Get your head straight Session Three
In sessions one and two, we talked about the importance of having a quiet working environment, at least two 15 inch or larger computer screens, and keeping up to date with economic data releases. And also to be realistic and not expect every trade to be a winner.
The one area of trading that hardly any new trader takes into consideration is the emotional roller coaster that the stresses of trading can cause a person to go through. When it comes to trading with real hard cash, winning trades can be quite euphoric, especially when a trader starts to see consistent winning trades ramping up their profit and loss. However, losing trades, or going into a drawdown, can cause a lot of stress and anxiety during trading. When traders let losing trades run overnight, it can cause sleepless nights. We all know that our performance will suffer when we do not sleep properly. A lack of sleep can cause poor judgment when it comes to trading.
And so when it comes to trading, people must ask themselves in the first instance; am I the type of person who can handle being on an emotional roller coaster? There is nothing quite like trading when it goes your way and where you are making money consistently. But when it goes wrong, the stress piles on and causes you to make more and more mistakes. You might have a natural inclination to double up when suffering losing trades because most people will chase losses. This is a fairly natural phenomenon, but it is gambling and not trading.
Professional traders set stop losses, so they will know what their losses are going to be on every trade and do not let losses run on and on, they only do that with their winning trades.
Losses can cause traders to feel frustrated and angry, and quite often, they may feel that they want to do nothing and hope that a bad will position will come back online. This is called burying your head in the sand and not facing the consequences of your actions.
The absolute best way to mitigate these issues, in order to keep your emotions in check, is to invest your time in Forex education. Because the more you know about this market, the less likely you are to make mistakes. Here at Forex.Academy, we have all the educational modules you will need, and they are freely available at your disposal.