Forex trading is tough. Most websites will try to tell you that it’s easy, and that everybody can do it…
… But that is simply not true.
If you want to be a Forex trader, you need a strategy, you need a trading plan, and you need the right trading psychology. In this article, I will help you out with some Forex trading tips to improve your trading psychology.
If you need help with your strategy, check out my free price action strategy. If you need help with a trading, and money management plan, check out the free Forex course.
Four Forex trading tips that will make you a better trader
Trading psychology is one of the most important aspects of Forex trading. So let me help you get your psychology on the right track, with these four sure-fire tips, that will help make you a better trader.
1. Start small, baby
Ok, you know the basics, you have been studying for a year, and now it is time to open a live account. How much money should you open an account with?
The experts say around about $5,000 but they are very wrong. If you open your first live account with a significant amount of money, you’re dooming yourself to failure…
… Why?
Well, professional traders are in control of their emotions, newbies aren’t. The longer you trade, the better you will become at controlling negative emotions. Trading psychology is tough to master, as a new trader, you will probably let emotion get in the way.
One of the most destructive emotions you will face is fear. Fear of losing will make you do stupid things. So if you’re trading a large amount of money, fear of losing will kick in quickly. Imagine you have $1 on the line, you would not be very scared of losing, right? Well, if you have $1,000 on the line, you would be much more scared of losing.
For this reason, it is smart to start your live account with only a small amount of money. You need to train yourself to deal with negative emotions, and bolster your trading psychology. As time passes you can add more money to your account. If you start off with only a small amount, it will give you time to harden your trading psychology.
2. Be fluid & think on your feet
Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot it becomes the teapot. Now, water can flow or it can crash. Be water my friend.Bruce Lee
A trader, above all else, must be able to adapt to changing market conditions.
If you have a trading strategy, you should never follow it religiously. You should always be ready to make changes on the fly, and adapt to current conditions. The Forex market is very fluid, and you need to be just as fluid to trade it. When the market throws something unexpected at you, you need to be able to analyse the best course of action, and make a decision quickly.
3. Only trading when you are sure
Do you ever enter a trade just because you think you should be trading? A lot of newbies do that exact thing. They take trades because they “believe” they should be in the market. Instead of waiting for a good opportunity, they jump into any trade (even if the chances of it working out are slim).
Trading just to be in the market is reckless and dangerous, it can cost you your whole account. So before you enter a trade ask yourself these two question.
- Why am I entering this trade?
- Is my strategy really telling me to enter?
Never enter a trade unless you’re sure you should be in the trade.
4. Set Targets
Setting overall weekly and monthly targets is very important to your trading.
Why is it so important?
- It gives your trading structure and allows you to plan ahead, long term.
- It gives you a goal to aim for instead of trading aimlessly.
The urge to over trade is a common problem among newbies. If you set targets, once you reach it your target you can relax, and take it easy for the rest of the week. Setting targets helps you to remove the pressures that can causes you to overtrade. It also keeps you disciplined because it gives you a structured plan that you can stick to.
If you have any questions, ask below
If you enjoyed my Forex trading tips, or if you have any questions, feel free to leave a comment below. I will try my best to answer.