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Tips to manage emotions in Forex - It determines 90% of success in trading!

 

 

We’ll talk in this article about an extremely important aspect when trading in the foreign exchange market, on which 90% of the success of any trader really depends - these are emotions on Forex. In the article below, we will talk in detail: what emotions are present in trading, what they affect and how to properly manage emotions on Forex, what aspects or factors need to be paid the most attention.

 

Forex trading is, in fact, a nervous job that takes strength and energy, requires a lot of knowledge and experience. Of course, as you have heard more than once, there is fear, greed, euphoria or adrenaline on the market, while traders, succumbing to this, very often open deals where they should not be, close them ahead of time, fix profits ahead of time, overexpose opening a position, etc. The consequence of such emotions, as a rule, will be the receipt of large losses and even a complete drain of the deposit.

Professional traders cannot afford to succumb to emotions as they risk losing their profits. Emotions on Forex are an important factor in successful trading that must be constantly monitored. Any trader was afraid of losing profits when the trend reversed, he was overwhelmed by excitement and greed when concluding a number of successful deals.

 

The fear of losing profit causes a lot of emotional damage to the trader. Popular expression:

“Take care of the loss, and the profit will take care of itself”

This gives great advice to the trader and indicates the direction in which to think. Excitement and greed whip up a trader to make rash deals, to lose sight of important factors in the state of the market. Only a sequence of actions, the use of his own clear plan and trading system tools will allow him not to succumb to the influence of these emotions.

 

So, how can you manage your emotions on Forex? Let's look at 8 basic rules, the observance of which will help increase your productivity, and subsequently also improve your trading results.

 

1. First of all, you must observe the daily regimen. Try to eat well, do not forget to walk in the fresh air and exercise.

 

2. Sleep at least 7-8 hours a day. Don't try to trade around the clock chasing profits, you will drain your body and be less efficient.

 

3. Work in a comfortable position. As funny as it sounds, the posture in which you usually work also plays a huge role. Scientists have long proven that physical condition can directly affect the emotional state. Therefore, you should develop the habit of keeping your back straight, not to tire your body with uncomfortable postures.

 

4. Alternating between rest and work, even small breaks will help your brain to "reboot" and be more productive.

 

5. Switch over. A person is able to control his emotions by switching to something else. And this method works great. It is enough to concentrate on a specific thought or goal. Your brain will begin to process a new task, overshadowing all the experiences that prevented you from working normally.

 

Analyze information from different perspectives. You can manage your emotions by changing your personal beliefs. Your beliefs allow you to see the situation from one side only, passing relevant information to you. Having changed your beliefs, you will look at the situation from a different angle, you will be able to interpret it in terms of other information.

 

6. When trading, use large timeframes, this rule is especially useful for novice traders. What is it for? One of the main reasons for emotional mistakes in trading is that traders, after opening a position, begin to closely monitor the price movement chart, and they do this very often (every 2-5 minutes, especially when trading is on M5-H1).

With such frequent observation (or, to be more precise, senseless maintenance of their open position ;-)), traders begin to make unplanned mistakes: move the stop loss level, change the exit point from the position, close the deal at all without following the rules of their strategy, etc.

Therefore, since on large timeframes the price changes slowly and for a longer time, on the one hand, the trader's need for frequent monitoring of the chart will gradually disappear (with it, and emotional pressure), and on the other hand, discipline will increase in following the rules of the trading strategy.

 

7. Goal setting. This factor can also reduce emotional pressure during trading. For example, set yourself a goal to earn 30-40 points per day, and after you have realized it, we completely stop our trading until the next day. Thus, you limit yourself and reduce the likelihood of making emotional mistakes.

 

8. And the last rule or way to better manage emotions on Forex is to use a reduced trading lot in the trading process (3-5 times). In this case, a trader who has reduced the volume of his trading position several times will be less worried about the funds and will focus on analyzing the situation on the market and the correctness of the execution of the rules of his trading system.

 

So, implementing the above rules will make your logic work and overshadow emotions. Successful trading depends on many factors: a good broker, training level, money management skills, experience and much more. Professional traders constantly work on themselves, learn from experience and raise their level. The only that can nullify all efforts is the inability to control your own emotions.

 

 

 

 

Published on: 9/14/20, 5:49 PM