How To Control Your Emotions in Trading

(Last update 10-25-2016)

As many traders have already proven, your emotions can significantly affect the outcome of your trades. Letting your emotions control your trading decisions can negatively affect how your trades will turn out, and it might even lead to the unfortunate end of your trading journey.

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To be successful in trading, you should learn not to let emotions influence your trading decisions. Failing to control one’s emotions in trading is often the biggest reason why most novice traders fail in trading.

Fortunately, there are some things you can do to make your emotions less involved in your trades. Here are some of them:

Set Stops & Limits Based On Your Analysis of the Trade, Then Leave

Do not attempt to adjust your stops and limits once you’ve initially set them, especially if you have already placed your trade. Stick to your trading plan. Trust your analysis and know that there are only two possible outcomes – it’s either you win or lose the trade. Trying to adjust your stops and limits might only ruin your trades. Plus, you should not worry that you’ll lose more than what you can afford. As long as you’re following a good risk management plan, you’re all set.

Accept The Fact That Not Every Trade is a Winning Trade

Be true to yourself and set realistic expectations. Be aware of the fact that you will not win all your trades, and you will also experience some losing trades. Most budding and inexperienced traders are having a hard time accepting this fact, which is another reason why they lose and fail. And because they’re having trouble handling losing trade, it often pushes them to do revenge trading and over trading. Such negative trading behaviors often leads to even more losses. According to one of the leading forex brokers, MXTrade, it doesn’t really matter how many trades you lost, but how much profit did you gain over the course of your forex trading journey.

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Avoid Looking at Your Profit and Loss While Trading

There is nothing else that can immediately trigger a great surge of emotions than looking at your profit and loss figure. Most traders treat their profit and loss figure as a measure of their self worth. But you must refrain from doing it, as it won’t do you any good. You should remember: you’re worth more than your profit and loss figure.

If you’re already following a solid trading plan and have set strict stops and limits, then you don’t have to worry about having severe and unwanted losses. Therefore, there is no need to check your profit and loss figure on a regular basis. It will not do you any good, and it would just negatively affect your attitude and behavior in trading. Similar to what Trade12 have mentioned, you should not let your emotions define your trading strategy.

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How to Deal with Financial Losses

For most Forex traders, the most difficult part of trading is dealing with financial losses. It is not just a matter of grief and distress, but the fact that these kinds of situations are what usually push the traders to make worst decisions, which often leads to even more losses, creating a loop of disaster that most traders recognize as uncontrollable.

Situations such as these can trigger them in doing self-destructive behaviors, such as overtrading and over aggressiveness, which are proven to do more harm than good to their trading results.

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Here are some of the things you should remember to be able to react properly in the event of a losing trade:

Accept the Fact that Not Every Trades are Winning Trades

Instead of seeing your losses as a mistake, or a failure, keep in your mind that these kinds of situations are inevitable in forex trading. Acknowledge these events as a normal part of trading. Instead of hitting yourself for losing a trade, shift your mentality for what a loss actually means. Losing a trade doesn’t mean that you’re a loser, stupid or a bad trader. Instead of grieving over your losses, try to treat them as the cost of running your “forex trading business”. All other businesses pay taxes and other bills to be able to run their businesses, but as a trader, the only thing you pay for, aside from spreads, is the losses that you take.

Do not Suddenly Increase your Trading Positions

In the event of a loss, it is only normal to feel wanting to win back the money you have lost in a trade. The first idea that might come in your mind is to increase the size of your position, thinking that it will help you to easily win back the trades you have lost. However, overtrading, or revenge trading as they may call it, may only worsen the bad situation you’re currently in. Remember, your sense of judgment and your ability to make logical decisions might be impaired at this point, so better not make decisions that can potentially lead to a bigger disaster.

See Each Trade as a Separate Event

Do not let the mistakes you made in the past negatively affect the decisions you are about to make in the future. See each trade as a separate transaction, each with own circumstances and objectives. Do not let your bad trades push you in doing irrational decisions. Instead, learn from these mistakes, and use them as a tool to make better trading decisions in the future.

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Learning how to react properly to a losing trade is one of the most important factors you need to understand if you want to be successful in forex trading. Learning how to do so can help you make the most effective decision on how to earn those losses back and earn extra profit.

Read the articles posted on our blog sites to learn useful insights that you can use to be more successful in Forex Trading. Find out who the best forex brokers are, visit Wibestbroker.com to see! 🙂

What is a Margin in Forex Trading

If you have been trading in the forex market for quite some time, you might have encountered the term “margin” at some point in your whole trading journey. You probably don’t fully understand what that term means, so we’ll gladly discuss with you what “margin” is.

If you have already read some articles that discuss about leverage, you probably know by now how it works. With just a small amount of money, you are able to control positions that are multiple times bigger than your initial investment. In case you haven’t heard about leverage yet, or have no idea what it is, you can read this article.

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Margin refers to the amount of money you need to maintain on your account balance to be able to trade on a leverage. Remember, to trade on a leverage, you must have sufficient amount of cash in your account balance relative to the size of the position you want to control.

For example, let’s say that the current leverage ratio of your broker is 1:100. It means that if you want to control a larger position, you would need to have at least 1% of the total amount of the position you want to control.  So, to be able to control a position size of $100,000, you would need to have at least $1,000 in your trading account balance.

The margin is used by your broker as a security. In the event that your position worsens and your total accumulated losses draw near your minimum maintenance margin, your broker might prompt you to deposit more money or to close your position to minimize the risk to both parties.

Expand your knowledge about the forex market and be an expert in Forex trading by reading our educational articles. Find out who the best forex brokers are, visit Wibestbroker.com to find out!

Two Top Reasons Why Most Forex Traders Fail

Why is it that there are only a few traders who achieve success in forex trading, and the majority of the traders are unable to do so and end up losing money? In this article, we will identify some of the factors that make traders fail to achieve success in forex trading.

Why Most Forex Traders Fail

Unsuccessful Traders are Looking for Easy Money

This is the unfortunate truth in the forex market. Most of the people who enter the forex market are not there because they want to learn forex trading, but because they want to earn money instantly without exerting any effort.

The main reason why most newbie forex traders have this kind of mindset is because of the false advertisements that are scattered all throughout the internet. Most of these advertisements claim that making money in Forex is easy, and it will make them rich in a short span of time. Many people fall for these claims, and it makes them enter the forex market without having the required knowledge and experience to trade properly.

The truth is, yes, it’s pretty easy to trade in the forex market. It is as easy as clicking the mouse. However, the money-making part of it isn’t that easy. Making profits and achieving consistent positive results in forex trading is quite difficult, and it requires a certain level of education, patience, discipline, commitment and such in order to be successful. In other words, yes, it is possible to achieve financial success in Forex trading, but definitely it is not easy.

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Most Traders Are Diving into Forex Trading without the Proper Education

Just like how you need to study for years and have a degree before you can be successful in any field, Forex traders also need to have extensive knowledge about forex trading in order to be successful. You cannot just dive into forex trading mindlessly then expect to be successful right away. To achieve success in forex trading, a trader should take his time to familiarize with the forex market first before he considers trading using real money. The trader must study the forex market as a whole, from the basics and fundamentals to the advanced strategies used in trading. Once you are already familiar with those things, you should not dive straight to live trading right away, you should first test the knowledge you’ve acquired using the demo accounts offered by most of the best forex brokers.

Remember, learning Forex trading is a lifelong process, and you should not stop trying to acquire new knowledge just because you think you already know it all. Just when you think you already know everything, the market will prove you wrong.

Learn more about the forex market by reading the articles posted on our educational blogs. See who the best forex brokers are, visit Wibestbroker.com to find out 🙂

What are Pullbacks in Forex

Learning about the different terminologies used in the Forex market is very important, especially if your goal is to be profitable in the said market. Just like how you need to familiarize yourself with any kinds of things in order to perform well, you need to be highly knowledgeable about the forex market in order to be successful.

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Today, we will discuss another Forex-trading term, which, if well-understood, can significantly boost the profiting potential of your trading strategies.  In this article we will tackle about what “pullbacks” are in Forex trading, and what causes them to appear in the forex market.

First of all, what is a pullback? A pullback is a term used to describe a situation where a security falls back from its highest price. This kind of movement in price might be recognized as a brief reversal of the current upward trend, indicating a slight pause in a continuing upward momentum.

Pullbacks normally occur after a security sees a significant increase in its price. Usually, they are considered as buying opportunities after a security has experienced a notable surge in its value.

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However, it is important to carefully analyze any pullback as it may be an indication of a definite trend reversal or a slight pause in the upward momentum, each having very different trading implications.

Learn more about forex trading and further refine your trading strategies by referring to our educational blogs. See who the best forex brokers are, visit Wibestbroker.com to find out!