We are what we think; all that we are, arises with our thoughts; with our thoughts, we make the world.

Psychology of the Forex

Trading the Forex Market can be a stressful occupation. Maintaining a calm approach will benefit the Forex Trader. Trades based on emotion, fear, greed or desperation are destined to fail. A great book to read is “Trading in the Zone” by Mark Douglas.

Trading the forex is only 20% skills and 80% emotions. You must learn to control your emotions if you are going to be successful. My mentors, at Market Traders Institute, http://www.markettraders.com/landings/forexIQ/forexIQ.aspx?id=THEFOREXMOM(Blog), have done a great job in helping me understand this. It has made a big difference in my trading success.

1. consistent winners – fewer than 10 percent of the active traders.
2. consistent loosers – 30-50% of the active traders.
3. Boom and busters – 40-50% of the active traders.

Share This:

The tools you will use to create this new version of yourself (a successful trader) are your willingness and desire to learn, fueled by your passion to be successful… The medium for your artistic endeavor will be your mental environment… your ultimate goal is consistency…

This lack of fear translates into a carefree state of mind, similar to the state of mind many great athletes describe as a “zone.” If you’ve ever had the occasion to experience the zone in some sport, then you know it is a state of mind in which there is absolutely no fear and you act and react instinctively. You don’t weigh alternatives or consider consequences or second-guess yourself. You are in the moment and “just doing it.” Whatever you do turns out to be exactly what needed to be done. …a psychological zone is not a condition you can will yourself into…

That’s what the great athletes have: a winning attitude that allows them to easily move beyond their mistakes and keep going. Others get bogged down in negative self-criticism, regret, and self pity.

Share This:

Why are some people able to think creatively and others cannot? Creating new strategies for the forex is an art, not a science. It requires creative thinking. Let me share with you some of the things that may be blocking your path to creativity…

Trying to find the RIGHT answer. Formal education leads us to believe there is ONE right answer. In the forex, there are many right answers.

  1. Logical thinking. Real life is illogical. Think metaforically. A great philosopher, Mr. Spock, used to say, “Logic is like a flower that smells bad!”
  2. Following rules. You must go outside of the lines and break new ground to be creative.
  3. Being practical. Don’t allow editor in the same room as the inner artist.
  4. Play is not work. Success is not the key to happiness…. happiness is the key to success! The people who are the most creative and successful find that work IS play!
  5. It’s not my job. Everything is related. Creative persons are renaissance and they can bring all knowledge together. This is one of the reasons you need to educate yourself and give yourself a liberal arts education in your spare time. Public schools will teach you WHAT to think, specialized schools like Universities, Medical Schools, Law Schools, etc will teach you WHEN to think, but you need a liberal arts education immersed in the classics in order to know HOW to think.
  6. Being a serious person. Read The “Four agreements” to learn how to not take others seriously. Develop a sense of humor. Life is a journey… you need to be enjoying the journey.
  7. Avoiding ambiguity. Allow yourself to deal with blurry concepts and then you can slowly sharpen the vision.
  8. Being wrong is bad. Thomas Edison failed over a thousand times to invent a light bulb before he succeeded. Remember, FAIL your way to success!
  9. I’m not creative. We are all creative, we create our own limits by the way we think. Get out of the rut, go outside of the box, cross the lines and BEGIN thinking creatively. I can promise you, it is a lot of fun!

Share This:

People who are hungrier tend to pay more attention to trading rules.

Happiness is found in being good at what you do.

Success is a formula, not a fantasy.

You need to find a mentor to be successful… (I am extremely pleased with all of my mentors at Market Traders Institute http://www.markettraders.com/landings/forexIQ/forexIQ.aspx?id=THEFOREXMOM(Blog))

We are not given dreams in this life, without being given the power to make them come true.

There are formula’s for everything in life, and we must abide by the formula to be successful.

It is important to get in touch with your emotions; otherwise, they can cause self destruction.

When I mentor people I like to begin by asking, “what is the problem, discipline, emotions, technique, or formula?”

Successful people will do what unsuccessful people can’t and won’t do!

Law of attraction – what we think about radiates out of our being and creates circumstances and events that align with what we think about. It also attracts similar people.

The mass of men lead lives of quiet desperation, Thoreaux, 1854.

Nothing great happens unless you start to dream… but focus on the formula not the fantasy.

We get what we deserve… We deserve what we get… We get what we expect.

Share This:

The defining characteristic that separates the consistent winners from everyone else is this: The winners have attained a mind-set—a unique set of attitudes—that allows them to remain disciplined, focused, and, above all, confident in spite of the adverse conditions. As a result, they are no longer susceptible to the common fears and trading errors that plague everyone else.

Traders who make it beyond “the threshold of consistency” usually experience a great deal of pain (both emotional and financial) before they acquire the land of attitude that allows them to function effectively in the market environment.

The hard, cold reality of trading is that every trade has an uncertain outcome.

So, what is the solution? You will need to learn how to adjust your attitudes and beliefs about trading in such a way that you can trade without the slightest bit of fear, but at the same time keep a framework in place that does not allow you to become reckless.

Share This:

Each trading strategy I follow must have a set of rules.

If I create my own trading strategy, I must also create my own rules. These rules need to be backtested so that I know they have a high probability of succeeding. I must use logic and not emotions when I create the rules. The strategy must include stops, limits, and contingency plans if the trade goes against me.

I always begin trading a new strategy with a demo account. I need to develop the skill to quickly visualize when the strategy is ready for me to enter a trade. I also need to gain some experience watching the trade and feeling comfortable with the different directions the market flows. I need to gain the confidance to trust the trade and stay in until I reach my limit.

When I have developed the skill and confidance, then I may begin live trading. It is important that I do not let my emotions alter my trading strategy. I plan my trade and I trade my plan. Sometimes I will gain pips, sometimes I will gain experience, either way, I WIN!

And most important of all, trading should be fun!

Share This:

Every trade is a new experience with uncertain outcome. I must begin by creating good trading habits.

General Trading habits: I have committed to spending a specific number of hours each day to trading. I trade at the same time each day. I do not trade if I am emotionally upset or angry. I only trade when I can remain focused on my trading.

Preparing a trade: I follow a specific trading strategy for each trade. I document every trade that I enter. I create a contingency plan in case the trade goes against me, which includes stop a stop loss that meets my equity management criteria.

During the trade: I must trust my trade and not allow my emotions to change my plan. If I find myself living and dying by each candle, I must not watch the trade.

After the trade: I must document the results of the trade, the pips and experience I gained, and the things I will do differently in the next trade.

Share This:

Gold Trading GCC
Gold Trading GCC
2 Great trading tools
Forex Smart Tools
My Amazon store
Click here to view some amazing books and videos on Amazon.

This selection was handpicked by me.
Checkout another website
This websites teaches you about the Foreign Currency Exchange.