, do not start to feel frustrated, it is difficult as it is a natural feeling to have, but instead, try working out why things went wrong. Hopefully, you are keeping a trading journal where you are putting in all the trades that you are making as well as the reasons behind making them. Looking at this, you may be able to see whether you did something wrong or if you missed a part of it. It can also show you if there are any patterns in your trading which could have caused the losses.

If you manage to find something, then this is the perfect time to make some changes, just adjust the little bit that you feel caused the issue, then test it out on a demo account, see whether it has made any differences, if it works, change it on the live account, if not, then revert back and continue with your strategy. If however, you find no patterns and nothing really wrong, then it could just be the part of your strategy where you will have losses, it will always happen, try not to overthink it too much, and carry on with what you are doing.

Take a break and get outside: So you have become frustrated, either from a few losses or the lack of trading opportunities, instead of letting that frustration grow, try and get away from it completely. Get outside and get some fresh air, this is a fantastic way to clear your mind, being able to reduce your frustration levels with a good walk, or by doing something completely different like shopping with help take the negative thoughts out of your mind. Coming back to trading with a fresh and clear mind will allow you to look at the markets in a new way, your past losses will mean nothing and you will be able to fully concentrate on your next upcoming trades.

Do some exercise: Exercise is one of the number one ways to get rid of both frustrations and also negative thoughts. Taking part in the exercise will release endorphins into your body which will very quickly help you rescue the frustrations that you are currently feeling. It does not need to be anything extremely tough, even a simple jog or a long walk is enough to help your body. Not only does it help clear your head, but exercise helps with your overall well being, both your mind and body. Having a healthier mind and body allows you to tolerate a lot more including those trading frustrations in the future and will help you to trade with a clearer mind.

So those are a few of the things that you can do to help with your frustration, it is important to remember that when something goes wrong, when you have a few losses, it does not mean that it was your fault. In fact, you may well have done absolutely nothing wrong. Being able to control those frustrations and to spot when you are starting to become a little frustrated is a very powerful tool, as soon as you see it coming, change something, do something else to help reduce or avoid it completely. Only you can tell when you are feeling frustrated, so it is up to you to be able to take that step back and do something about it. You will thank yourself later once you have managed to reduce those levels and you will be a far better trader if you learn to control it.

Tags Forex Advice, Forex Guidance, Forex Tips

Forex Psychology

Winning…and Winning Badly

Post author By Forex Academy
Post date 6 August, 2020
No Comments on Winning…and Winning Badly

By now, you started trading actively, did some research regarding trading tactics, and watched numerous helpful and educative videos which helped you sharpen your senses and taught you how to profit. All of this led you, step by step, to success. The winning percentage just started rising month after month now. When you hit the numbers in a row, your adrenalin starts working and you get high on success. After such a winning row one reaches these heights and starts thinking of oneself as of pro which has a power of knowledge and cannot be stopped. This is where you get blind and slightly stupid in your arrogance and inevitably, fall happens – you hit the wall hard – it is just a matter of time.

Every decision and step you take right after this fall could easily determine your trading future from this point on. This will sound crazy, however, there is a right and wrong way of winning. You may take this preaching as rubbish especially if you are in winning swing at the moment of speaking. However, as I can easily foresee it right now, eventually at some point you will, for sure, come back to this article in the future. We will discuss this theme in two different aspects: on the macro level – kind of the zoomed-out point of view, and micro-level – where you need to understand when you are winning.

We propose to have look at these The Big three rules in terms of Forex trading:

Money Management

As we already spoke about it, money management is the most important thing in forex trading. At the end of the day, this is the thing that increases assets on your account or ruins you completely. Put together your plan: how much percentage to risk from your account, how many pips to risk, manage your trade, and pick wisely indicators that you will involve in trade.

Trade Psychology

The most important thing in trading psychology is patience. The long game is far superior to the short game. It is necessary to take initiative and develop the discipline to get to success. And last but not least the Technical Analysis.

Macro-Level

One needs to understand that trading psychology is a very important part of trading. Once you learn everything you are out there getting amazing trade entries, great money management, you are on the run, controlling your emotions, winning trades, and achieving what you dreamed of…

You think the world is yours, now you are untouchable, however, as we already explained, the moments of failure are inevitable at a certain point. To be completely honest, the moments of prolonged failure. The way you deal with failure will determine a lot in the future. One of the things that are quite important is not to give up and leave everything. It is just one fall, get your grip, and start again. All you have to do to get back on track is keep trading your system, do not try to jump in – do not think that you know more or better than the system, and keep repeating this recipe until you get back on winning tracks. If you could do only these three things you would win every time, especially long term. It is not that easy, right?

Trouble is, we are all emotional beings and we cannot change this fact. In trading Forex, we just need to eliminate and subdue our feelings as best as we can and keep doing this all the time. We can be emotional persons, but it is not recommendable to be an emotional trader. Mistakes that we all do when we are winning like you are trading overall and you are unstoppable and your winnings are just landing one on top of the other. While you are in such a run, your emotions are at the highest level, especially if this is your first time, and you never been here before. You cannot stop it. It is just beyond you, especially if this is the first-time experience. The biggest problem with this is that majority of new traders do not understand or see that they are only temporarily winning.

Huge misleading thoughts are ‘this is how it is going to be from now on’, and ‘all I got to do is keep doing what I’m doing and I’m in profit every month till the end of the days’, right? Everyone who reaches these levels is risking to drop off real fast. Professional trader’s opinion is – do not consider this like failure. Consider it as coming back to the true aim you had when you started trading. Let’s say you made 9% per month and now you are making 1,5%. This now is not a bad result – actually it is a great average percentage. The previous average result was the product of too many entries or very high leverage you used. The one incredible mistake that anyone can make is ‘if I’m getting this high win percentage and doing so well, why am I risking only 2% of my assets, when I should be risking way more than that’. It is truly foolish to act like this. Returns that you got are not real and not sustainable on a long term basis and the solution is not to increase your risk.

What you need to do is understand that fall was inevitable, it was supposed to happen. Be completely honest with yourself and analyze, were you following the rules or you were going higher, overtrading and overleveraging, and so on. When you finish the analysis, dust yourself off and get back in the game. Just because you hit this crash doesn’t mean that you are not up to this. It just means that you need to come back taking all experiences into consideration and following the rules this time.

Micro-Level

Here is how it looks on the micro-level: when you are actually in trade and winning, or you just closed winning trade, haven’t you felt regret of doing so? Just a little bit? Do not worry, every trader has been there. Everyone closed at least one winning trade with a speck of doubt ‘why have I did this just now’.
It may happen that you did not exit your winning trade when you thought you should. For example, you were in a winning trade that you saw it can bring 500 pips and suddenly, that price came back the other way, and tripped out to your Stop/Loss or your exit indicator, whatever the case it was, and you ended up closing this trade with only 275 pips. Of course, 500 pips are better than 275 pips, but a win is a win, and you shouldn’t be regretting over it.

The next thing that can be born out of this regret is the idea that you shouldn’t let it happen again, and thought that you should meddle in and stop the trade on 500 pips before it gets lower – this is something that should be avoided completely. The moment you do this, there is a possibility that price is going to come back a little bit, and then give you one really big 1500 pips move, and you are not going to take part in it. You will be watching with regret, what you have missed and professional traders will be getting this move. Why? Because they do not let their emotions to overpower them and get in a way of their trading systems. This is what you should do in the future as well.

There is another possible scenario. By now, you know how to calculate your risk and where to take profit, right? Sometimes, it can happen, that you may get really close to that ‘take profit’ point, and the price is going to come back and it will actually be closed as a loss. It is very true that you were so close. At this point, another form of regret floods you and you think if you just lowered a bit your first ‘take profit’ point you would have closed it with a win. The problem is that this causes you to start deviating from your system. As soon as you do this, slowly you are going to start leaving your pips behind. Again, this is the situation where you are trying to outsmart your system. The system that you made – if you did everything right – has been proven to work, and outsmarting it is not recommendable for profit.

According to many successful traders, regret is a wasted emotion. What these guys do is, keep up the plan, leave emotions out of the trade, and patiently win their trades. The whole point in trading is to get to profit not run from it. Our advice is to keep it smart and simple, follow the system, follow the rules, master your emotions, and stick to the plan. As you may guess by now, everything is up to you and how you control your emotions when they are at the highest level, i.e. when you are winning. We will do the best we can to support you on your way to success but this is something that you need to deal with yourself.

Tags forex education, Forex Success, Forex Trading

Forex Education Forex Psychology

Tips for Getting Past Trader’s Block

Post author By Forex Academy
Post date 4 August, 2020
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No doubt that at some time in your life you have heard the phrase “writer’s block”. It is normally where a writer losses their inspiration and is unable to create any new work, these blocks can vary in their severity, sometimes lasting for minutes, and with some lasting years. Anyone can suffer from writer’s block, in fact, there have probably been timers in your life where you have needed to complete some work, whether it is written or otherwise and you have gone completely blank, you have no idea what to write or do, this is a form of writer’s block.

So how does this relate to trading? Well just as writers do, traders also get these blocks. These sorts of blocks can sometimes occur after a large win or loss, it can be caused for a number of different reasons, maybe you feel that you cant replicate the last big win, or you have a fear of another large loss, the block can simply palace you, not being able to get into the trade or even no longer being able to analyse the markets the same way that you used to, both of these things can prevent you from making trades even though you know you should.

So how do you manage to cope with trader’s block and what can you do to start getting over it? Firstly we will mention what not to do, as a traders block is the simple thing of not being able to put on a trade, do not try to force them, do not try to put on trades regardless of the markets conditions or your analysis, yes this will get you trading again but if we are being honest, it would just be a gamble. This sort of reckless trading will only lead to more issues and potential losses.

You need to be able to take things slowly and to start again from the beginning as with traders block, the more you struggle with it, the harder it will become to get out, much like quicksand, the way to get out is to relax rather than struggle. So the first thing that you need to do is to take a step back, move away from the computer and trading as a whole, this could just be a short break or a couple of days, you need to be able to try and clear your mind of what is causing the block, the memory of the big loss or thoughts of not replicating a large win, distract yourself with something else.

Now that you have a slightly clearer mind, we can go back to the beginning, we need to start fresh, you have a trading system that works, so we aren’t going to change anything in the way that you work or trade, what we will do though is going straight back to the start of that system. This is a way of re-learning what you know about your strategy and trading, re-learning it will give you the confidence and bring back your understanding of the system to help you begin trading again.

So now you have your strategy and the basics fresh in your mind, you can begin to look at the charts again, using your strategy and the analysis behind it, look for a trade based upon them. Remember that trading should be an emotionless thing, it is hard but it is the way it needs to be. With these initial trades keep the size small, this will help you get over the initial block, as the risk is lower so it should be easier to apply.

There are however those that experience a really strong version of traders block when walking away and trying out their old strategy just does not help. If this happens, the best thing that you can do is start over, well not entirely. Looking up a new strategy and learning it can help you to take the thoughts and memories of the previous strategy that caused the block out of your mind. Learning from scratch can renew your confidence and also motivation for trading as you are learning something new and fresh, this can give you a much fresher perspective of the markets. Once this has been done and you are up and trading again, you may be able to then move back to the previous strategy to try again, more often than not, you will now have the confidence to use this strategy again.

It is always hard to get over a trader’s block. In fact, it has the potential to completely derail your trading. It is all about rebuilding the routine that you had before, once you are able to get back into the rhythm of trading it will be far easier to get back into the system of trading that you used before. It is also worth remembering what you did and how it felt, as traders block has a habit of recurring and coming back, so if you have it in your memory what you did to get out of it, as well as the understanding that you can get over it will help you in the future should it occur again.

Tags Forex Advice, Forex Tips, Forex Trading

Forex Psychology

How to Prevent FX Trading from Being Overwhelming

Post author By Forex Academy
Post date 31 July, 2020
No Comments on How to Prevent FX Trading from Being Overwhelming

On the outside, trading looks pretty straight forward, you just guess whether the markets will go up and down, easy right? That is the view that a lot of new traders have, it isn’t until they actually get into trading that they come to realise how much there actually is, and learning it is a […]

When you first get into trading, it is hard if not impossible to understand all the information that is being thrown at you, and every day new patterns or ways to analyse the markets are coming to light which makes it a never-ending learning process. Plans that have been created can be made obsolete a few hours later due to a single bit of news, things change within the markets and it can frustrate you, but the key to being a successful trader is overcoming those stresses and adapting to the markets.

When your plans aren’t working and things are going against you, it is often the case that you need to make some decisions, and quickly. This creates an additional time pressure that you really do not need. Do you stay with your current plan or strategy, or do you need to make a new one? Each second that you wait is the situation moving further away from you, it can feel that there is too much information and not enough time to process it.

In order to overcome this, or at least some of it, it is good to look at yourself and see how it is that you actually perceive your time. Sounds like a strange thing to say, but when you are in that panic mode, everything seems like it is moving 10 times faster than it actually is, your thoughts are racing but you aren’t actually coming up with any solutions, in order to combat this, you need to regain the structure that you had before things went wrong.

A way of doing this is to actually have several plans at the same time, have a plan for one market conditions, a plan for another and so forth, this way, no matter what happens you have a plan and know exactly what to do, this won’t prevent losses, nothing can, but it is at least a way to give you a structured guide on what you need to do when certain things happen within the markets. Simply refer back to the most relevant plan rather than panicking and struggling to adapt.

Doing this will make you feel that you are back in control of your trading, it will alleviate a lot of the stresses and you will feel far better for it.

Tags Forex psychology, Forex Trading, Trading Basics

Forex Psychology

What Is Your Body Trying to Tell You While Trading?

Post author By Forex Academy
Post date 29 July, 2020
No Comments on What Is Your Body Trying to Tell You While Trading?

Forex traders often think that trading is all about your mind, it is your mentality, your intelligence, and your discipline that will make you successful, and they aren’t wrong. Those things absolutely do have an impact on your trading and they are vital if you want to be successful and profitable, however,r there are also other things that you need to take into consideration, things that your body will be telling you about, so we are going to be looking at the different signs that your body may be telling and why you should be listening to your body if you want to b a successful trader.

One of the more obvious signs that your body can be telling you is that you are tired, sometimes within our mind, we may be fine, but when your body begins to ache, or you find it slightly harder to move about due to a lack of energy, this is your body telling you that you probably need a break When your body is in this condition, it will begin to distract you from your trading and that is the last thing that you want to do, so if your body is starting to feel tired, be sure that you listen to it and take a break.

Sitting at a desk or in front of a computer for extended periods of time can make it quite hard to maintain your posture, this can lead to a number of different issues with your body, the most prevalent being aches and pains. If you start to feel these, be sure to take a break and stand up, much like when your body is feeling tired, you need to be able to get up and give your body new positions, go for a walk, or just simply stand up, that change in posture and stance can really help your body to recover from those aches and will allow you to fully concentrate when you had back to your trading platform.

If you are easily losing concentration or are becoming increasingly easily distracted then it may be time to take a much-needed break, you will often begin to feel this way if you have been doing something for an extended period of time, it is not healthy to do any one thing for too long, so if you are losing your concentration easily, then we would suggest that you take a step back and take a break, if it is late, call it a night as you should not be working or trading into the early hours of the morning anyway.

If you are waking up in the morning tired, then your body is telling you that something is wrong. Your body is either telling you that you are not sleeping properly or getting enough of it, or that you are simply working too hard. Mental exhaustion can carry over for a number of days, even with a day of sleep, you need to be able to develop a schedule that gives you enough breaks and ensures that you are not working too hard on your trading, the exhaustion will only continue to get worse if you do not.

Your body can sometimes give you clues as to your current emotional state or what you are thinking even if you do not know entirely yourself. Little muscle twitches, different breathing patterns, and things like clenching your fists are all things that could indicate to you that you are going through an emotional change. Being able to recognise these little and often subtle changes can give you a headstart on avoiding the emotions which could potentially cause you to make rash or dangerous trading decisions.

There are of course a lot of other things that your body could tell you, but those are some of the more obvious. It is important that you take notice of them, your body is there to help you if you feel tired or ache, take a break, just be sure not to push yourself too hard, or the results will only be negative on your trading account.

Tags Forex Trading, FX Psychology, FX Trading

Forex Psychology

Desperation: The Destroyer of FX Trader’s Dreams

Post author By Forex Academy
Post date 21 July, 2020
No Comments on Desperation: The Destroyer of FX Trader’s Dreams

We have seen people burning up on jobs, screaming “I can’t work on this job anymore I have to get out!” We’ve also seen people losing large sums of money trading on Forex. You could see the desperation and you could read on their faces. “How do I get this money back?” or “My expenses are $2,000 dollars a month, how long do I have to trade to make that sum?” Most people don’t understand that answer to these questions comes with – patience. Which is critical in the trading game.

The lack of patience, it’s something that we all are affected with, more or less. There is one feature of impatience, that is the killer – desperation. That is what is blocking us from achieving success. Something that we need to discard. It is, more than anything, negative that is impeding progress in trading. Desperation causes us to make irrational decisions. Extreme decisions. What would you do if someone would offer you a job that would satisfy you professionally and economically, but only after 5 years building on it with lots of crashes and self-doubts? Would you still be interested?

This article is conceived in such a way to help you get there faster, relieved from impatience. Understand that when you start trading professionally, even after all tests from trading firms, it is just the beginning and there is limited money for the trading accounts. It takes a strong work ethic. That is not to torture you for fun, it is there with a purpose, to see how you handle real money, as training with demos is worlds apart from real trading. You cannot rely on luck and trading firms are there to make money, thus, they are good at managing risks, so you have to get the right to be able to earn more, to show them you are a good investment, consistently. And being consistent is really hard, as the market itself, is always fluctuating. That’s a big step, reliability.

Acknowledge that 90% of traders cannot escape that constant, dull tick of desperation in their heads, that interferes with their trades. Being able to place calculated, disciplined trades with low risk, at the right moment with constant desperation chaining you is impossible, and it gets worse with years. You have lost accounts again and again, but you know Forex is a place where millions can be made, and you are getting anxious and frustrated with your Forex trading endeavors. That gets people in a panic mode, pushes them into making irrational decisions and, not just, financial mistakes.

Impatience, creating unrealistic expectations for yourself, the desperation to get good results, it all leads to disasters. Don’t invest more money that you can’t handle, hunger is good when it is calculated. For those that endure and survive, those disasters can be a catalyst to expand their knowledge on trading. And don’t believe in the myth of quick recovery. Sure, some people are very lucky, odds are that somebody has to win lottery eventually, but that’s not a smart move. Desperation for funds recovery leads to even more losses, like gravity pull into the losers pit.

To some degree, traders who in the beginning use the emotions to resist the acceptance of failure are the ones who win at the end. After a while, they become more like scientists, objectivity, research, experiments, tests, and trying out new things are infused in their minds. But, it cannot be done instantly. Train yourself, stop being desperate. Try to think in this manner “So, you lost an account, man up, don’t cry about it and don’t chase it, learn from it.” Most other problems in trading can be fixed by placing a good system to work and learning how to uphold it. It is great to have the drive, to look forward to something when you wake up in the morning, but that has to be backed up by having realistic expectations. Motivation is great until it turns into desperation, when that happens, it is just a push in the wrong direction. Always think about what went wrong, analyze your trades, trade based on rules that keep you emotionally solid.

This all applies to all stages in life. If you are young, and you heard that trading on Forex is easy money, and you are desperate for independence, that is great motivation, but it can mislead you. Go to college instead if you can, you can practice Forex and learn something in college. At the end of school, you can be ready for a Forex job. If you are contemplating leaving your day job and desperate on living a luxurious lifestyle, you are digging into every chance to make trades on Forex. Stop and think, am I having realistic expectations, am I being hazardous? If you are a pro Forex trader, in a streak of bad trades you will become desperate to compensate losses.

This is the game where you cannot cheat to be successful, it is long. It needs time invested and it is rough. If you see yourself living off Forex trading, you must learn to deal with desperation and maintain healthy motivation. That is the way to be responsible with your money and money entrusted in you. You have no options here.

Tags Forex Methods, Forex Risk, Forex Trading

Forex Psychology

Why Does Forex Create a Self-Maximization Mindset?

Post author By Forex Academy
Post date 21 July, 2020
No Comments on Why Does Forex Create a Self-Maximization Mindset?

How can you diversify your income streams and improve yourself at the same time? It’s decision time. It’s time to decide whether you are going to just stick to what you’re doing right now or whether you are going to put time and effort into making yourself a success. You could carry on holding down […]

How can you diversify your income streams and improve yourself at the same time?

It’s decision time. It’s time to decide whether you are going to just stick to what you’re doing right now or whether you are going to put time and effort into making yourself a success. You could carry on holding down your job and carry on trading, or you could decide that it is in your best interest to add new streams of income to your life.

Why would you choose to do that? There are two main reasons. The first is that by diversifying your sources of income, you can insulate yourself from any future shocks. The more streams of income you have, the better protected you are from things like the economy tanking or your company going under and leaving you unemployed. The second, perhaps more convincing reason is that you are almost sure to end up making more money this way. The greater the number of income streams you introduce into your life, the greater the odds are that one of them will become a runaway success.

Of course, that’s not an easy thing to achieve. Particularly if you’re stuck in a rut or have allowed your brain to talk you down to the point where you don’t have the confidence to start something new. But, if you’re reading this, that means you have in all likelihood already overcome that first hurdle. You have probably already started forex trading or are on the road to teaching yourself how to trade. Take a moment to give yourself a hearty pat on the back because that is no small feat. It is, in fact, a paradigm shift away from being a bystander in your own life and towards being able to know what you want and how to go out and get it.

Diversifying Income Streams

The huge advantage you have, living in this time, is that there are now more ways than ever to explore new avenues of earning an income than there ever have been before. Better still, a great many of them do not require you to quit your job or abandon your forex trading routine. They can be bolted on without causing the kind of life-changing disruption that would have been inevitable in the past.

Of course, as is the case with everything you do as a trader and – speaking more broadly – every big decision you take in life, you will have to run a careful risk assessment to figure out the potential pros and cons. Not just in terms of your financial portfolio but also in terms of the amount of time invested, whether that time could have been used more productively on another endeavor and, ultimately, on your own personal wellbeing.

Your risk assessment cannot, however, involve no risk. Otherwise, you are just back to square one. Why take any risks when you can sit on your couch and eat chips? That’s not the name of the game. Imagine you’re in a casino and the odds of winning a hand at blackjack or roulette are 12-1. That means that out of 13 possible outcomes, 12 are going the way of the house but if the game does happen to go your way, you stand to make 12 times your stake. Now, of course, betting on a future outcome like that makes little sense. The game is stacked in the house’s favor. That’s why casinos exist in the first place because they can make money by making sure the odds are always in their favor.

Take a look at Las Vegas or Macau in China. There’s a reason why all those casinos look so opulent and it isn’t because the poor schmucks betting on a 12-1 hand are winning all of the money. Okay, but now imagine that the odds of winning the game stay the same but that the winnings go up by a factor of 100. Your chances of winning haven’t changed at all but the potential gains if you do win, gains are now astronomical. No casino would deliberately set up a game like that because they would be out of business in no time. One of the reasons they would go out of business is that suddenly it makes much more sense to make that bet from the punter’s point of view. The reason is that a risk with such a large potential upside starts looking more like a calculated risk that promises to pay out a reward that is out of proportion to both the odds and the initial stake. In other words, it becomes an opportunity.

The point is that when looking for ways to diversify your income, your goal is not simply to search for the low-risk option but to identify real opportunities.

Opportunities for Self-Improvement

Getting to the gist, there are many ways to invest your money that will look on the surface like they provide an additional income stream where you can just sit there while your money works for you. They include anything from peer-to-peer lending, across ETFs and dividend-heavy equities, to investing in the real estate market. These are all likely to be potential components of your financial portfolio in one way or another. They are not, however, very imaginative ways to diversify your streams of income in a meaningful way. For one thing, while the risk may appear to be low, they are not entirely devoid of risk. Moreover, while these options are relatively low-risk, they also do not offer spectacular rewards. In other words, they are not real opportunities.

Another, perhaps better, way to go is to look for business opportunities.

In that sense, we are blessed with the true plethora of business opportunities that the internet and other modern technologies provide. It can be said we are also still very much in the pioneering stage of online business. While it may seem like everyone is online selling something or marketing themselves in some way, this couldn’t be further from the truth. Wherever you are in the world, you will find that most people around you have still not cottoned on. Most people are still bumbling around, unaware of the potential these high-tech tools offer. All of this means there is still time to get in, if not on the ground floor, then at one of the early floors and let the elevator take you up.

What’s Stopping You?

Here’s what’s stopping you and why it shouldn’t. What’s stopping you right now from starting some form of online business in addition to your job and in addition to your trading, is the very same thing that for a long time stopped you from getting into forex trading in the first place. Fear. Now, the fear we’re talking about here is fear of failure. There’s nothing to be ashamed of, we all have it in one form or another.

Here’s what’s lucky about this situation: The reasons for overcoming that fear are precisely the same as they were for overcoming your fear of getting into forex trading. In fact, not only are they the same but there is one bonus reason that makes this kind of endeavor even more worthwhile. So, when you start a new business venture and that business doesn’t work out, if you’re smart, you still get to walk away with quite a lot.

There will be losses, that’s for certain. But the gains are almost certain to outweigh the losses and they should be factored into your risk assessment. The first gain is that you will have taught yourself a lesson about your own resilience. Your business may have failed but you can pick yourself up and get right into the next thing. That resilience will kill your fear of failure right away. The second gain is that you will have learned from any mistakes you made along the way and will be able to do things better at the next go around. This is a gain from the experience that people actually undervalue time and time again.

It’s a little known secret that no number of online courses and video tutorials will teach you. In short, sometimes you need to mess things up yourself so you know how not to do it the next time. The third gain, the bonus gain, is all of the many big and little things you will have learned along the way. Even if your venture fails, you will have invested time and effort into yourself. You will have bought yourself a whole new skill set that you could not have acquired in any other way. Most if not all of those skills will be applied either to your next business venture or to those things you are already doing – your day job, your daily life, and, yes, even to your trading.

The Idea Factory

Ok, so by now you’re probably interested but maybe you don’t have any ideas. First of all, that is hugely unlikely. Give your brain just a few minutes to explore the enormous scope for new businesses out there and it is bound to come up with at least ten viable ideas. If not, however, even that is made easier for us by the wonderful world of the internet. Get online and do some research, let your searches be your guide. Get on social media, get on YouTube, find out what other people are doing and adapt it to something that’s your own. Your brain is just by its very nature a magical source of ideas and plans and schemes but plug that into an online world with millions of other brains doing the same thing and you have yourself a veritable factory of ideas.

The online world is a great place to explore, investigate, and actually put into practice any range of business ventures you care to name. Lots of people have made a go of selling actual physical products online but that’s just a starting point. Using all the tools the internet provides makes it possible not only to sell products but services, brands, entertainment, and even the very skills you learn along the way as you build and develop your business. You could, just as an example, offer up the skills you learn in growing a business as services to other businesses. This is because, as your experience expands, you will come to know all sorts of things about marketing, logistics, accounting, project management, and a whole host of other fields you never knew you would be able to master.

What’s Hot?

One of the things that are particularly hot as an online commodity these days is knowledge. People are hungry for new knowledge and new skills like never before and there is a rapidly growing sector of online businesses ready to respond to that demand. You may be thinking, “well, I’m no expert on anything” but that’s the wrong approach. That’s the fear talking. First of all, your experience is unique, the way you understand the knowledge you have is a complete one-off, your approach to explaining and transferring that knowledge to others might be just what people are looking for.

Often the greatest experts in a field are so deep into the area they work in that they miss the little things that they too had to learn along the way. But those little tips and tricks, they’re like gold dust right now. The other point to make here is that there has never been a better time to learn new skills and perfect the skills you already have. Use all of the tools at your disposal, follow people on social media, watch tutorials and read articles, take an online course if you feel you have to.

If you can combine the knowledge you can pull down from the airwaves with some experience of putting it into practice – even if you failed along the way, or perhaps especially if you failed along the way – you are almost certainly someone people will be able to learn from. It couldn’t be simpler, learn from others, make that knowledge your own through practice and experience, and put it back out into the world. Others are doing it and making it work, why wouldn’t you?

Just Do It?

As we said in the beginning, the only force holding you back is a fear of failure. And since it is now clear that failing, but failing upwards, is part of the journey, now is the time to convert that fear of failure into a fear of quitting. The only real way to fail is if you fail downwards. That is if you try something but quit along the way before you’ve had a chance to learn anything. That puts you in with the 95 percent of ordinary Joes who are just muddling along through life without a plan. Here’s the good news, all you need to step out of that undesirable state of affairs is to stick at it.

So leap forward, diversify your income, and yourself. Try starting a new business and do it with a smile on your face because even if you fail, you will come through to the other side better, more resilient, smarter, and with some new marketable skills. Diversification works in forex and it works in life too.

Tags Forex psychology, Forex Trading, FX Mindset

Forex Psychology

Trader Personality Test: Find your Pros and Cons

Post author By Forex Academy
Post date 17 July, 2020
No Comments on Trader Personality Test: Find your Pros and Cons

This concept that we will discuss here is not new. Personality Tests are used when hiring new employees. It is not all about the skills they may have, the employer may want his staff to have certain personality traits for the task in mind or company culture. Companies know that they may perform better for the role, sometimes even the skills and knowledge are secondary. Traders are independent, they do not have anyone superior, their performance is easily measured. The forex market will be their judge and a reflection of the effort, personality, and experience.

Still, it is rarely known prop companies test their traders’ personalities as there are so many videos, books, and mentors that are mostly focused on trading technicals, methods, management, and so on. If you have not heard already what are the two most important elements of trading, they are Risk Management and Psychology. Risk Management can be developed with testing and devotion but the Psychological part is a bit harder to master.

Everybody has unique personalities, habits, goals, and so on. Your Trading Plan and your Trading System will reflect this, and it should. Meyer Briggs Personality test is used by a group of prop companies so they can assess their new trader recruits and find out their strengths and weaknesses. If the company has the experience and has researched the personality-psychology relation in trading, they will know what traders’ mistakes are most likely to be. You will rarely find a video or a book about this if you are not searching, unfortunately, and it is such an important topic.

Prop company coaches even dare to say your Trading System is not important, it will increase your odds but it does not matter if you do not master your personality bad habits. Meyer Briggs test has 16 personality categories that cover enough psychological areas of a person so a trader can know on what weak spot he can focus on improving right away. How this is done depends on the weakness. What is important is to know that this test can be done for free, it is easy, and it is widely available. Once you complete it, we move on to explain how you can improve those bad aspects that bring your account down.

Know that this personality test does not have the right or wrong answers. In the end, you will have bad and good perks for trading as every trader has. There is no scoring, just the classification based on your answers. Let’s say you are stubborn. If you think this is all bad trait for trading you are wrong. It will mean you are not a quitter, you will likely keep trading despite the challenges. On the other hand, you could be doing things persistently wrong. What is even more interesting is that Forex will state this in your face as you trade. Are you persistent in chasing to recover that losing trade? Well, your account balance will suffer. Still doing this will bust the account. There is no way you can beat the market, if you want to become a professional trader, you will have to adapt.

Many traders that have been through the path of Forex trading have recognized they have changed for the better generally as a person. One of the great quotes that match the idea here is by Joseph Plazo saying that “ When it comes to trading in the market, winning is the matter of the mind, rather than the mind over matter…Playing a winning hand depends on knowing your own mind – and understanding the way psychology moves the market.” Finally, traders start to understand that mastering your mind for trading will take a lot longer than learning to make a good Risk Management plan. And it is perfected using special methods. Trading is 90% mental and 10% technical according to prop firm statements.

When you look at the market and have some basic knowledge to understand it, you will have an opinion. In a more scientific angle, this is subjectivity. This is your internal interpretation of the phenomena and how you deal with it. Your opinion could be aligned with the truth or not, in other words, you could be wrong. Objectivity is facts, our ability to get free from bias, prejudice. When two traders face and discuss what is going to happen next on the market, using the same data, they will form opinions. More often than not these will be the opposite. They will believe their opinions are facts even though in reality they are not. One of them will be wrong, the price will move in one way.

Money is tied to emotions. It will be our Subjectivity versus Objectivity. The separation of emotions from this is impossible according to the professional prop traders. It is very common to see a trader have great results on a demo account and collapse when trading with real money. They cannot trade the same way. If we can get to the point where we trade more on objectivity than on subjectivity, we are steps closer to consistent successful trading. This is one of the reasons trading systems are very helpful to see the objectivity.

The Personality Test has 4 classes that describe your Energy, Decision making, Attention, and Lifestyle. For each class, you have two opposite traits. In the end, there are 16 personality types possible. As you gain experience with trading, your personality results will reflect this. The traits describing your Energy can be Extrovert or Introvert, you make Decisions on Intuition or Sensation, Attention will be based on Feelings or Thinking, and your Lifestyle can be Judging or Perceiving.

Traders will have common opinions that the market is against them, that they are the victims. Of course, it is the trader who is in control. Forex cannot be controlled, except maybe by the big banks, but traders are responsible for their actions. The Personality Test will set you into an Introvert or Extrovert but you are a bland, more or less. Below are the peculiarities of each trader type.

Decision making is based on two traits:

Intuitive traders love patterns, correlations. They seek them out, they feel something is about to happen, they take the big picture and wrap their minds around. These patterns will be their facts. Hunches or feelings are the base of their research. Looking at the chart’s history is their main activity.

Sensing traders use all the sensory input to make a decision. This is the way they create facts, with everlasting desire to find more. Details that make the big picture is their way. Having all gathered, they make structures, linear processing, and an organized plan. Everything has to make sense, they rely on tools and precision.

Attention core is defined by:

Thinkers are more analytical. Analysis, logic, and principle. They want to detach subjectivity and focus on facts. Only objective criteria can make them make a decision. They can see imperfections in their system, engaging in self-criticism and everlasting need to improve it. Precision is required, the goals are defined clearly and the results cannot be in the gray zone. It is black and white, to enter a trade or not is clear to them. Math is their friend. Emotions are a sign to the system is not good enough for them and they will try to take emotions away with precise numbers, not fuzzy thinking.

Feelers like the abstract, intangible forces to guide them. They feel the market, focusing on what the emotions are trying to tell them. Facts are not a priority. Human values and needs create a way for them for judgment and decision making. Market psychology is their friend are more likely to act on it, Therefore, they are less objective, tend to force out bad trades led by strong emotions. If not in control, emotional traders are always in danger of default.

The energy of a trader will align on how they approach to problem-solving:

Introverts focus on their inner voice of ideas, concepts, theories, possibilities, abstractions. They need a reason for a consequence, the source, reasonable argument, proof. They will think reflectively. They will use the market data and action to measure, extract, and define facts. These facts are then aligned into a system used as a machine for decisions. The world is in their head.

Extroverts are outside of their heads. They find meaning in people and what is happening around them. Therefore, interaction is what motivates them, they will also move people into action, create events. They like to make decisions in a team, learn with others, take collective action. The expression is more important than to absorb.

Lifestyle will reflect on how they trade:

Judging traders do not have doubts when they want to trade, they act. Motivation is pumped internally, they will create rules. Unfinished business is not done by the judging trader, the task will be completed, fast. They will act once the basics are known. Plans are created and based on them the trades are executed.

Perceptive traders do not like plans, rules, and strict algorithms. It is not gray or white to them, it is fuzzy. Stop Loss placement is not exact, but close enough where they think it should be. Procrastination is common, easygoing, late at the meetings. They do not lack curiosity, they can adapt and be spontaneous. Before trading, they want to know everything about and tend to make bad trading decisions using too much information.

Now let’s see how all these traits mean for trading and traders. According to the research, all of them have bad and good habits in trading. Recognizing what type you are, you have a good starting point on what area to work on.

Starting with Extroverts’ strengths, they are energetic, passionate, they feel great, optimistic, and ready to trade. Group trading is a great way to trade, they thrive with teams. Chat is their favorite tool, talk about their ideas, and share with the team. Action is their middle name, when it is time to act they will have no fear. When the see the opportunity for trading, it will be done, fast. The weakness in trading is emotions. Extroverts get excited easily and get carried away. Passion for trading is great, but too much of it will cause overtrading, one of the most common bad habits. They may also underperform when alone or when too much information is given to them.

Introvert strengths are very good for trading plan construction. They are introspective meaning they will come up with ideas alone using their analysis. Information is how they base their decisions. That is why they want to know more. They will go deep and be thorough with every info they find. The weak points come with this desire to have more information and then overanalyze. Overanalyzing leads to hesitation. Introverts need just a bit more for that trade execution, until it is too late, missing the opportunity. They really care trade is a good one it blocks their execution. They like their ideas so much they do not want to share easily with others.

Decision-making strengths for the Intuitive type traders are based on patterns they easily see. They get the big picture, understand it, and act on it. Relationships for the movements are also noticeable for them. They zoom out and process all the “invisible” information and act on that. Sometimes they have reasons they cannot explain, but they just feel what is going on, on multiple levels. Their weakness shows up when they hang on to bias, hunch, and how they feel at that moment. If they are asked about a decision, they will have no factual or reasonable argument and probably disregard objectivity.

Sensing traders love details, systems, rules, easy to follow procedures. Organization and plans are precise. Research is top-notch and scientific. All this can be overdone and expose their weaknesses. These are overanalyzing, causing hesitation when trading. They are also stubborn. Once their system is complete it will probably work extremely well. But once the market conditions change at some time, it can stop generating profit. This is a nightmare for the sensing trader, the engineer, who is stubborn to stop trading with these conditions. Failure comes hard on them, they will not accept it and learn from mistakes.

Thinkers have a sea of ideas in their heads. Their strength comes from their mind, creating a reason, logic, clarity, goals, and finally, objectivity. After all, is set and done, they question if everything is based on facts and if it is objective. This is also a filter for emotions. The weakness comes from using the mind too much. Losing trades in a row will start the chain of thoughts about their system, create skepticism. Even when the trade is profitable, thinkers still think about that trade. Stress is something they experience more than other types.

Feelers’ main strength is understanding the market and the psychology behind it. They create a bond with the movements so they understand the relations although they find it hard to explain why. The big picture, the mood, and the energy of the market are easy to assess. Sometimes they can see the sentiment without indicators. The weakness comes from an emotional attachment to the trades. They will often disregard facts and arguments against their decisions. Trading on feelings alone will kick out of the game. Even when loosing extensively, their optimism will fuel their will to continue. This punishing weakness is boxed in with a rigid ruleset.

Judging a traders’ strengths can be very beneficial for trading. As masters of decision making, they will not hesitate. They will take action, complete, push to the goal. The plan will be followed to the letter, and the plan itself will be clear. There is only right and wrong, black and white, nothing in between. Their mindset does not allow doubts, any contrarian opinion will bounce off it. This manifests in the weakness of not taking advice. Additionally, low flexibility is another consequence of this mindset. Thus, traders of this type may have a steep learning curve.

Perceptive traders’ strengths come from their ability to be shaped into great traders. They are adaptive, change their mind, open for new ideas. Having a perceptive trader as an apprentice will be easy for the coach. Whatsmore, their curiosity will further improve their trading to an astonishing level of detail. Weaknesses out of all these positives manifest as being unsure of their decisions. Trades that they have entered could be closed before the Stop Loss rule. They change their minds, soak up information, and forex can easily play tricks on them. These decisions will be spontaneous.

Now once you have defined your weaknesses, you will need ways of eliminating them in trading. Discipline will not be enough. You may try to stay disciplined but your personality weakness will come out. Trying to change what you are is unnecessary. Admitting your weak points, faults, bad habits is a giant leap in trading. Naturally, you will tend to root them out. However, overtrading, risking, impatience, cannot be eliminated just by convincing yourself not do that mistake again. The mistakes will repeat. Because of this, prop traders even advise you to skip this step where you try to eliminate bad trading habits with discipline. Instead, create lifestyle barriers that separate you from the environment where the bad habits manifest.

This can be done in various ways. For example, if you are overtrading, you can appoint some sports activities that will pull you away from the trading platform. You will always feel the next opportunity is around a corner which you can take. This way, you will have an obligation, a barrier, pushing you away from the environment where your habits can manifest. These barriers may diminish at one point, but you will need to create new ways of avoiding exercising bad habits. This can usually be done in agreement with another person. Ultimately, your will to avoid things that bring your account down will decide if you are going to become a professional trader. After some time, the barriers will not be needed, your bad habits will be buried.

Key takeaways for your Personality Test results are:

Know that trading is 10% technical and 90% mental
Understand who you are and gain acceptance
Use your strong points
Do not try to fight your weakness, find ways to put it out of reach
Compensate your weak points with systems.

Tags forex education, Forex psychology, Forex Trading

Forex Psychology

The Lifestyle of Forex Traders

Post author By Forex Academy
Post date 16 July, 2020
No Comments on The Lifestyle of Forex Traders

What is like to be a professional forex trader? Not long ago, we had an interview with a high-profile forex trader named Arnold, he was speaking about the motives and transitions he was going through, why he became a trader and how that decision affected his life. When we asked him how he discovered forex, he said that in his mid-twenties he worked as an assistant manager at Abercrombie & Fitch store in London, drinking around with his lads, and always struggling to support his living. One day on his way back home, he was in the metro sitting next to the nifty guy and noticed him playing some strange video game on his mobile phone. He was curious so he politely asked a guy about the game.

The thing is that wasn’t a game, it was the Metatrader, which is a trading platform used by a large majority of forex traders. Later on, a guy said to him that he had been made fifteen thousand pounds the day before. Later that day, our guy spent hours on internet researching about forex trading, and that’s how his journey went on. Today Arnold is a professional forex trader and mentor to over one thousand beginners worldwide.

Here we are going to try to pull back the curtain a little bit on a lifestyle of someone who trades daily, and who is close to understanding and anticipating the landscape of forex trading. We’ve been listening to all the time about different daily routines. About waking up early, trading, drinking coffee, going to the gym, taking our vitamins, reading news, trading again, and that’s it. That doesn’t tell us a lot, to be frank. What we can expect from this lifestyle and what it is? For all of you flashy people who think that lives of traders are super glamorous, if you think that every day is going to be a P. Diddy video, hot girls wearing bikinis, drinking cocktails, riding around the pool on roller skates, you better think twice. There are a bunch of traders around wearing Rolex watches, driving Bugatti cars, having the latest gadgets, and owning multi-million dollar houses, but we need to be reasonable and put those commodities on aside for a bit.

Don’t get us wrong, being a forex trader is great, it could be super beneficial, but it takes a lot of effort and practical knowledge if you want to be in the game. In this world, we have as well, a significant number of low intelligence people and very desperate people that can be easily amazed by a flashy lifestyle of forex traders. They happen to think that forex trading is their way to the penthouse. Those people are bound to fail, no matter what you tell them. Arnold says it’s the first law of marketing: ‘Don’t advertise to intelligent!’ because at the very end someone is making money out of your ignorance. So be careful about what you take for granted. If you are a type of person who genuinely wants to know what it’s like to be a professional forex trader, we shall try to give some answers here because you can make pretty good life trading forex. Speaking further with our guest, he told us it could be helpful to live below our means.

We should avoid buying stuff we can’t afford. If we want to be successful, we should stop wasting our time, drinking a lot, feeling sorry for ourselves, or anything like that. As forex traders, we need to do everything we could to make our trading consistently profitable. For beginners especially, you guys are not going to be able to put yourself in a comfortable position where you can easily trade your money. It’s most likely you are going to lose all. So if we manage to present consistent results maybe somebody out there would give us money to trade for on their behalf. Eventually, some steady company might be a solution for us. Private coaching could be a potential source of income as well, for people who have a capacity for something like that, and if you find yourself confident about the knowledge that you are about to present.

Whoever wants to make a living out of this type of business, that person must be ready for the extreme inconsistency because there will be a lot of time not knowing how much money we are going to make the next day, the next week, or the following month. From this stand of point, it is going to be almost impossible to project the future or to make any plans. So the first moment when we actually taste the money and think we could sit back and pop the champagne cork or treat ourselves with a golden watch, we should stop right there and act accordingly because we simply don’t know just how long that is going to last. Hopefully, it’s going to last for a very long time, but if we don’t adopt a long game approach it might ruin everything we achieved. We should be better thankful for what we got and try to maintain a certain level of decent modesty. Instead of spending money on things we don’t need, we should consider to allocate our income into other businesses, other markets, or put our money in more passive income. Arnold emphasizes that he was constantly trying to build and build and add those layers of protection so this lifestyle he worked so hard to create never goes away.

So what is being a professional forex trader, what that lifestyle is? It is anything you choose it to be. If it’s private jets, exotic pets, and shiny jewelry, ok. But it might not last very long because it isn’t right kind of money management, investing in things like depreciating assets was always pretty questionable. You guys are free to do whatever you want to do with the money that you made, it is your money, but we are going to live a very long life hopefully, we might as well build that empire while we can. Most hi-expert digital nomads are mainly focused on flashy ideas rather than flashy possessions because that is the financial energy that we want to be involved with. Preservation should be our number one goal as Arnold likes to point out. So traders, understand that if we don’t take necessary steps to preserve our wealth it could all be gone in a blink of an eye, and it may never come back. So the real life of a professional forex trader is relentless work and dedication. We need to learn from our mistakes, write them down, find out what went wrong, what was behind that and we must be patient. Remember guys, the game is far from over, and whatever that dream of yours is, go and get it. The time is now.

Tags forex traders, Forex Trading, FX Traders

Forex Psychology

Four Ways to Boost your Confidence while Trading

Post author By Forex Academy
Post date 16 July, 2020
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Similarly to when opening up a new business, trading requires a certain level of confidence in oneself to succeed. Confidence is the pillar of any successful trading journey and many new traders end up not having enough courage to handle the risky endeavors that successful trading needs to bring in profits. Here we will go […]

Learn your trade.

The best way to boost your confidence in anything you set your mind too is to challenge yourself to learn all that you can about the subject. Subjects such as trading might be overwhelming at first, with so many trading styles, techniques, approaches, and terminology to learn, however, daily trading will set you on the right track to becoming knowledgeable and clearer in your daily trading decisions. Even when you feel like you cannot learn more about the subject, you will realize that although you have prepared yourself well, markets will remain highly unpredictable. Because of this, traders often find themselves feeling like they never know whether their trades will be successful or a waste of time. This is why shifting your focus onto your trading plan rather than your losses and profits, will help you become consistent, disciplined, and eventually profitable in your trading.

In today’s world, finding authentic and unbiased information online about trading techniques and plans might be a bit of a challenge, however sourcing out other traders like yourself through online forums or groups, is a great way to share and learn through other traders’ experiences.

Be confident enough to walk away.

Working with such an ever-changing environment, which is what trading is all about, can make it easy for you to fall into the trap of constantly sitting at your computer/device monitoring your trades. This can be detrimental both to your trades as well as your general wellbeing. Confidence comes with time and experience, however in the beginning, even though you might not feel confident enough to do so, you need to make yourself believe enough in your trading plan and be able to walk away from your trades, even if this comes at the risk of losing your trades. Even if you do lose out on your trades, remember every loss is a great opportunity to learn and develop your trading strategies.

Use your winnings and losses to become better.

Being successful at trading, especially for a long period, might make it easy for traders to become overly confident. A great way to keep your confidence within the ‘safe zone’ is to analytically reflect on your losses, to learn from those mistakes, but also to analyze your wins. Trading with small amounts that you can afford will help to make your losses feel more like learning curves rather than personal disasters. Some traders go on to say that your losses might be your most fruitful mentors. It is best to keep in mind that in trading, there are no winners without losers, so prepare yourself for many losing trades and learn how to extract the important information from each loss you will inevitably encounter.

Set your rules and follow them.

If you’ve attended trading training or if you’ve done your research online, you’ve heard of strategies, how to identify them, when to apply them and how to manage them once they’ve been applied. Strategies are nothing but a list of rules that help you to recognize and apply your methods for making a trade profitable.

Making your list of rules that accompany the trading strategy you’ve opted for, is a great way to keep yourself focused and motivated for your current and more importantly, your future trading. Many beginner traders, unfortunately, give up after the first few losing trades, however that moment when you feel like this might not be the best for you, is the moment when you learn the most.

Making yourself a clear list of rules, writing them down, and sticking them up where you trade, will make it easier for you to be disciplined. Set up rules such as – When will I trade, how much risk am I going to carry daily/weekly/monthly, what markets am I going to focus on, etc.

Your list of rules will change and develop as you learn more about who you are and where you stand as a trader. Consistency and discipline are the two main ingredients you need to have to help yourself develop the necessary confidence traders need to become successful. Do not expect to make massive profits on your first few trades, because the probability is, you won’t. Learn the basics, make your rules, stick to them, and believe in your choices. Happy trading!

Tags Forex Basics, Forex psychology, Forex Trading

Forex Psychology

Why Trading Discipline May Not be Enough

Post author By Forex Academy
Post date 14 July, 2020
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Let’s say you are an experienced trader, trading on the Daily timeframe. You are long on the EUR/USD, as per your system signal, you have also set up your Stop Loss. The trade is open, although it is not going your way. It is going lower, fast. You notice the candle extreme pushes down, as someone deliberately wanted to destroy your trade. What do you do now? It is closing in quickly to your Stop Loss level! The time is up! What have you done? There is only one answer that proves you have the discipline – Do Nothing.

You will and should come back to this article as it is human to recognize your discipline is not effective. Psychological discipline in trading is necessary to do things the right way, and the right way is to separate emotions. That’s not easy even after years of professional trading. Discipline is one of the most important things in trading, and you will slip on it, it’s just human nature, at some point, you will get in your way. To train your discipline, you need to create a system of entries and exits, set of criteria, indicators, and follow it, and when you fail, take a step back, and follow your system.

When building a system, testing is important, but setting criteria in a demo is essential. This is important because it will allow you to do good trades in the long term. Of course, the system has to be tried first. How good can you separate your emotions from trading? When making big decisions you need your intellect and strategy and emotions out of the way. Trading with emotions is trading by feel and it will result in loss, always, so to avoid this, set up a sound strategy, logic entries, and exits, let it unwind on a trade.

Now to get into more details. Your system, you are following the rules, yet you still mess things up. You have worked hard on that system, made a long way but the trading results are not good. It is because you stand in front of your system. If your trading rules do not need you to think, to intervene, put on your brain whether you enter a trade or exit, it is a good thing. You think it is easy not to deviate from your system, just do what it says to do? That is where most traders fail without even noticing. Separating logic and emotions is hard. Emotions are the killer of good trading decisions yet every logical approach has a degree of emotion mixed in. You must be at your best when it comes to forex trading, and emotions will be in your way.

The worst and dumb decisions you made had a big part of emotions. If we take a long and not so happy relationship, they are not a good decision when we look at it rationally, but emotions keep it floating, taking a significant part of your life you cannot relive. When you need to decide, take a step back, are you emotional about that trade? If yes, you know what to do – nothing. You already have something that works, if you have backtested and built your system the right way, so let it do what is meant to do. Your emotions or gut feeling about the trade is going to make it worse. Here is what we can do to make emotions detached:

Choose your strategy wisely, because mistakes are easily done, and these are the checkpoints to follow and avoid crashes. We know exactly when to enter and exit a trade. We have found a trade we like and now it is time to pull the trigger.

Do not make corrections, even if the market trends seem to be unfavorable, let the system work. Interventions make a proven system go bad. As much as you want to change something, let the market go. If it is going to trigger that Stop Loss, watch it do it, even better do something else. If you intervene, and you are right, you have just prolonged your misery. There is a 50% chance you get it right, the price will move up or down. You have a justification, you think you are good at this, your feelings work, but, they do not.

The biggest mistake is to look at your trading terminal and your blinky lights. If you made your trades, turn off the terminal, your screen, move away. If you need to lock it and give the key to someone, do it. Creating a barrier will put you in a very good position not to have any possibilities to intervene. If you are trading on the Daily timeframe, this can be easy for you, all you have to do is check your trades at the end of the trading day. Boredom can be your doom too. Therefore, find your favorite place to work out, swim, socialize, play games, whatever you like. The best part of being a daily timeframe trader is you have a lot of free time. Although this can also be a problem for some.

Chasing losses and overtrading go hand in hand. Let’s say you take a few consecutive losses. You start hating that currency pair, you want your money back. Someone has manipulated the price because every time you enter, the trend reverses the other way. Now you have that justice emotion, revenge against these manipulators. This is how the spiral down to your account bottom begins. Some may even think about position size increase, you cannot lose 5 times in a row. Well, you can, EAs sometimes use that tactic to recover the losses of consecutive bad trades. Essentially, it is just increasing potential loss.

Panic or exiting too early. It is very relative to what you do after a trade is executed. You look at the charts and make an emotional decision when you are losing but also whet you are winning. Drawdowns are always happening, you will rarely see a trade go the way you want without a drawdown. Do not close the trade if you do not have the signal for that from your system. Closing too early because you are afraid the trend will reverse and want to keep that what you have is just a limit to your potential profit. Forex will create that emotional build-up in you after a few losses, making you hesitate and get scared. A good analogy to this is with boxing. When you land a good hit, you do not stand and marvel at it, engage even harder! Sometimes you want to cash in and not be greedy, that trade you made is really good. Well, know that putting a cap on your winners is also your doom.

Not giving your system time to make the signal. You might notice the repeating sentences in this article. Repetition, practice is what will make your mind perfect and remember this. You will make the same mistakes with discipline so you must remember to stay away from your system.

Not understanding the long term trading. Forex is not a casino, this is a long term involvement. Traders need to understand bad trades can happen a few times in a row, but after 1000 trades, the sum should be on your side. If you have a bad day, week, month, and even a year, it does not mean you have to dwell and change things. It happens even the other way around, you can have a great period where you make great gains. After a few trades that gain is negated and you are back to break even.

Long term mistakes come in scenarios when you feel invincible after trading well for some time. When you take a hit and see all of your long period of winning is negated, it is emotionally devastating even to experienced traders. Trading is always fluctuating, so ups and downs are normal, stay with the planned course and discipline will help you. Discipline will take you to the top, you have a tested system, stay with it, and realize what matters is the long game.

Now let’s see what can we do about these problems, starting with the zoomed-out perspective. Generally, if you have low discipline in life, you will have difficulties in trading on Forex. Understanding discipline will make you overcome that hazardous jumping mindset. The best way of action is to change bits of yourself. Books come in handy, one particularly good and practical is “Discipline Equals Freedom” by Jocko Willink.
If we zoom-in now we get to another important part. It is time-consuming. Test systems, adjust them until they start working to your set criteria. Prove it works, on a demo account.

There’s no partial discipline. Follow the system, don’t make unnecessary corrections. You are not smarter than the system you created. If the criteria for entry are only ¾ met, then do not trade it. After you are done, do not look at it! Otherwise, emotions will creep in, and the worst option is when you are right to intervene. Know that trying to be more disciplined just by yourself is not going to work. When you realize the mistake, you will say to yourself that you are never going to do this again. But it will happen again, you will not succeed with self-discipline. The best course of action is to come back to this article and read the steps again.

Tags Forex Discipline, Forex psychology, Forex Trading

Forex Daily Topic Forex Education Forex Psychology

Guidelines for Successful Trading

Post author By Eduardo Vargas
Post date 12 June, 2020
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Introduction

To achieve a successful trading profession is more than a couple of good trades, and a fancy template in the trading platform, nor a social media trader’s fashioned lifestyle.

In this educational article, we’ll present a set of guidelines to aid in building a successful trading plan.

The Right Trading Mindset

Trading in financial markets must be understood as a decision process, which, when developed systematically, tends to provide consistent results.

Robert and Jens Fischer, in their work “Candlesticks, Fibonacci, and Chart Pattern Trading,” define a list of rules or guidelines that can aid investors in its decision-making process. These guidelines are as follows:

Self-knowledge

If the investor feels uncomfortable when it is in the market, this could be indicative of an incorrect positioning in terms of position size or market side.

Ego by a winning streak

An increasing ego encouraged by a winning streak, especially in the first trades, could drag the investor toward huge losses.

Hopping when things go wrong

Many traders tend to let run the losses expecting a market reversal to the trade direction, and they usually close a winning trade too soon, with a small profit (fearing a loss), which is a recipe for disaster. To solve this issue, traders must plan every trade in advance, with a pre.defined stop-loss and profit target before opening any trade.

Losses are part of the business

Investors must be aware that it is impossible to have 100% of winning trades.

Avoid Martingale position sizing

The increasing the size of the position when the market and the trade moves against you is the path to bankruptcy.

Trading systems could fail

There is no trading system that could provide 100% of winner trades. However, losses will increase when the investor jumps from one system to another. Each strategy has its advantages and disadvantages. The profitability of any trading system will depend on the market conditions, and the investor must learn to live with the potential risk of his trading system.

Diversify the risk

Independent of the profitability associated with a trading product, the systematic diversification of risk could give the investor a smoother equity curve growth than when considering only a single trading asset.

Making Money by trading is a long road

The consistent and profitable trading in financial markets is the result of a systematic work taking months or years where results obtained can confirm the rentability of each trading system.

The importance of a trading plan

Successful trading is not to make money quickly; it is related to the capability to make profits consistently long term, independently of changing market conditions.

A comfortable trading strategy

The trading strategy must provide the investor with similar results in real-time than on paper-money or in the back-test mode. If the approach does not offer the same results in real-time, the methodology must be revised.

The importance of discipline

The most important characteristic of successful traders is discipline because they limit their decisions to their established trading methodology.

The Importance of Number Three

In the financial markets, there exist a vast number of ways to analyze it technically, for example, chartist formations, Elliott wave, or candlesticks patterns. However, those ways to analyze the market have in common, and it is number three.

In Elliott wave analysis, when the price moves in a trend, this develops three movements in the primary trend’s direction.
The most popular chartist pattern known as Head and Shoulders has three tops (or valleys) and two valleys (or tops.) When the price reaches its third valley, the price action tends to break below the previous two valleys and continue a downward (or upward) sequence.
An ascending triangle corresponds to a continuation pattern, in the bullish case, three valleys, and two tops. When the price action touches by the third time the top, the price surpasses the previous two highs and continues its earlier move and continues its primary trend.

In the following figure, we observe a set of patterns that follows the characteristics of “three.”

Conclusions

In this educational article, we presented a set of guidelines to develop a trading mindset that can support a profitable trading methodology along time.
We also exposed a group of chart patterns that correspond to a simplification of three moves, which could support the analysis and generation of trading opportunities in the real market.
In the following article, we will present the basic principles of a trading strategy.

Do Not Let Your Losing Trade Chase You

Post author By Tareq Sikder
Post date 1 June, 2020
No Comments on Do Not Let Your Losing Trade Chase You

Trading depends a lot on a trader’s mindset. It does not matter theoretically how strong a trader is. If he does not know how to deal with trading pressure accordingly, he will never be a successful trader. One of the biggest issues in trading is encountering losing trades. It diverts the traders’ mindset, which makes him make more mistakes and lose money in the end. We mostly choose winning trade setup in our trading lessons. However, we sometimes chose a trade setup that encounters a loss as a part of our trading psychology lesson. In today’s lesson, we are going to demonstrate a losing trade.

This is a daily chart. The price heads towards the North upon producing a C point. Look at the last candle. It comes out as a bearish engulfing candle producing right at the level, where the price had a rejection earlier. The H4-daily combination traders may flip over to the H4 chart to go short in the pair.

This is the H4 chart. The chart shows that the price heads towards the North with good bearish momentum. The sellers are to wait for the price to consolidate and produce a bearish engulfing candle to go short in the pair.

The chart produces a bullish inside bar. It seems that the chart may produce a short signal for the sellers soon. The H4-daily combination sellers must keep their eyes on the chart.

The last candle comes out as a bearish engulfing candle closing well below consolidation support. The sellers may trigger a short entry right after the candle closes. This looks like an A+ trade setup. It seems that the sellers do not have to wait too long to earn their profit.

Things do not go according to the sellers’ expectations. The chart produces a spinning top followed by a bullish engulfing candle. Some sellers may want to close their entry with some losses here. Let us assume that we let our trade run. Then, here comes the last candle. It looks good for the sellers again.

The chart produces a bullish engulfing candle again. This must be annoying for the sellers. Let us assume that we keep holding the position with the hope that it goes towards the South and hits Take Profit.

It does not. It hits Stop Loss instead. An A+ entry ends up being a losing trade. If you keep thinking about a losing trade (with your proven strategy) and do not look to find out new entry, it means a losing trade chases you much more than it should. You really have to find out a way to avoid it.

Tags Forex, psychology, Technical Analysis, trading

Forex Psychology

The Road to Become a Pro: The Trading Job Part 1

Post author By Fran S.
Post date 17 March, 2020
No Comments on The Road to Become a Pro: The Trading Job Part 1

Except for elementary tasks, to do a job properly, it is commonly subdivided into several tasks or processes, each of them optimized to get the best results. To succeed in Forex trading, people need to think about trading as a job made up of several processes that the trader needs to do every day.

There are three groups of processes a trader should do day, in day out plus another one that must be carried out periodically.

Preparation of the next trading session
The core trading processes
Post-session analysis
Periodic review
Preparation for the session

Trading is like no other profession. Usually, when driving a car, the risk taken compared with the ability of people to predict where the vehicle is going is shallow, and even more so, when we think that it is in the interest of other drivers to avoid collisions against you. That is the opposite of what happens when trading the financial markets. Here, prices move to the direction of maximal pain, that is, pros and institutions, which have vast amounts of information about the trades of the rest of the crowd, move prices so as to hurt the most and profit from your “collisions.” Thus, even when just a few people recognize the fact, psychology plays a vital role in the success of the trader.

Self-Assessment

According to Dr. Van K. Tharp, success is 60 percent self-control and 40 percent risk control. He also stated that the risk control part is 70 percent position sizing and 30 percent reward to risk ratio trades (cutting losses short and let profits run). Thus entries and exits, the basis of a trading system, account for just 12 percent of the total factors that make trading successful. That means traders need to work on themselves much more than on market analysis.

Traders also need to evaluate their physical and psychological conditions and prepare themselves before the opening of the session, since, as we saw, that they are the most crucial factor in their performance. Most top traders are aware that they must show a zen-like, emotion-free state of mind when trading. They call it Zero-state.

Dr. Tharp contends that the propper psychological, mental state is the difference between profits and losses. That is quite true. Sometimes the edge a trader has over the market is tiny. That edge can be lost if the wrong mental state changes the equation, makes him modify or avoid a profitable entry or hold a losing trade too much, not following the rules.

Rate yourself

Before you start the trading session, rate yourself in your different facets (parts). Health, happiness, family relationships, economic condition, Self-image, your fear-greed state, your own market sentiment, and any other aspect you consider vital for you; and rate these aspects on a scale of 1 to 5 or 1 to 10. Make an index of all these and keep it. Check your trading performance in comparison with this index. Maybe you discover that trading below a certain level hurt your profits. You could make a rule not to trade unless your self-index is higher than a specific figure.

Beliefs for Self-rating

I am crucial to successful trading
Being aware of how my brain works is a trading edge
Self-analysis can help my different mental parts to get in agreement
Trading with a self-rating below X hurt my profits
Success in trading is a measure of my mental performance

Best Mental States for self-rating

Honesty with yourself is crucial
Rational and meticulous

Mental strategy for self-rating

See yourself analyzing your condition
Identify and solve possible conflicts
Do the rating and judge if you are fit to trade today
if not, can you identify the part or parts with the lowest scores to improve them?
Yes? Go to Rehearsal
No? Avoid trading today.

Rehearsal

Rehearsal is a crucial element to improve almost any human activity. Visualizing the possible scenarios of future trades and identify your actions if one of them becomes real is key to success. Top athletes mentally rehearse his play before committing themselves to action.

The rehearsal task is essential because your rational mind will be in command, and any fear or greed request sent by your subconscious (system one) mind can be easily spotted and analyzed if it is in collision with your planned course of action. That helps the trader avoid costly mistakes.

Beliefs for Rehearsal

Our capacity to process information is limited
Stress caused by our system one reduces that capacity further
Rehearsal helps our rational mind to take control of system one, which is irrational and primary
Better be prepared to act when needed, especially on disaster situations
Rehearsal will prevent mistakes and save money

The mental States for Rehearsal

Rational
Complete
Creative
Positive

Mental Strategy

Which unanticipated scenario can stop me from following the rules?
For each trade: Plan the possible scenarios. Which stops and targets are optimal?
Mentally see yourself executing your solutions on every trade.

Further reading: Peak Performance Course Book 1 – How to use Risk, Van K. Tharp chapter V

Tags Forex, mental strategy, prepararion, psychology, trading, zero-state

Forex Psychology

The Road to Become a Pro: Preparation

Post author By Fran S.
Post date 16 March, 2020
No Comments on The Road to Become a Pro: Preparation

I see a lot of people approaching the financial markets as a way to get a second income or even be financially independent. The major part of them wants to invest in the financial markets but don’t have the time or interest in mastering the needed skills to really succeed.

A minority of them are involved in acquiring those skills but think that to be successful, only the knowledge to forecast the markets is needed, most of them focused on learning one or several technical analysis methods that would allow them to do it.

The cruel reality is that the randomness of the markets is high, and forecasting is not deterministic. Thus, operating in leveraged markets makes the task much more difficult if traders are not aware of the statistical parameters and size limitations of the system in question. Thus, psychology comes into play as traders get confused and unable to act as losses accumulate, greed, and fear driving the decision process instead of the rational mind.

The preparation tasks

Dr. Van K. Tharp states in his Peak Performance Course series that top traders need to master 15 different tasks or processes, twelve related to trading, two preparation tasks, plus “being out of the market” task. The two tasks related to preparation are:

Developing Self-awareness and
Developing a low-risk game plan

Self-Awareness

This task aims to recognize our strengths and flaws, so we can profit from the first ones and overcome the second ones. For instance, if you are good at recognizing breakouts, you could focus on that kind of pattern to create your trading strategy. Another trader might have difficulty with decision making but is good at programming. Thus he could use his skills to develop a mechanical system that makes decisions for him.

Goal Settings to solve the conflict

Dr. Tharp rightfully states that most traders are nor aware of what they want to accomplish. Of course, they want to get the max out of the markets, but that statement says nothing about the right way they should go. Most of the time they have conflictive goals, they want profits but also avoid losses, be safe at the same time they risk capital. Most of the time, unresolved conflict of both primary desires spells catastrophe. The right way to solve personal issues is through goal setting. In the case of profit/risk conflict, traders must set goals for the monthly profits and verify these are congruent with the expected risks (drawdowns), and match both to fit him. Goal setting is part of developing a system that suits you, but to know what suits you, you need to know yourself. It is important to list all your desires and expectations about you and the markets.

Are you a risk-taker or avoid risk? Do you want to work 100 percent of the time looking at monitor screens or just to enter a trade? Do you like to plan in advance, or are you an intuitive trader acting the moment you feel a move?

Development of a Low-risk Plan

The key to succeeding in the financial markets is not good forecasting, but profiting from low-risk ideas. A lot of traders only focus their attention on entries and forget that the exit is when the profits are realized. Also, since most traders want to avoid losses, they think that a high percentage of winners is the critical element of a sound trading system. Thus these traders end up scalping small profits and holding their substantial losses. Instead, the key to success is the opposite. Traders must create a written plan with a primary element: low-risk trades.

A low-risk idea is one in which the reward is higher than its risk. The property of high reward-to-risk ratios is better shown with an example. Let’s call the risk R and the reward a multiple n of R. It is evident that in a series of n trades, just one needs to be profitable to break-even. Thus, if continually trading using 5:1 RR ideas, only one profitable trade, every five trades is enough to keep us afloat. Therefore, it is in the trader’s interest to chose low-risk trades as protection for a drop in the percentage of winning trades.

Consistency by following your rules

A written plan consisting of a set of rules is essential. You need written rules so you can, later, analyze results and make changes to the rule that needs to be improved. If there are no rules, it is impossible to improve them.

For instance, let’s suppose there is a stop-loss rule that cut losses at 1.5 ATR(10). Maybe, after some time, you see that there is a substantial portion of trades that reverse after your stop is hit. If your system has such a rule, and you keep a record of your past trades, you could do an analysis and conclude that your system could be optimized by changing the 1.5ATR to 1.8ATR, but that 1.9ART or more harms you in the risk side with no substantial improvement in the number of winning trades. That kind of analysis, obviously, is impossible if your stop-loss strategy is decided on each trade depending on your subjective feelings

Making money demands consistency and discipline. Trading rules are essential to both. To respect the rules is the factor to consistency, and a disciplined mind is required to adhere to the rules. With no rules, trading is a set or random entries and exits with no possible statistical value for future analysis and improvement. In this context, a mistake means not a losing trade, but not following the rules.

Further reading: Peak Performance Course Book 1 – How to use Risk, Van K. Tharp chapter V

Tags Forex, Forex psychology, preparation, tasks, trading, Trading Plan

Forex Daily Topic Forex Psychology

What does it take to Replicate Success?

Post author By Fran S.
Post date 12 March, 2020
No Comments on What does it take to Replicate Success?

Replicating something is done by taking a model and copying it. To become a successful trader, beginners should replicate, or model, a successful trader. But what does it take to replicate Success?

The Model

To replicate a model, we need first to define and subdivide it into sub-processes or tasks. According to Dr. Van K. Tharp, the needed subtasks required to master to become a successful trader are:

The trading process

The process of trading
The process of developing a trading system that fits the trader
The process of objective definition and risk management
The process of a business plan as a document that guides decision-making.

Of course, to aim for excellence, we need to model the best traders in class.

The first step is to subdivide the model into sub-tasks. Once the tasks have been defined, we need to attach beliefs, mental states, and mental strategies for each one. The purpose is to duplicate the way a successful trader thinks and acts. If we can achieve this feat, we are sure the results can be replicated.

The beliefs

According to Dr. Tharp, beliefs act as the first filter to transform the information coming from the world. Beliefs, meanings, categorizations, and comparisons determine how people perceive the real world. What a trader expects from the market depends largely on his beliefs about it. That which is called market sentiment is really “market beliefs.”

Since beliefs are filters to reality, it is wise to classify them, by asking ourselves the following

Where did this belief come from?
How useful is it?
How does it limit my actions?

This process helps us keep and improve valuable beliefs and get rid of un-useful ones.

Mental States

The next step to generate success is duplicating the mental state of top traders. It has to do with discipline and emotional control. When people carry their mental problems to trading their results usually come from an improper mental state, not suited to trading:

I’m impatient and always get in too early
I get mad at markets. They seem to know when I trade just to do the opposite
I’m afraid the market is against me now that I’m wining
I get too excited when I’m winning and don’t get out in time.

Controlling these states is not the solution to solve all problems. It is just one part of it. Dr. Van K. Tharp tells that in the ideal model to the trading success, each task has an optimal mental state attached to it.

Mental Strategies

A mental strategy is a sequence of thoughts that go from a stimulus coming any of your senses to output or action. Let’s create an example with two possible mental strategies for the same stimulus to better understand the concept.

Mental Strategy One:

perceiving a trading signal
realizing it is a known signal
Think about what can go wrong if you take it
Visualize the scenario
Feel afraid

Mental Strategy Two

Perceiving the Signal
Recognize it as part of your system
Feel good your system delivers you a new opportunity
Take it and trade

What do you think is the right strategy for trading? Could you take action and trade consistently using mental strategy one?

As in the case of the mental states, each trading task requires an optimal mental strategy to optimize the results. That will be developed in future articles.

Further Reading: Peak Performance Course Book 1- How to use Risk, Van K. Tharp.

Tags Crypto, Forex, Market Psychology, psychology, success, trading

Forex Psychology

Trading Psychology -Are you a Trader?

Post author By Fran S.
Post date 11 March, 2020
No Comments on Trading Psychology -Are you a Trader?

What defines you as a trader? What is the secret ingredient that makes an ordinary person a trader?

Dr. Van K. Tharp, in his first Peak Performance, tells the story of Jack, a wannabe trader that, after more than ten years losing money in the markets he discovered a trader who had made consistent profits in the markets for 30 years. This great trader was willing to teach him if he was committed to learning how to trade properly.

Jack told him he wanted to be a trader, and he understood he, the old trader, was willing to teach how to do it.

The trader said, “yes, I’ll teach anyone, but most people are not fit to learn. All I ask is to do what I tell them to. Many people say he will, but most of them don’t even finish his first assignment.”

Jack told him about his failures and his inability to follow supposedly successful systems that somehow it didn’t work for him. Then, he asked the old trader about his secret to success.

“I am a trader,” told Jack.

“I know it, said Jack, but what is the secret?”

“I have told you: I am a Trader. You are a game player. When you’re fully committed to becoming a trader, you’ll understand. Are you really entirely committed to become a trader?”

Commitment

Commitment means a person is focused on and putting all efforts to accomplish a goal. To show you the difference between commitment and lack of it lets us understand the following cases:

Case 1 A Trader made a profit in the market but did not follow his strategy rules.
Case 2 A trader entered a position with his system but is continually fearing the market will move against him
Case 3 A trader has subscribed to a signals service supplied by a successful trader but, somehow, he cannot trust them, so he cherry-pick them.

Contrast these cases with the following ones:

Case 4 A trader made a profit strictly following his trading strategy.
Case 5 A trader entered a position not knowing the outcome of the trade, but being sure his system will make him money each month if he followed the rules of the strategy.
Case 6 A trader is entering all the trades the signal service provides, because he trusts the service, and records all trades for analysis purposes.

We can clearly see the contrast between cases 1-3 and cases 4-6. In the first case, the trader felt unsure, and we see there was an inner conflict between what he should do and that he felt. In the last cases, the trader was in sync with the method. There was no conflict between theory and practice.

According to Dr. Van K. Tharp, conflict is the result of people being fragmented internally. The different parts that make the personality of a person trying to accomplish particular positive purposes by following certain primary behaviors. Not all of these responses are congruent; thus, they push the person towards different directions. For instance, a role that supports a trade decision might be in conflict with the inner part of the trader that tries to avoid risk.

Obstacles to Success

Traders think that to trade successfully is as simple as knowing when to enter and exit. The issue is, when they realize that having always winning trades is not possible, they find two main obstacles:

Not reaching the profits they wish, or
Try to avoid losses. In fact, both issues are related.

When a person tries to avoid losses, she holds into the loss hoping it the price will reverse and come to his favor. Then when a small paper profit shows, she closes it at once on fear the price would reverse and become a loss. Finally, she is cutting profits short and let losses run, which is a recipe for disaster.

The truth is in there

The real problem lies inside the trader’s head. People tend to avoid working on themselves, as it’s too uncomfortable, so they shift their problems and blame the market. For example, people seldom record their trades for later analysis. Therefore, they are not sure if the system fails or is himself. Then, they have second thoughts about every trade, so they cherry-pick the trades.

Also, they don’t use predefined targets or stop-loss levels, so they decide to stay or get out of the trade solely based on his inner feelings. Thus, in the end, they succumb to their biases. What’s worse, his system is totally random on entries and exits. Finally, since they do not register their trades, there is no way to know the properties of his system or devise ways to optimize it on entries, take-profits, and stop-loss settings.

The end of it is, the trader will doubt or quit the system after a perfectly normal losing streak because he lacks the information needed to verify if the current performance of the strategy is normal or not.

Winning and losing

Many people that are attracted to the markets by their huge potential profits don’t accept losing. But, the reality is there is no sure system to trade the markets. There is an element of chance or risk; thus, some trades will inevitably be losers, and traders have to accept losing. If a person wants to only win, the markets are not the place to be. To be successful, there is no need to be right all the time. Not even 50% of the time. A scientist may spend five years in the lab doing unsuccessful experiments until the last one pays and discovers something worth all the effort and time. A trader may be successful just one every five trades and be entirely successful. In the trading job, a winning rate and Reward-to-risk ratio combination is the key to success.

Developing Commitment

According to Dr. Van K. Tharp, developing commitment is a three-step process.

Step 1

Determine your own obstacles. List them on a document. If you’re not sure about them, keep a diary of your trades, reviewing it every week. Look for the obstacles you are encountering.

Step 2

Analyze every obstacle and try to see what is going on in your mind, what is the common element. Not taking losses? Cherrypicking trades? Taking profits too early? Not keeping your diary properly?. Do some inner research, try to find out what’s inside your head. Doubt, fear, unsure about your strategy?

Step 3

This step has to do with dealing with whatever is inside you that is sabotaging your trades. You must make peace with your obstacles. One way to deal with them, says Dr. Tharp, is to go to the extremes. For instance, if your problem is with losses, imagine taking a huge loss. As you keep doing this exercise, you will find it easier to cut your losses soon.

You should find the parts of your mind that are key to the conflict and negotiate between the parts, to spot behaviors that could fit both parts in conflict.

Further reading: Peak Performance Course Book 1 – How to use Risk, Van K. Tharp

Tags Forex psychology, psychology, trading

Forex Daily Topic Forex Psychology

Sentiment Analysis- An Introduction

Post author By Fran S.
Post date 4 March, 2020
No Comments on Sentiment Analysis- An Introduction

Market Sentiment

The Market sentiment term is used in reference to the mood of the market traders. Sometimes most traders feel fear and pessimism, and at other times they feel overconfident positive and, even, greedy. Investors trade their beliefs about the market, and the beliefs are raised by its over-protective system one (Please, read https://www.forex.academy/know-the-two-systems-operating-inside-your-head/). Thus, they react emotionally to the market, and these reactions influence the market at the same time that the market is changing their emotions.

The two systems

In the mentioned article, we talked about the work of Dr. Daniel Kahneman and the Two-systems model to explain people’s behavior. System one is fast and closely related to the primal emotions and instinctive knowledge. In contrast, system two is slow and is the way people use in rational thinking, computations such as math operations such as counting. We also said that system two trust system one most of the time. That is the way we are programmed. System one is a warning system if danger appears.

Market Sentiment is a Contrarian Indicator

But the marketplace behaves very differently from the real world where system one was trained. Thus, market sentiment is a contrarian indicator. That is because the majority of market participants are non-professional investors moved mainly by greed or fear. Therefore, when a large portion of traders shows expectations about the future curse of an asset pointing to one direction, the market tends to move in the opposite direction. That is logical. Let’s suppose that a large percentage of retail investors think the EURUSD is going to rise significantly. That means they are invested in or plan to do it right away. At the times when the crowd is the most bullish, it is when they are nearly fully invested.

The market is fueled by the buyer side. When everyone has already invested in the EURUSD most of their funds, almost no fuel is left to lift it further, as they don’t have more financial capacity to continue investing. Thus the demand shrinks. Only the supply side is left, since professionals, who sold every available lot to the masses, are not willing to buy that high; therefore, the prices should fall.

The Market Players

There are three types of market participants: The informed, the uninformed, and the liquidity players. The informed players have insider information about the course of the fundamental drivers and can position themselves in the direction of the future trend. These are the institutional traders. They tend to sell at the top, when the crowd is mostly optimistic and buy at the bottom when the public sees no end to the drop.

Uninformed traders are the majority of retail traders. They act moved by greed and fear. Their greed made them bet with disproportionate leverage at the wrong moments. Their fear made then close their positions at the worst possible time or close it with minimal gains so as not to lose.

Liquidity traders are professional traders interested in short-term plays, so they mostly do not affect the primary market trends. On the forex, Liquidity traders operate using technical analysis and price-action strategies, using money management schemes and systems that have been proved to be profitable.

Traders are their worst Enemies

Everybody knows they should buy low and sell high, but the majority buy high and sell low.
Everybody thinks it is easy to be successful in trading and be rick
Anyone should know that panic selling is a bad idea, but nobody follows the advice.
The major part of market signals is worth less than a coin toss, but people still crave them and then overtrade and lose at the first slight market retracement.
Nobody takes seriously trading with reward to risk ratios over two. Instead, they prefer High percent winners with lousy RR ratios.
Everybody trades untested strategies. Thus, they ignore the statistical parameters of the system, and, even, they cherry-pick the signals.
Nobody knows about position sizing even when they want to trade at maximal leverage.

Advice for you

Market Sentiment is a contrarian indicator. If you consider yourself a uniformed trader ( and 85% of retail traders are), trade against yourself. A lot of brokers trade against you, and they are getting rich.

Instead of one impulsive trade based on greed, consider yourself direction agnostic by taking two opposing trades using 15-pip away stop orders and a 2:1 Reward: Risk ratio:

Practical System Example:

Two simultaneous and opposing orders with a Reward/Risk Ratio of 2.

1 One LONG EURUSD position

Buy Pending Order: Current price + 15 pip buy stop order
Stop-loss: 20 pips below the entry price
Take profit: 40 pips away from the entry price

2 One SHORT EURUSD position

Sell-short Pending Order: Current Price – 15 pip Sell stop order
Stop-loss: 20 pips Above the entry price
Take profit: 40 pips below from the entry price

Using this kind of order, you let the price tell you its direction. One order gets filled the other not. Also, an RR ratio of 2:1 protects you against a decrease in the percent of the winners, since only one good trade every three is needed to be profitable.

Money management

Finally, do not risk more than one percent of your total assets initially. On the EURUSD, we know that every pip is worth $10 on each lot. Thus a 20 pip stop-loss distance is worth $400. To trade a full lot risking one percent, your account balance should be $40,000. Therefore if you own just $4,000, do trade one mini lot, and if your account is only $400, you should use just one micro-lot.

Learning is hard. You will think that trading that way you won’t get rich quick, but just four things you must consider.

Your initial purpose should be to learn your trading job and know how the system performs.
The primary goal of a trader is to preserve the capital
Compounding is a powerful concept.
You should know your risk and its characteristics.

References:

THE COMPLETE RESOURCE FOR FINANCIAL MARKET TECHNICIANS, THIRD EDITION, 2016. Charles D. Kirkpatrick II, CMT Julie Dahlquist, Ph.D., CMT

Thinking, Fast and Slow, Daniel Kahneman

Tags Forex, Market Sentiment, psychology, trading

Forex Psychology

Trading Psychology: Learn the Art of Getting Over a Floating Losing Trade

Post author By Tareq Sikder
Post date 27 February, 2020
No Comments on Trading Psychology: Learn the Art of Getting Over a Floating Losing Trade

In today’s lesson, we are going to show an example of a trade setup, which tests our psychology and ask us a big question. This situation is something that often happens with traders trading on the major pairs. We try to find out the answer to what we shall do in such a situation.

This is a daily chart. The price finds its support after being bearish for a long time. It produces a bullish engulfing pattern followed by another bullish candle. Using the daily-H4 combination, traders shall flip over to the H4 chart to get consolidation and a bullish reversal candle to go long above the last swing high. Let us flip over to the H4 chart.

The H4 chart suggests that the buyers may take control soon. A massive bullish engulfing candle followed by an inside bar bearish candle may attract the buyers to go long upon getting another bullish engulfing candle. The buyers are to keep their eyes on this chart since the chart may produce the signal candle anytime.

It does not produce the signal candle immediately. However, after a while, it produces a bullish engulfing candle closing above the last swing high. This is an A+ trade setup as far as the daily-H4 chart combination trading is concerned. The price makes a deep consolidation and produces the signal candle afterwards. This is what breakout traders love to see. A long entry may be triggered right after the last candle closes. Let us proceed to the next chart to find out what happens afterwards.

This must be painful for the buyers. The trade setup looks very good, but things have not been going as expected. The price comes back within the consolidation zone. This looks ominous for the buyers. Since this is an H4 chart, the buyers have the opportunity to look after their trade. They may ask themselves whether they should keep the entry or close it manually? I let you think about it for a minute.

If your answer is the buyers shall close the trade manually, you may not be right. The reason behind this is, once a trade is floating on a loss, traders shall leave it and let it finds its own way. If it hits the stop loss, let it hit it. Traders are to calculate this risk well before they take entry. If a trade is running on profit but acts unusual or gets sluggish at a significant level of support/resistance, that might be a different case. Although the chart suggests that most probably, the price is going to hit stop loss, the buyers shall hold the entry and concentrate on other pairs. If a trader wants to survive in this market for a long time, he must acquire this skill of getting over on a floating losing entry and concentrating on a new trade setup.

Tags Breakout, engulfing, Forex, Forex psychology, Price Action, psychology, trading

Forex Psychology

What Wastage of Time!

The H4-H1 combination is one of the best combinations to trade for intraday traders. The H4 chart is the most consistent intraday chart in the Forex market. The H1 chart integration with the H4 chart offers many reliable entries. However, it is often seen that the H4 chart doest its part, but the signal never comes on the H1 chart. In today’s lesson, we are going to demonstrate an example of an H4-H1 chart combination, which is about to give us entry, but it ends up not producing a trading signal. Let us find out how the story goes.

The price after being bullish on the H4 chart, it has several rejections at a level. The last bearish candle gets rejected at a Double Top resistance. The sellers are to flip over the H1 chart and wait for the H1 consolidation and H1 bearish breakout to go short. However, it is an Inside Bar. It may not attract the sellers that much. Let us proceed to the next chart.

This is the H4 chart, as well. The price does not head towards the South on the H1 chart. It rather produces an H4 bullish candle followed by an H4 bearish engulfing candle. This time it may attract more sellers to be keen on selling opportunities. They are to flip over to the H1 chart again. Let us have a look at how the H1 chart looks.

This is the H1 chart. The last candle comes out as a bearish engulfing candle. The sellers are to stick with the chart to wait for consolidation and to get a breakout to go short. The waiting game starts.

The price keeps going towards the South without having any consolidation. Since the sellers do not find new resistance, thus there is no entry for them yet. Let us not give up but wait for consolidation.

The consolidation starts, but it does not make any H1 breakout to make the new lowest low. It rather finds a level of support where it has several bounces. It is a ‘Double Bottom’ support. The way things look now, it may head towards the North if the price breaches the neckline. All anticipations and hopes have gone in vain. Some traders may think, “what wastage of time.”

If you think it is a wastage of time, you are far away from being a professional trader. 70% of your trade setup like this may end up not offering an entry. Never think it is a waste of time. Take it easy. Each potential setup does not offer an entry. Concentrate and find out more setups in other pairs. It must be round the corner.

Tags Breakout, consolidation, Forex, Forex price action, Price Action, Technical Analysis, trading

Forex Psychology

Having the Mindset to Deal with a Frustrating Situation

Post author By Tareq Sikder
Post date 29 November, 2019
No Comments on Having the Mindset to Deal with a Frustrating Situation

Patience is one of the most essential components of Forex traders. Traders are to keep patience in every single second. Before triggering an entry, a trader is to find out

Patience is one of the most essential components of Forex traders. Traders are to keep patience in every single second. Before triggering an entry, a trader is to find out a trend, key levels, momentum, news events, etc. After all this hard work, he may not be able to take the entry. It is frustrating, but for Forex traders, it is a usual thing. A trader must accept it simply. In today’s lesson, we are going to demonstrate an example of that.

The price heads towards the South; it consolidates and heads towards the North. The price breaches a level of resistance, which the buyers are to keep an eye at for a bullish reversal. Let us proceed to find out how the next chart looks.

The buyers were waiting for the red-marked level to hold the price and produce a bullish reversal. If the level had held the price and pushed the price towards the North breaching the highest high, the buyers would have taken a long entry. They must have waited eagerly, but all went in vain.

The price headed towards the South further and found its support. After finding the support, it heads towards the North again. On its way, it makes a breakout at the highest high of the last bearish wave. The buyers are to keep an eye on this pair again to find a long entry. To take the long entry, the price is to come back at the breakout level, to produce a bullish reversal candle, and to breach the highest high of the last wave.

This time it looks good. A candle closes within the level of support. The buyers are to keep an eye to get a bullish reversal candle first. This means they have to be patient again. Let us proceed to find out what happens next.

The level produced a bullish reversal candle, but it did not breach the highest high. It instead came down and breached the support level. In a word, all efforts have gone in vain. What wastage of time!

The Bottom Line

If you want to take trading seriously as a business or a consistent source of income, you must not think that it is a wastage of your time. It is an investment. Traders must be patient and not be frustrated when opportunities are lost or do not come as per expectation. They must deal with it professionally.

The bad thing is it does not come with practice or experience. The good thing is it is all about mindset. Even a beginner may have a mindset to deal with a situation like this, whereas it might frustrate a trader with five years of experience. We must remember that if it frustrates too much, it hurts trading performance.

Tags Basics of Forex, Breakout, Forex, forex education, Forex psychology, Resistance, Technical Analysis, Trade Setup

Forex Psychology

Experiencing a Losing Trade

Post author By Tareq Sikder
Post date 25 November, 2019
No Comments on Experiencing a Losing Trade

A losing trade hurts. Beginners find it tough to encounter losing trades. However, in the Forex market, losing is inevitable. The market is so action-packed that even an experienced trader

A losing trade hurts. Beginners find it tough to encounter losing trades. However, in the Forex market, losing is inevitable. The market is so action-packed that even an experienced trader often makes mistakes. Sometimes, even a good entry may not get us any profit. In today’s lesson, we are going to demonstrate an example of a good entry, which ends up being a losing trade in the end.

The price heads towards the North and makes a pullback. Traders are to wait for an upside breakout to take a long entry. A bullish Engulfing candle follows a Doji candle. As things stand, the buyers are to take the control soon upon an upside breakout.

Things are different now. The price comes down instead, by making a Double Top. It starts having the correction as well. Consolidation and bearish breakout shall attract the sellers to go short on the pair. Let us see the next chart.

The chart shows that the price is having a correction, where it had a bounce earlier. The equation is very simple here. A bullish reversal attracts the buyers, and a bearish breakout attracts the sellers to go short.

It makes a bearish breakout. The breakout candle looks good. As far as price action and candlestick pattern are concerned, this is an A+ short entry. Concentrate on the marked Stop Loss and Entry levels.

The next candle comes out as a bullish candle. The price may take out some of our entries because of the spread factor. With some brokers, traders pay more spread. Some of our trade (the same entry) may still survive. However, let us not get into this argument but proceed to the next chart. The following chart has an interesting scenario to present.

This should conclude the argument. The price hits the Stop Loss and heads towards the South again. The entry looks to be an A+ entry, but it has ended up bringing us a loss. As usual, beginners with average knowledge of price action may think that something must be wrong with his strategy.

This is not the case. An entry like this would bring us profit at least on 70% occasions. It hurts more since the candle, which hits our Stop Loss itself a strong bearish candle. This is how this market plays. We have to accept it. We must not let our losing trades occupy our thoughts. It is a game of probability of winning and losing. With knowledge, experience, and hard work, a trader can increase the likelihood of winning for sure.

Tags Breakout, Forex, Forex price action, Price Action, stop-loss, Technical Analysis, trading

Step #1: Identify Your Fear

Step #2: Don’t Let Fear Stop You

Step #3: Start a Trading Journal

Tip #1: Practice

Tip #2: Critique Yourself

Tip #3: Stop When You Need to

Use a trading journal:

Talk to yourself:

Talk to someone else:

List the triggers:

Walk away:

Don’t Dwell, Act!

Look at What Went Well

Change Strategies

Find a Niche

Talk to Others

Confirmation Bias

Herding Bias

Attribution Bias

Addiction Bias

Recency Bias

Taking the Trade

Not Every Trade Must Be Perfect

Avoid Biases

Don’t Panic Over Stats

Allow for Market Volatility

Mind Games

Pulling the Trigger

Being Your Own Shrink

Fighting Back

#1 – Practice

#2 – Look at the Bright Side

#3 – Focus on Your Trading

My broker is a scammer!

The markets are against me.

Trading takes too long.

Trading is too complicated.

You can’t make enough to live on.

Practice Conscious Breathing

Listening to Music

Try Positive Self-Talk

Try Meditation or Yoga

Use Grounding Techniques

Denial

Rationalization

Depression

Acceptance

Money Management

Trade Psychology

Macro-Level

Micro-Level

Introduction

The Right Trading Mindset

Self-knowledge

Ego by a winning streak

Hopping when things go wrong

Losses are part of the business

Avoid Martingale position sizing

Trading systems could fail

Diversify the risk

Making Money by trading is a long road

The importance of a trading plan

A comfortable trading strategy

The importance of discipline

The Importance of Number Three

Conclusions

Suggested Readings

Self-Assessment

Rate yourself

Beliefs for Self-rating

Best Mental States for self-rating

Mental strategy for self-rating

Rehearsal

Beliefs for Rehearsal

The mental States for Rehearsal

Mental Strategy

The preparation tasks

Self-Awareness

Goal Settings to solve the conflict

Development of a Low-risk Plan