Ever wonder why about 95% of Forex traders lose money? After all, there are many trading methods that should work, that people swear by, yet two people using the same system can get totally different results. There are also a lot of courses, workshops, mentorships, and so on which should help many more traders make money over and over again.
Yet only a few succeed. Why?
The reason is Forex trading psychology. The reality is that no matter which method you're using, unless you're able to control your emotions, eliminate trading anxiety, and avoid silly emotional trading mistakes.
This is no joke: many losses are caused by irrational trading decisions made by traders who should know better. In fact, psychology explains why two people with the exact same trading education can get totally different trading results.
Controlling your mind and emotions may prove to be the biggest challenge you face as a trader and may help you explode your profits dramatically. Here are some tips:
1. Use stop loss and take profit prices to control your trade. This allows you to place the trade and stop dealing with it. The more you deal with a trade the more it sits in your mind.
2. Just walk away – some traders place Stop Loss and Take Profit prices but then they still look at the trade to see how it's going. Why? What's the point of a Stop Loss if you're going to watch the trade? Are you really planning to interfere with it in mid-course?
3. Use low leverages – The moment you use super-high leverages you do the potential of larger profits but also of huge losses. This can certainly drive you crazy with anxiety and lead to bad trading decisions. Until you develop a killer Forex trading psychology, stick to low leverages.
4. Limit your losses to a small part of your account by using tight stop loss prices. Then you will know that in the worse case scenario, you'll be taken out of the trade with a small loss. Nothing to really worry about.
5. Do not use a method you're not sure of. Trust me, if you're going to be trading by tips, or hunches, you're going to be thinking about each trade constantly until it closes. Use a proven, reliable, and structured method and you will be a much calmer trader.
Do not neglect your psychology. Work on your mental fitness. This is a must for long term trading success.