If you’re a new trader trying to make sense of forex market movements and making money while you’re at it, the whole experience can be exciting and overwhelming at the same time. This is why it is important to work on your basic forex trading psychology from the very start of your endeavor.
Perhaps one of the most important things to remember when you’re starting out is to just take it easy. It can be tempting to try all technical indicators all at once or trade every single top-tier news release out there, but you might run the risk of overdoing it and feeling burned out later on. Stick with what you’re comfortable with and just add what you learn along the way.
Another thing to keep in mind is to know yourself. Make sure you come up with a trading strategy that is in tune with your personality and your risk preferences. For instance, if you thrive in fast-paced movements and if you’re comfortable with managing many open positions at once, then you could look into scalp trading techniques. On the other hand, if you get easily stressed with quick price movements and would rather just check your charts every now and then, swing trading might be better for you.
Lifestyle considerations must also be taken into account when coming up with a trading strategy so as to not set yourself up for stress or failure. If you are planning on trading part-time while holding on to your day job, then you could look into trading techniques that won’t require you to be in front of your trading platform all the time.
Easier said than done is the trading psychology recommendation to stay on top of your emotions. After all, we are human and we can’t help but sometimes give in to poor decision-making when our minds are clouded with fear or greed. The trick in forex trading is to keep an objective mindset to be able to focus on what the market is telling you instead of letting emotions cloud your judgment.
This particular skill takes time to master and even experienced traders can still be guilty of being too emotional, which is why it is also important to constantly remind yourself to isolate these emotions when trading.
Staying disciplined goes hand in hand with trading psychology, as this enables you to stick to your strategy and risk management rules. After all, it can be tempting to deviate from your plan when the markets are going haywire but with the right mindset and discipline, you should be able to focus on the right action steps to take.
Lastly, it is important to note that keeping a trade journal is one of the best ways to work on your trading psychology, and this is a habit that must be started by beginner traders from the very start. This allows you to keep track of your profit and loss, trading decisions, trade strategies, and even the factors that influenced your decisions. In analyzing these, you can be able to identify your strengths and build on them while working on your weaknesses.