Some Important Ideas
Here are some important ideas about trading the Forex market. We have touched on a few of them already but we thought it would be useful to summarize to a certain extent and maybe elaborate on some that we feel are particularly important or did not fit neatly into other areas.
Let the market be, just trade
Have you ever found yourself in a position where you hesitate to follow your system, not taking a trade suggested by it, and the outcome of that trade would have been profitable? Or agreeing with your system, feeling everything is right, just to lose that trade? I’m sure you have, we all have, but why does this happens? I’m not sure if I have the correct answer to that question, but we don’t need it anyway.
The only thing you need to know is that the market is always in constant motion. It forms patterns, these patterns just look similar; they are never the same exact pattern, so there is never a guarantee of an outcome. The best thing to do is to follow your system rigorously, you will never know ahead of time if the signal will be profitable. What we do know is that whenever a signal is present, the market has a higher probability to go one way over the other.
You have to set your goals, these goals will help you take ongoing steps on the path to improvement, such as:
– Work on your weaknesses
– Learn from mistakes
– Keep losses reasonable
– Preserve capital (MM)
– Follow your system
Your goals must be achievable! Start with little goals pointing to your major goals, every time you reach a minor goal you will feel closer to your major goal and this will motivate you to work harder. Even the longest journey started with the smallest step…
Pay attention to what I’m thinking about and what market information I’m focused on.
Redirect my thoughts on what I have learned.
State of mind
Your state of mind, focus, and personal belief system will be the determining factors for your success as a trader, not your trading system. Try to liberate your state of mind.
Psychological Skills Necessary to Become a Successful Trader
Personal motivation – Motivate yourself; you are going to make it! Don’t lose the battle before it all begins. All significant changes in life begin with a strong overriding motive to succeed.
Goal setting – What you want to accomplish in quantifiable and verifiable terms. All your actions must be towards your goals. Goals must be specific, positive and realistic.
Confidence – The only way to get the confidence required to trade successfully is by discipline. Every time you follow your system adds to your confidence and the confidence in your system.
Anxiety control – Anxiety is very common between traders, but we need to remember that the only way to succeed is by following your system. Every time you follow your system (even when we incurred losses) we step forward towards our success as traders.
Focus – Get rid of all thoughts and actions that act against our main goal. All your actions must have one objective: to reach your trading goals.
Understanding market uncertainty – All patterns are just similar, they are never the same, so the outcome of every trade is unknown.
Accept and embrace risk – Accept the fact that we traders are risk-takers. Accepting the inevitability of a loss is one of the most important skills a trader can acquire. Accept losses as a cost of doing business.
Common psychological barriers
Not taking a loss or a profit – Most of the times the market will not give you a second chance.
Getting locked into a belief – It doesn’t matter what you think about the market, if you think the EUR/USD is going to the moon is irrelevant. Just watch and let the market tell you where it is heading.
Hesitating at your system – You have decided to use certain rules to get in the market because they have produced good results in the past, if you test it correctly, it is likely to have the same results in the future.
Not focusing on opportunities – The market gives us many opportunities to profit from it (i.e. trigger signal) don’t worry when the market makes a huge move and you are not in. Low-risk trading opportunities arise only when your system signals a trade.
We sincerely hope this is helpful and know from experience if you follow the above guidelines you will not be in the top 5% of traders but probably the top 1% – good luck!
You may find it helpful to print out or save this page somewhere accessible on your PC. Look back every now and then to make sure you are still on the correct path