Even if you have an idea of what to do as a beginner in a demo account or have traded the stock market before, you need to execute Forex trades in a live account in order to gain confidence, get the real feeling of trading, and follow your trading strategy. The best sports players practice the physical aspects of their game, but they also spend time in the mental gym.
We explain how understanding trading psychology can be used as a unique edge toward your trading success and more.
Professional traders know that making the first trade in the forex market is the hardest because it's an emotional challenge and a psychological hurdle. To become successful as a trader, you need to get comfortable with the learning curve. The best way to get over the fear is to place a trade in a real account. After you do, you will find a world of opportunity open up before you in your trading account.
Follow your trading strategy and stick to it, letting your emotions get in the way will result in inconsistent trading with a lack of positive results and confidence, that is why the psychology behind trading is so important to control.
Professionals also know that winning from the beginning is unlikely. When a rookie is drafted, he or she probably isn't going to be a superstar right away. It takes some time for the new player to become acclimated to the team and league rules, opponents, coaches, and other aspects of the sport. The same principle applies to trading: Expecting success from day one is unrealistic, but you need to start somewhere.
The experience that you would gain from trading with live account conditions would simply be invaluable, the more you trade the easier it becomes to control emotional responses and have a good trading session by controlling the forex psychology element.
Additionally, successful forex traders also know that there are going to be more losses along the way. They don’t expect to win every trade, but they do try to win more than they lose. Ultimately, professionals understand that it takes time to develop their skills, gain experience, and be able to control the emotional and psychological aspects of trading in a real account.
A great way to get over the psychological hurdle is to start trading small volumes on a currency pair you like to follow, that way you get to understand the emotional aspect of trading and learn how to control it, take it slow, and practice. Come up with a trading plan that will allow you to use your technical analysis to make decisions.
Trading is as much a skill as it is an art. It requires time, energy, and concentration in order to be successful, and even then, you can’t be right all of the time. Consistency in trading is the ability to make the same decision given a similar set of circumstances over and over again.
Sticking to your trading strategy is a great way to control the emotions running when you open a trade. The process can take years, but if you’re able to learn from your mistakes and trade with discipline, you’ll eventually develop a unique style that works for you and master forex trading psychology.
The best traders don’t see losses as something negative. No one likes losing money, but they accept that they will lose sometimes, consider it as a part of the learning and growing process, and see it as a time for action. Successful traders analyze what went wrong and adjust future actions for success until they develop a trading strategy that works for them.
One of the biggest challenges when placing your first trades is being able to close a losing trade. Everyone wants to be trading successfully, and It’s a difficult fact of life for most traders, but the best way to be a successful trader is to accept losses quickly and move on. There’s always another trading opportunity around the corner.
It is also very important to note that the cup and handle specifically is a pattern that requires a lot of patience. A pattern that could take up to 65 weeks to form is one you should be cautious with. Entering a trade too quickly could be detrimental to your trading account.
Another thing to consider is the depth of the cup. While a shallow cup can be a real signal and lead to a successful trade, deep cups can be a false signal. Sometimes, the cup will form without the handle. Therefore, it is important to be patient and calculate everything closely.
You should keep detailed notes on why you made the trade and what your expectations were at the time of making the trade. You would then record the actual outcome of each trade and any lessons you can learn from it.
Don’t be afraid to ask for help or learn from other people’s mistakes. The internet has many resources where you can find information about trading.
Exact market prices are not predictable, but pricing levels have patterns. That means we can anticipate some of the things that will happen and prepare for them. These patterns exist because everyone reacts in the same way to similar situations, thus creating similar price action behavior. This is why we trade with probabilities: we don’t know what exactly will happen, but we do know how often something has happened before in similar circumstances.
1. See the trade. Does it meet your conditions or strategy requirements?
2. Ask yourself how you feel about the trade. Do you feel good about it? It’s important to feel that it is the right decision otherwise you will have difficulty following through.
3. Prepare the order. Check and recheck the order screen to make sure you have not made any mistakes.
4. Place the order.
5. Check your order in the terminal. Is the order correct in the open trades terminal? If so, you are done.
Remember that you can’t win them all, use a stop loss to prevent bigger losses at a level you are comfortable with.
Takeaway: Just like anything else trading requires practice, to get good at it and there are ways to help move the process along faster and with less stress. Even if you have an idea of what to do as a beginner, you need to execute actual trades in order to develop success. The act of trading is a skill that improves over time.
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