What is the strategy behind success in the Forex market?
You may find a lot of useful articles filled with a bunch of misinformation. But the reality is a bit different. Only 5% of the total traders become the master ones. Then what happens to the rest of the population. Here lie the convenient statistics. Most of them whether giving up themselves from the Forex trading market or continues to make losses.
The psychology of being a good trader and being a rich person is responsible for this. In this article, you are going to learn the basic mentality of being a good trader and earn money more efficiently.
One of the most important and once again ignored by traders is to maintain a healthy psychological outlook with regard to trading. The psychology of the trade along with the risk management of one of the pillars on which the professional traders base their success in the market.
In fact, investors who are not able to control the stress produced by variations in the market do not get them to survive as long-term traders, no matter how easy they are nor their knowledge about market analysis tools.
Trading free of emotions.
It is critical that the marketer make his decisions regarding the market based on objective strategies in such a way that eliminates the interference of emotions such as greed and fear whose effects can be fatal as they cause the person to make bad decisions.
One of the characteristics common to all professional traders who can obtain a complete emotional detachment regarding their transactions: although they are involved and dedicated in their operations in the market, they do not get to commit themselves emotionally with them, for that reason they accept without problems Losses and make all investment decisions in a completely objective manner.
Often, traders who become emotionally involved with their transactions often make important mistakes, so they tend to change their strategy capriciously to a few losses or on the contrary become very careless and overconfident after getting a few Winning Operations A successful trader is one who has emotional balance and who bases all decisions on an objective strategy that is applied in a disciplined and free of emotions such as greed and fear.
The professional trader knows when to take a break.
When a trader undergoes a major streak, he should consider taking a break from trading before fear and greed can dominate his trading strategy and drive his decisions. It is important to understand that not all transactions will produce profits. Therefore, the trader must be psychologically able to understand that at some point he will have loss which ones he must manage properly.
The vast majority of traders, even the most successful traders, often go through periods of losing trades. This is not uncommon. That’s why the key to becoming a long-term winning trader is to have the ability to get through a losing streak without getting upset. The moment a trader goes through a negative streak in which he experiences large losses, it is probably best to take a break from trading.
Normally, staying a few days or even weeks without observing the market can clear the mind and can be one of the best solutions to a losing streak. Conversely, continuing non-stop trading during a complicated market condition may not only produce high losses but also affect the trader’s psychological state.
Finally, it is always better for the trader to recognize their losses rather than continue to fight against them and act as if they do not exist. It is vital that the trader understands that no matter how much he prepares and practices, during his career in the market there will be many losing trades. The key to success is to make these losses so small that the trader keeps enough capital in his account so he can trade another day in the market and so he can leave his winning transactions open for longer.
The fact is that a trader can overcome any streak of losses with proper monetary management techniques. This is why experts emphasize using a benefit-to-risk ratio in their 2: 1 operations as well as not risking more than 2% of your account’s equity in a single transaction. With these practices losses can be kept at an acceptable level.
For traders operating in the Forex market or with other instruments such as stocks or futures, here are 10 basic rules that every trader should follow:
Let your earnings run.
Limit your losses as much as possible.
Do not fight the trend.
Hold positions with an appropriate size according to the capital of your trading account (monetary management).
Apply an appropriate benefit-risk ratio.
Do not add up the losing positions to compensate, on the contrary if a position is generating excessive losses close it.
Analyze and take into account the real expectations of the market.
Properly capitalize your earnings, do not allow a winning transaction to lose a high percentage of potential profits produced or end up causing losses.
Use a trading notebook and learn from your mistakes.
Set a maximum loss or retraction level for your winnings. If you get to this point consider resting and stay away from the market for a few days.
Can anyone command the market?
Well, this is not possible for you and me. So, you need to control yourself while trading. This control is with yourself and with your money. You cannot be in the middle part of this scenario. When you will start investing your money, two different options will be available for you. Just tried it all or do not trade a cent. You need to choose on which path you will go.
Every beginner in the Forex market comes up with the dream of being a perfect trader. They cannot judge the obstacles. But the time when you will know what is coming towards you, it will be easier to stop loss. Are you afraid of being totally devastated? This inconvenience can bring bad to you and your health. Soon enough, there will be much more anxiety for you. A scattered mind cannot think properly. So, you must be calm and thinkable while investing your money in the Forex market.
A bad trade or unfortunate fluctuation can bring “forced awareness” for you. Helplessness cannot be a good option to be a successful trader. To be encouraged, read the success stories of every trader. Then you can find yourself in a good position in this business market.
Fear and Greed to invest caused a lot frustration for both the trader and buyer. The fear will make you run until you are tired of investing. On the contrary, greed may affect much more than the other one. The Forex market is not a lottery. It is about common sense and your instinct. If you follow your instinct, nothing can create loss for you.
So, invest money with proper attitude and keep an eye on the market. You can also be one of the 5% of traders.