Forex Trading – Mind Over Matter
When it comes to Forex Trading, winning is as much as mind over matter as picking the right entry and exit point. Any forex trader with any experience that the key to success is not just the forex trading system but a combination of forex trading system, money management and psychology. Working a winning trade is very much dependent on knowing your own mind and coping with your own emotions.
Forex Trading is very much a mathematical game. You can plug in the right numbers, make the right calculations and you should come out a winner. But why it is that so many forex traders end up losing, we all have access to the same numbers, the same data, the same info, so if it is just maths then why do that the same set ups end with different results. Of course the answer lies in interpretation of the numbers but also the key thing here psychology wise is that every forex trader must understand that every set up in the foreign exchange market is completely unique.
The forex market is made up of millions of forex traders so no moment or set up is exactly the same and we have to understand that anything can happen. Your forex system gives you an edge but this edge is only an indication of a higher probability that the trade will go in your direction. Many forex traders get mixed up with their emotions in thinking that they must be right. The forex market is always right so your trade plan must included the possibility that the trade is going to be wrong and the steps that you are going to take to exit that trade with the minimum loss.
You do not have to know what the market is going to do next to make money. In order to make money in forex trading is to accept that some of your trades are going to lose and also understand that there is a random distribution of winners and losers. A losing trade is not a reflection on you and the best way to deal with losing trades is to move on. It is simply a loss, and the best way to deal with it is to stop losing money by not seeing this loss as a failure but as a learning experience.
Winning traders see loss as a way of learning something new about the forex market or themselves. Forex Trading is numbers game you have to go though the losing trades to get to the winning trades but psychology it is difficult to keep on trading when you are losing trade after trade? It is important to remember that one trade does not make or break a trader. You must focus on the trade at hand, follow the triggers that you have set up and then define yourself by what really counts the overall record.
One of the ways I keep the focus on the overall record is to split my record my trades in blocks of 10. At the end of the 10 trades I then work out the profit or loss and the win / lose ratio. This keeps my focus on the bigger picture rather than individual forex trades.