Some would say that Forex trading is fairly straight forward once you know how. Some argue that it is just a question of getting the strategy right and money will fall into your lap. I wonder then, if it is as easy as it sounds, why are there still comparatively few people making a profit from Forex trading?
So what is the big deal then? How can you be successful trading Forex?
The most common problem is emotional attachment to Forex trading. Money is highly prized and personally important to our lives. This attachment can be damaging to your trading psychology.
The way to overcome this is to think about trading in pips or points. Focus on the numbers! The money you make or lose will depend on your stake which will change according to each trade. Defining your trading successes according to pips or points gained or lost is a more accurate thought process. If you think in this way then the money will take care of itself.
OK, so you have a good, proven strategy that works and you are thinking about your trading according to pip gain and not monetary gain. Now what?
Do you have a clear desk area and quiet place to trade? If you have distractions, this will interfere with your focus and ability to think clearly. Make sure your desk is clear of clutter and unrelated items, just for the hours you trade and have your Forex trading note book to hand. If it helps, write down how you felt during your trading hours and before, after each trade so you have something to refer back to.
So now you have a good dedicated office space to trade, anything else to consider?
Well, yes. Make it your goal to be as automated about your Forex trading as you can. Don't attempt to second guess the market and try to understand why a currency moves in a particular way. The Forex is too large a market to analyse in this kind of detail. Look to your strategy and remember your stop loss.
Another very common problem is paralysis by analysis which is THE most damaging fault to your Forex trading profit potential.
It is only necessary to have three or four pieces of information on your charts in which you will make your trading decision. Having more information that this will make it almost impossible to act on a good quality trade set up, meaning you will have missed your optimum entry point.
So what happens if you do have too much information on your charts and end up panicking and entering into a trade too late? This again is common and yes, I am guilty too!
Forex trading is great!
This market is so vast, liquid and trending that there will be another opportunity to trade and profit just around the corner. So, the answer is to leave the trade alone and wait for the next time.
Still, it is better to miss out on a trade, than it is to trade badly and lose money!
So, we have seen that the way you think about Forex trading can possibly even determine how successful you will be. Take a little time out and consider how you see your Forex trading - do you see Pound or Dollar signs or racking up your daily pip gain? Do you have a dedicated Forex trading desk space and quiet time to trade? Be as automated as you can - try it and see if it helps.
With Forex trading, remember not to have too much analysis to do before placing a trade. You may be able to cope with this when you are paper trading and using a demo account but too much data will overwhelm your live account. Lastly, be good to yourself and do not beat yourself up for making a mistake or missing out on a trade.
I hope you have found this article useful. I have included some information about myself below with links to my free Forex training newsletter - sign up today for free training. You will need an account with a Forex broker too not forgetting to use a demo account first. One of the best Forex brokers is detailed below. Sign up to a free account and see what you think. To Your Success.
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