Traders often neglect the importance of having a correct mindset in trading forex. Yes, trading strategy is important but no, we are not saying it should be on top of your trading mindset. Having a perfect trading strategy can definitely help you in gaining but if you have the wrong trading psychology, those gains can soon be turning into losses without you even notice.
Mindset controls everything, believe it or not, even your success relies heavily on it. Sometimes, a change of mindset has the power to change your trading outcome and your life. So this week, we are going to give you some insights about how to develop a correct mindset that can enhance your trading experience and mitigate your risk. More on your mindset, less on trading strategy.
Can you sleep soundly at night?
If trading constantly caused you insomnia or panic attack then you are having a wrong mindset. The best way is to be 100% OK with every trade you make. Make sure you don’t feel panic or anxious after you made your trading decision by not taking any trade personally. Another aspect that can affect this is only trading with your disposable ‘risk’ capital. Don’t trade with the money that your life depends on it. This will lead to enormous stress and causes you to fail to make a good trade. Accepting losses are a part of the lesson you should learn throughout trading, never take it personally and accept it with grace.
Are you gambling or are you trading?
Keep in mind that never let your EMOTION take over your TRADING DECISION. A successful trader who trades with their skill instead of emotion doesn’t increase his or her trading risk after they had several consecutive gains just because they have extra confidence after that. And also, avoid ‘rushing’ back to the market after losses because human instinct will make you try to ‘win back’ what you lost. Emotion and trading should not be mixed therefore traders need to have a resilient mindset of knowing forex trading is not gambling but something you need to conquer by learning and practice.
Always prepare for the worst
We all set our expectation when we first started something. It is not a total bad habit to have an expectation but we encourage you to prepare for the worst-case scenario too. Not trying to be pessimistic but getting yourself ready for something bad happens can boost your confidence invisibly. Prepare for the worst means get yourself mentally and physically prepared for the bumps and adversities you are going to face in your trading adventure. You have literally nothing to worry about if you are well prepared. Having your back-up plan ready gives you a sense of security and lighten your anxiety that will possibly surface on the journey.
Have your trading plan right
Everything starts will a plan, it’s all about planning ahead. Even though the plan alone cannot 100% ensure you to gain but with a plan in place, it gives you a positive attitude and belief. Pre-planning increases your odds of making money because you are trading more on logic than emotion. Figure out your strength, be it price action trading or setting indicators, and find out your weakness to improve. Keep a trading journal if you can to record down your trade decision then analyze it to do better on the next trade.
Trading can feel like sitting on an emotional roller coaster sometimes. Handle your mindset correctly can greatly reduce your risk and reach your goals much more smoothly. Know when to stop and never trade with emotions such as anger, faith, and fear. So start from today, become a good gatekeeper of your mind and only plant seeds of positivity, you will see how your life and trading journey shift.
“Expect the best, prepare for the worst”