How to develop a positive state of mind when trading Forex

Trading Forex can be one of the most difficult jobs to do and perhaps that is why 90% of traders tend to fail. The common misconception is that the market can be a little bit like a betting playground but the truth is completely the opposite. One of the main reasons why traders fail (especially new traders) is because of lack of discipline. This discipline can be broken down into a few categories such as confidence, money management, following the rules, loss management and mental stability to name a few.

The difference between Forex trading and a ‘normal office job’ is that if you make a mistake as a trader you lose your own money. That is, if you make a mistake in another job you lose commission or other moneys relative to the job but you will still get a basic pay-check. So, in this article we have a listed a few factors you should take notice of in order to develop a positive state of mind when trading:

1. Never change what you have learnt – it is very common for a new trader to change the rules on what they have learnt when they experience losses. Once a loss occurs a sudden state of panic can occur in your mind and you may start to realise that you are falling behind. The key is to stick to your rules and have the confidence in the Forex trading strategies that you have learnt during your Forex training. You have learnt them for a reason and now is not the time to change them.

2. Walk away from your screen – you may have not done this during your demo Forex training but once you place a trade, place your stop loss and target then simply walk away from your screen. This will ensure that your mind does not suffer with constant highs and lows as you are watching the trade. Just let the market do what it needs to do. Once the trade is done simply come back to your desk and analyse what happened then – not during the trade.

3. Don’t think of the money – thinking about the money will drive you crazy. Focus on the Forex trading strategies and this will relax your mind knowing that you have made the right entry. If your trade fails, it will be because of something beyond your control such as a news release or a data result. The point is that if you constantly focus on the money rather than what you are doing you may close the trade too early only to see it run in the original direction where it would have made some profit. That can be very frustrating.

4. Gain confidence through back testing – testing your own Forex trading strategies is crucial. You should never go blind into the market without historical data that proves your strategies work. Once you have that, be confident that they are good enough for the real market – which is exactly the same as the demo market. Stick to your rules and wait for the strategies to deliver profits or suffer minor losses.

Don’t become part of the trading community that doesn’t succeed. Make sure that you are disciplined in an almost military manner where you are strong enough to know when not to trade. This is as important as knowing when to trade. Through time you will build up the confidence you need and Forex trading will literally become second nature to you.