Forex Mindset

Many people talk about the wonders of trading and how it can be best approached but knowing how to establish and identify your entry signals can mean a lot to setting the right path to trading, therefore, a basic introduction to trading must be in order.

 Basic Trading Mindset

The primary goal to trading is for profit.  Understand that trading is speculative, where one cannot determine or tell what exact market forces are at play at any given time and what it can ultimately do to your trading choices.

 

Self-determination is another key to your trading success. No one will tell you what to do next, you have to plan for yourself, especially since there are no hard and fast rules for this career only the rule you create yourself.

 

Other traders may give you advice, and they could be right based off how they trade but consider that the market fluctuates, conditions change, trading is about watching the market, analyzing it, and acting on your own accord.  Every single trader has their own unique trading style.  Use that to your advantage.

 

Understand and recognize your opportunities and risks.

 

The random opportunity that most likely pops up in a trader’s life is a crisis in supply. Something has interrupted the normal flow of supply and demand, dramatically raising the price and this is a temporary chance.

 

Others will also be jumping on opportunities the same as you do. These may be the regular suppliers, those with surplus currencies or another trader with a source elsewhere.

 

Wisely judge the risk and then make your move.

 

The difference between luck and success lies in the amount of risk managed. Sometimes you could get lucky and at other times not, so risk analysis and management lie at the heart of any method that can be termed reliable.

 

Setbacks happen, and this is a real risk in trading, the truth is there will be losses in trading.  Play at the stakes and risk levels you can afford to lose, don’t lay down all your cards so to speak, and have nothing left to pick up on. Make every effort to know the market, this is so important. This will help a lot in determining how you could establish the ins and outs of the market you are in.

 

Every trader needs to know his chosen currency pair(s) as well as (s)he knows their spouse, best friend, or children. This is the “edge” that every trader can use to leverage their chances of success in the Forex market.

 

Trading is a world of compound interest, challenges and opportunities. You have the option to invest in buying and selling a plethora of currencies, and other investment instruments.   All these options and various of investment vehicles can become overwhelming.

 

The nature of the market is purposeful chaos. This is so because the market is the aggregate actions of thousands maybe even millions of people, therefore it cannot be predicted with absolute certainty. The market is very volatile and will change on you in an instant, go against your trading plan, take your profits, render prior knowledge obsolete or even render you penniless if you don’t utilize proper risk management and have the right mindset.  Patterns change, so don’t just rely on that totally. As what the previous point indicates, one day it could be favorable for you, but that can change the next day, even the next hour.  So, this is a basic introduction to a trading mindset and this can help you be on your way to more profitable gains and calculated risks.

 

Attitude And Your Trading Mindset

 

As a trader, you are a business owner and you set the direction. As a leader you must know how to run your business which is essential to your success, frankly, attitude and your trading mindset can determine your success or failure.

 

Statistically, 90% of traders lose money.

 

The trading mindset challenge is how to face up to the challenge of being among the 10% who make it big in trading.

 

One way is to understand leadership principles and see how you are applying them to your own trading business.

 

First of all ask yourself these 4 questions?

  1. Why you are in the trading business?
  2. What attracted your interest in trading currencies?
  3. What are your motivations?
  4. Are you willing to seriously focus your undivided attention to making your trading business succeed?

 

Many say that it is money, excitement, challenge, power and a lot of other things.

 

Imagine you got all of the things you wanted to get out of your trading business. Setting your own trading mindset will help you get along the way, especially when your attitude comes into the picture.

 

Next ask yourself these questions:

  1. What is your degree of discipline?
  2.  How you tend to react to stressful conditions and circumstances?
  3.  How focused are you towards reaching your goals?
  4.  Do you give up easily?

 

Managing your energy, time and effort is one sure way to establish a habit and will aid in creating a discipline that you hope to use in shaping the path of your trading career.

 

One good principle to follow is the 80/20 rule, where 20% of your efforts get 80% of your desired results.

 

You can focus your energy on the efforts that get you the results you desire or let yourself get distracted and fail. Distractions will not allow you to produce the result that you vision for your trading goals in the time frame that you want and this can be discouraging which can lead to a failure or will cause you to give up on your trading career.

 

Perception is also another useful mindset tool in establishing the right attitude for your trading mindset.

We face challenges and difficulties throughout our trading business, but this is just a normal fact of trading.

 

Question is, how do you deal with these setbacks?

 

If you consider your losses as being the cost of doing business and an overhead for your business, then it is easier to accept the fact and move on, taking into consideration that your loss is a way for you to learn from it and avoid it from occurring again.

 

It is important to take note of  your perception and how you view your trading. Losing is not an option, it is a fact of life that every trader has to deal with and how you perceive it will help you reshape your path towards your trading mindset.

 

Of course, fear has a way of making one reluctant about a certain trading decision but recognize when you experience fear and use it as a trigger to remind yourself that successful trading is fearless trading.  You are a trader you are an expert in taking calculated risks and you understand that if one trading decision does not work to your advantage there will always be another opportunity.

 

Take ownership of your trading business, make your decisions work for you and do not let other people traders or otherwise make decisions for you.

 

Trading is a very competitive market and a hard truth to it is that if there are winners, there most definitely have to be losers, otherwise it cannot be considered a market.

 

Many of us put more value in others trader opinions or systems than our own and we tend to want to be safer than sorry and if something goes wrong, we have someone else to blame, as long as it is not us.

 

If we follow others, we do not have to take responsibility for our results. We can blame the advice, the markets or anything else, but the sign of true leadership and the ideal trading mindset is that you should not fear mistakes, but o handle the consequences and move on.

 

It’s worth repeating once again: one of the signs of great leaders is not that they don't make mistakes, it is that they handle the consequences and move on.

 

Remember that the most important thing to establishing that trading mindset is not only to make decisions, but also how to live with the consequences good or bad, and how to take them as a lesson to prosper.

 

Your attitude and trading mindset, if done for the right reasons, conditions and goals, will definitely give you an advantage over others.

 

How To Strengthen Your Trading Mindset

 

To be able to succeed at trading, you must be fully aware of how to strengthen your trading mindset. Here are some simple tips on how to strengthen your trading mindset.

 

  • Always take full responsibility for your trading decisions.

 

  • As a rule of thumb, most investors simply follow the crowd, but successful traders make up their own minds.

 

  • Although you should always be open to good advice from other experts, the final decision rests upon you and not with anyone else.

 

  • You can always try to focus on the opportunity to learn since there’s plenty of it, but don’t let it cloud your perspective or determine the choices you make.

 

  • Avoid the pitfalls of over-trading.

 

  • There are basically two types of over-trading - trading too often and trading too many currencies at one time.

 

  • If you are trading too often, remind yourself that there’s really not a good reason to trade constantly, since extreme over-trading creates stress, produces high commissions and often leads to losses.

 

  • This is so because market forces do not last forever and time has shown various occasions the law of gravity in the trading market is very true it’s rule:  whatever comes up must go down.

 

  • Instead of grabbing every single opportunity that comes along, make sure each trade setup meets the criteria of your trading plan, don’t be too over cocky or too selfish.

 

  • To prevent trading too many currencies at one time, use a risk calculator to determine the appropriate position size before you enter the trade. It relieves stress to know that the amount at risk for each position you hold is safely proportioned to the size of your entire account, this is money management at work.

 

  • Always go easy on yourself: There’s a tendency for traders who take responsibility for their actions to be tough on themselves.

 

  • Never dwell over a losing trade.

 

  • This could be a good opportunity for some positive self-criticism, but don’t slam yourself too hard or too often, since even the best traders make mistakes.  When you do, learn from them quickly and then let it go.

 

  • Avoid yelling at yourself, as self-inflicted psychological damage is tough to overcome, so it’s best to avoid it entirely.

 

  • Always think like a winner.

 

  • Thinking like a winner turns you into a winner, since the sum of your thoughts has an interesting way of showing up in your life.

 

  • Thoughts are like muscles, the ones you use the most will grow to become the strongest. Work on the thoughts you want to develop and focus on them regularly, since it has the tendency to become action, action become habits, and habits determine results.

 

  • Always think of success and you are much more closer to be on your way to success.

 

  • Lastly, take every effort to relax.

 

Even though trading is serious business, the best traders know how to laugh - especially at themselves.

 

Having fun and enjoying at what you do is a very good motivator to give you focus on making money and earning it through Forex trading.

 

 

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