Trading is not all that complicated once you learn a simple, rules-based strategy for anticipating market moves. Here HYMC, one of AtoZ Approved brokers, is offering you five trading psychology tips that you can use to avoid disasters and maximize your potential in the currency exchange market.
HYCM – If you’re an experienced forex trader, you’ll know that adopting the right trading psychology is an essential part of your success. Those new to the world of trading however, may not be aware how important it is to be disciplined and to be able to handle stress effectively.
Trading psychology is an aspect that is often overlooked in the quest to earn money which can really impact on the level of success attainable. Many forex brokers such as multi-award winning broker, HYCM, recommend that you devote some time to learning about trading psychology and several techniques that will help you achieve your financial goals in a professional way. Here are HYCM's five trading psychology tips:
Top Five Trading Psychology Tips
#1 Get Into the Right Frame of Mind
Getting into the right frame of mind is crucial for times when trades go against you. During these times, you need to be able to control your emotions and maintain a cool head. Whatever trading strategy you have employed, you need to keep your nerve and stick to your game plan. It is important that you are fully prepared before you embark on your trading activities and that you approach it in the right frame of mind. This is what will differentiate you from the many traders who lose more often than
It is important that you are fully prepared before you embark on your trading activities and that you approach it in the right frame of mind. This is what will differentiate you from the many traders who lose more often than not, or only manage to earn small rewards.
Whatever type of trader you are, you should also be able to judge when it is the right time to walk away from a trade. Analysing the markets and predicting the direction of a price movement is only one aspect of what makes a successful trader. Managing the stresses of trading is what separates great traders from the rest.
#2 Learn to Be Disciplined
The most important aspect of forex trading psychology is being strictly disciplined. It is advisable to find a trading strategy that works for you and stick with it. Seasoned traders arm themselves with a meticulous, clear-cut plan whereas amateurs trade on intuition, often instinctively and impulsively. If you find yourself making trades based simply on your hunches, you are acting impulsively and should walk away! If this happens, it is best to take time out and do something else for a while and resume your trading activities later.
#3 Make Stress Work for You
A certain level of stress can be stimulating, but you should try to ensure that you don’t break your stress threshold barrier. Smart people make stress work for them and the same applies to traders too. A small amount of stress can actually make you a better trader as it keeps you functioning at your peak. However, you should not overdo it as if you exceed your stress comfort level, you will start making fatal errors. Too much stress can trigger defensive or aggressive behaviour which can, in turn, make you reactive rather than proactive. Identifying your stress threshold is useful advice not only for trading, but in any walk of life.
#4 Keep Control of Your Emotions
In forex trading, some trades will inevitably not go in your favour. Controlling your emotions and keeping your cool is a tactic that will serve you well and give you the edge you need. This is where the psychology of winning and losing comes into play. The natural reaction of traders who lose out on a trade which has not gone as predicted is to double down on the next trade to try to make up for their losses straight away. This is a big mistake. It is important to stay calm and stick to your plan. The same advice applies when you win. You should never get over-confident and try to ride your luck. Luck does not exist but the correct strategy does!
#5 Don’t Be Too Greedy
It is important not to be greedy if you want to make a success of trading. There are many traders who do so and continue to play the same position as long as they can squeeze out every last drop of success out of it. It is of course human nature to constantly strive for something more, but in trading it is important not to become too greedy because in the majority of cases it will only bring you down. Be realistic and fair on yourself and remember that keeping level-headed is more likely to bring you success.
While this advice may be perceived as easier said than done, once you accept that trading psychology is a key part of the equation of making a success of trading, the more likely you are to start earning money. It is a tried and tested formula as any experienced trader will confirm!
Good forex brokers such as HYCM usually include trading psychology in their educational tools. Be sure to check out our Trading Psychology video in our Education Suite.