By: Terry Allen
You will find that one of the biggest hurdles separating you from Forex success is learning how to control your own emotions whilst trading. You have to develop your mindset to a point whereby you can prevent your gut instincts and whims from influencing your trading decisions.
To counter these problems, you need to develop your Forex psychology so that you can trade in a professional manner. You must take these steps so that you do not become just another part of the appalling statistic stating that 95% of all novices lose their entire accounts within a few months of startup. You will, no doubt, feel nervous when you start your Forex career because on the one hand you will possess a strong will to succeed whilst on the other you will have a dread of failure.
Expert consensus advises that you need to devise a Forex trading strategy as your best counter to controlling your emotions. As such, the process of constantly following a FX methodology comprising a strict set of rules will enforce you to trade in a more business-like and scientific manner devoid of any emotional input. Consequently, you will find yourself more in control and not just reacting to every difficult trading problem in an undisciplined way.
You must realise quickly that Forex is a ruthless and unforgiving entity. As such, you will have to deploy the maximum amounts of self-control and emotional stability in order to trade Forex successfully. Once you have developed a trading strategy, it will possess and be defined by following parameters:-
Money Management Strategy
Entry and Exit Strategy
You must then utilize your Forex strategy by regarding it as the king influence over all your FX trading decisions. For example, you enter and exit your positions only when your strategy flags you to do so. Under no circumstances, do you perform these actions just in response to your emotional impulses. Should you find that you are suffering a series of consecutive losses, then you must revert back to your drawing board and re-evaluate your strategy.
Although this task can be performed using a straightforward procedure, you will find that your emotions can release havoc on this process if you have not made efforts to control them. For example, Forex novices have great difficulty in accepting small losses and the resultant emotional turmoil usually causes them to suffer even larger drawdowns.
To prevent this from happening, you must always resort to your Forex trading strategy and let it advise you when you should take critical actions. When your stress levels rise, you must not under any circumstances begin to over-ride its advice by making erratic decisions based on your instincts.