How’s it going, forex folks? I decided to hang out in the forums section for a couple of days and discovered a wealth of trading psychology tidbits from our very own members.
Let me share with you five forex psychology questions asked by newbies and answered by some of our experienced traders:
1. Godspeed 108 asks “How do you overcome greed or the need to win?”
“It’s just a test of discipline. If you know it’s not a great trade, don’t get in. If you can’t help yourself, turn off the PC and walk away. Do something else that you enjoy to distract yourself fora few hours until you are in the correct mindset again.” – ivanyo
“I found this hard myself. You can adjust your R:R ratio and lower your reward. This will increase your % chance of winning. You might up end up making less money than if your reward is higher, but if it’s psychologically optimal, then you might have to accept it.” – Kevin LaCoste
2. Brien is wondering “How do you know when to take profits?”
“There aren’t any hard rules about it, and thats a tricky thing. Not only do you have the decision buy and sell, but you also need to know where you close which is not a two-dimensional thing.” – goldenmember
“Truth is, you’ll work this out as you continue to trade. Trade management is the HOLY GRAIL. And that has everything to do with self-knowledge and mental psychology (forged in the dirty, sweaty mold of continued trading over time). There’s no formula for this, friend; it’s a personal walk.” – dudest
3. Godspeed108 also wants to know “What mental techniques do you apply to stay patient?”
“If you do find yourself becoming impatient, open a demo account and try scalping the shorter timeframes, or closing trades prematurely before they hit your profit target. Burn yourself as much as you need to until you realise the folly of impatience. Visualise the money you could’ve saved (or made) if you only followed your rules.” – Kevin LaCoste
“I would suggest that you concentrate on a certain aspect, let it be break outs, up/down trending, side trends etc. Then you master just that aspect. Mastering doesn’t mean “yeah I know what it is”. Mastering it means you can identify right at the beginning and right at the end. You can grab everything in between and you even dream about it. Then when the market changes and you are no longer an expert on the same pair you wait until you are again. – Drexta
4. danyaal is wondering “Do I really need to start with a demo account?”
“As long as you treat that demo money as real then it should be good. I guess all of us should go through demo. I trade demo even if I have a live account for a couple of years now! It helps me clear some doubts in my head and try out some new strategy that i wont dare make on live.” – jingoy
“When it comes to this, it really depends on the individual. The majority favors using demo accounts, the small minority is against it. In the end everyone needs to decide what they think is right. Personally I am against demo accounts and always advised new traders against it if they asked me about my view on them. Using a mini-account makes more sense and it actually teaches you how to trade, but besides that those who are terrified of facing losses should not trade to begin with.” – TheLastBear
5. Dannyboi93 wants to know “How do you deal with missing a good trade?”
“Experienced traders know that after missing a good trade another good trade will shows up eventually and for them it is not a big deal. That should be a part of any trading strategy; trading with no emotions.” – Rambo35
“Hindsight is 20-20 and thinking “Damn, I should have taken that trade” is one of the biggest mistakes you can make. It damages your confidence, and messes with your ability to remain neutral while trading. you need to almost be robotic. If an instrument gives you a signal according to your appetite, then you need to trade it, every single time. This is what brings consistency. You need to manage your risk though alongside this notion.” – FOREXunlimited
For more nuggets of trading wisdom, I suggest you head on over to the Trading Psychology section of the forums. See you there!
