To have successful trading; is 80% psychological and 20% methodological. That is why; self-knowledge and study of its own patterns of behavior is the key to success.

We all know that the forex market is highly volatile and often decisions must be taken in very short periods of time. Uncertainties are on all things, and even today we have the help of many tools and techniques, no one really knows what will happen with the market prices. Faced with a downward transaction, no one knows exactly how low will prices fall or how high they will rise, the question is how much will I risk. All this creates great anxiety and nervousness in forex operators, which often end up losing their money by making hasty decisions.

Control over your emotions and stress management

Given that everyone has access to the same information, the same news, the same numbers, indicators, statistics, etc… What is the difference between winning and losing traders? The answer is that the former remain emotionally stable at all times.  They can handle the pressure of risk and can control their emotions. We should understand that losing is part of the business. Trust in its methods and systems, giving them the peace of mind that losses are only small setbacks that will last a certain time and then be recovered.

The most important thing is to enter calmly and with confidence knowing that everything will turn out right. Planning in advance our strategies to operate on them will give us, as traders, greater sense of security.

Controlling your emotions can be achieved through: Trust in the probabilistic model, to be psychologically prepared to lose, to operate without fear and self-criticism. We must not be satisfied with the way we trade, but we must investigate our errors and design techniques to overcome them. Keeping a log of errors is quite useful to shed bad habits and avoid falling back into them. All this as a whole guide will provide greater security and peace of mind in difficult times.

The question among the rookie traders is: When are you ready? That is, when it becomes aware of what they learned and the sense of one’s own emotions into effect, and when you have enough knowledge (of both the market and ourselves). That is, when there is awareness of one’s own inner states, resources and intuitions, and when you make a correct assessment of your own strengths and weaknesses as Traders. This ends in one thing: confidence in oneself, valuing our skills and emotions.

Emotional competencies are required:

A-Self-control: keeping disruptive emotions under surveillance such as extreme fear or feeling of absolute immunity and the impulses that do not meet your trading plan.
B-Trust: maintaining adequate standards of honesty and intellectual integrity, based on a proper training and the predetermination of the actions to be taken in situations of gain or loss.
C- Consciousness: assume full responsibilities, and the fate of its operations.
D-Adaptability: flexibility to accept changes in the market and positions.
E-Innovations: accept the new information or new perspectives, expectations, or ideas that are better suited to new situations
As for handling stress, taking regular breaks will help fight it. In difficult times it is advisable to change rooms, and renew energy, preferably outdoors. The practice of respiratory exercises is also highly effective, helping to lower the decibels and think clearly again. Accepting one owns limitations also help ease the tension. Pressed with ambitious goals to take profits and limiting ones capacity only generate more frustration, which markedly reduces productivity.

Discipline

In forex, every-trader will be solely responsible for their own decisions and actions and must face the consequences. Great discipline and ability of acceptance is required. Self-knowledge is as important in forex trading as the knowledge of the facts, economic theories, news, and methods. For it is not strange to see how many times the emotions prevail, forgetting any tools, and indicators. Traders who have self-control and discipline over their emotions are more likely to emerge as winners.

It is not easy but necessary to make a self-analysis to identify our strengths, weaknesses and personal tendencies because by nature, our perspective is subjective. To achieve this requires willingness to be completely honest with ourselves and accept the results of looking inside ourselves. Admitting our mistakes is very beneficial both in trading and in life itself, and will enable us to understand why we lost and how to avoid that situation next time. It is possible to ignore weaknesses and work on them, as it is possible to review and work on our trading methods.

The habit of information is within discipline. A professional trader should be used to checking market information on a regular basis (reading news, subscribing to newsletters and alerts, checking indicators, etc.)… This will give you the confidence to operate on the basis of accurate and objective information, which along with the strategy put forward to avoid falling into despair and impulsive actions that could lead to their losses.

Discipline involves:

- Training. Each trader should draw and follow a training plan that would provide all the required expertise
- Self-analysis. Perform a thorough analysis of our own strengths and weaknesses, to exploit the work of our strengths and work on our weaknesses
- Planning. A business plan should include strategies and trading methods
- Objectives. Targets that can be achievable and measurable. Compare with results and check frequently, analyzing the reasons of differences among both.
- Information. Check market information and indicators on a regular basis.
- Self-control. Practice stress management and emotions techniques. Self-recognition of one’s own emotions.

Greed and Fear: Two Sides of a coin

Even if the reasons are different it can both lead to losses.

FEAR: in down trending markets usually there is fear and traders get carried away by despair. The impulse response in this case is to close all positions quickly to avoid further losses. These movements are often market peaks that eventually reverse, that is the point here. The trader that acts calmly and beforehand verifies indicators and trends is more likely to take advantage of changes in the market and avoid losses. That’s why the best in these cases is to set a “stop loss” and respect it, because in “difficult” times you will not be thinking with total objectivity and reasoning.

GREED: This is contrary to the case of fear. Greed occurs when the gains are increased and the operator fails to distinguish a time when to get out of a position, always waiting to “get something closer to the market.” Of course this also has its peak before starting to fall, which in the best case scenario achieves minor gains and at worst … could even lose money.

To avoid falling prey to these emotions, the important thing here is to understand that both parameters, Stop Loss and Limit to be set before each transaction based on the fundamental and technical analysis of it, and then they must be RESPECTED.

Remember:
• Stop Loss: my limit in loses.
• Limit: How much will I earn.

In short, the desirable attributes in the profile of a successful forex trader are:

-Auto-control (managing emotions and stress)
-Discipline (a plan and follow it, observe the strategies raised)
- Self- confidence (market knowledge, and self of our strengths and weaknesses)
-Ability to accept (being psychologically prepared to take risks and accept losses)
- Tenacity and perseverance (the forex market is a long term market; you must learn to be patient and wait and persist in getting to your profit points.However do not get discouraged at the first signs of price reversals.
- Ability to adapt (keeps an open mind and be receptive to new ideas and changes in the market)
-Self-criticism (learn from our errors)
-Tolerance to pressure
- Perception and common sense (detect market opportunities and distinguish those highly profitable and meet the expectations of what the market could do next)
- Selective Mind (ability to separate the forex market forecasts in general, the current positions of the market, not to think about the market from the perspective of an open position).

If you would like more informacion about how to become successful trader, go to our website with tons of Free Information: Forex and Pips

Bookmark This