The Forex trading psychology techniques that will make you a better trader of trading is a very interesting field.
Psychology is used to help traders make better decisions and develop trading strategies. While there are a number of different strategies that can be employed when trading forex, the most successful traders are those who use a combination of techniques.
To be successful at Forex, you must have a good grasp of the psychology of trading as a whole. This article explores 10 techniques that can be used to make you a better trader, and help you increase your profitability.
#1 The Six Biggest Forex Trading Psychology Mistakes
In this first section of the article, I want to discuss some of the Forex trading psychology mistakes many new traders will come across, in their first few months of trading the markets.
There are a number of psychological techniques you can use to make yourself a better trader. However, a majority of traders still make a number of the same mistakes. There are six major mistakes that traders make, that they should be aware of:
1. Gain Shyness
This is where you resist making new trades, or wait for the perfect trade to appear. It can make you get in and out of trades too quickly. Don’t give up, gain some confidence.
2. Use Triggers
When you are in a positive state of mind, this is when you should trade. You should take control, and not let other people and their emotions affect you.
This is something that you can do by making short-term trade triggers, and creating automatic entry points, as well as using psychological techniques.
3. Using a Wrong Trading Strategy
Using a trading strategy that works in the short run is not a good strategy. Psychological traits of the human mind can make us prone to making errors in this area.
We often react faster than we think we should. Many traders make the mistake of using a short term strategy. This means that they trade for a relatively short period of time, and then they quit, before they have realized their mistake.
A better trading strategy to employ would b a supply and demand trading strategy. But unfortunately most traders are left waiting for the market to make a dramatic change that never comes, and thus they incur losses.
The market is rarely on sale. As a consequence, the position is closed, and the trader decides to close the position and leave the trade.
4. Thinking that Forex Trading is About Luck
In other words, you think that because you’re successful at Forex trading you’ve just got lucky.
The truth is that forex trading is about logic and the use of the psychology of the market. In other words, it’s about the psychology of trading.
It’s about knowing how to read a market, recognise trends, spot opportunities and use psychological techniques to beat the market.
This is exactly what you can learn with a supply and demand trading approach. To help you fast track your learning on this subject I have created a video for you to watch right now.
5. Worrying About Losses
Unlike traditional ‘stock’ trading where losses are immediately incurred by an investor, losses in the Forex markets are compounded.
Many investors who are new to trading choose to focus too much on negative and what they see as catastrophic losses. This is especially dangerous when the Forex market has been weak.
Excessive losses can cause an investor to re-evaluate their strategy. For example, a trader who buys or sells every major move lower in the market will not have a winning strategy.
Instead, one of the best tactics is to limit losses and not participate in trading when the market is falling – only trading when the market is rising.
6. Traders Judgment
Psychology is all about how you perceive the world around you. As a trader, you are faced with a wide range of conflicting information at every moment.
To do well at Forex, you need to be able to filter out what is useful and discard what is irrelevant. The easiest way to do this is to train yourself to consider every market as the same market.
Doing these six things can significantly improve your success in Forex trading. Just remember the next time you go to charts to look to take a trade you are not falling fowl of these Forex trading psychological mistakes.
Lets now move onto what techniques you can also use to make yourself a better trader with Forex trading Psychology.
#2 The Power of the Big Picture
One of the most important techniques that traders can employ is understanding the big picture.
The big picture is simply the big picture. It may sound a bit circular, but this is a powerful tool that you can use to turn a small profit into a big profit.
You may find that it is in your best interest to focus on the big picture, even when the trade seems to be “too small”. As you look out in the future, the big picture will help you determine the “big picture” of the situation.
When you recognise the problem that you are in, then it will be easier for you to determine how to escape your situation. The power of the big picture will help you make the best decision when it comes to your decision making process.
Once again, I suggest to learn a supply and demand trading methodology, which in turn will allow you to see the big picture. One for of seeing the big picture with a supply and demand strategy is with the use of top down analysis.
To learn more on how this type of top down analysis in supply and demand trading. I have created a video to teach you how to exactly apply this technique.
#3 The Emotional Forex Trading Environment
Analysts often talk about the psychological factors that affect our decisions. They have a lot to say about things such as the development of the Decision-Making Process and the Decision-Making Theory.
If you want to become a better trader, you need to understand the psychology of trading in general. It is well documented that in times of extreme fear and stress, humans become very reactive.
Many who act this way will give into their emotions, and hence act on false beliefs.
There are numerous other ways in which the psychological factors of trading affect your decisions. But to get an idea of the kind of things that affect the psychology of trading, we can start by looking at the seven Ps of Forex trading.
#4 The Power of Perspective
A good strategy will start to develop the mind-set that you have an idea of what your trading strategy is. This then causes the mind to be optimistic, and the prospect of trading will become more appealing.
The power of perspective is an important technique to use for trading, as it can help you be more confident when the time is right. This is something that you will find in a supply and demand trading strategy.
Start learning supply and demand today with this FREE basics of supply and demand mini course clicking here.
Visualisation- Visualisation is an important technique to use if you want to be successful at Forex trading.
By thinking about a trading scenario, you can transfer some of the subconscious thinking into your subconscious mind, and this enables you to make decisions that are more effective and efficient.
A good way of using a visualisation in trading is being able to see how chart colours can improve a traders focus, by clicking here to read this article now.
Focus- The first step in making good decisions when trading Forex is to focus on the task at hand.
#5 The Power of the Decision-Making Process
Most successful traders have strong decision-making processes, as it is one of the most important aspects of trading.
Forex traders use a number of different decision-making techniques, but one of the most powerful is the area of Metacognitive, or ‘mindfulness’.
Metacognitive awareness is about learning how to give your brain permission to make your decisions for you. As the name implies, when you give your brain permission to make your decisions, it will do so in a much more effective manner.
You may not be aware of this, as it is a very subtle technique. Expectancy Theory is one of the most effective cognitive processes that you can use. This technique helps you to think about how likely you are to succeed or fail in a trading situation, based on previous patterns.
#6 The Power of the Right Environment
To be successful in Forex trading, you need to be able to study market conditions, identify the conditions that occur when the market is most active, and understand how to use these conditions to your advantage.
Market conditions can come in the form of market or economic fundamentals, including the level of GDP growth or the amount of demand for a specific commodity, and can change from one day to the next.
Be wary of following the herd, because there are many markets where the herd mentality prevails.
Market psychology has been called the “witch in the matrix” of the global financial market. So it is important to pay close attention to how the market behaves in order to avoid trading into a high-risk area that the market may not want to enter.
If you want to learn how the power of the right environment… with being able to trade Forex from your home, with this complete guide I wrote then click here now to read it.
#7 The Power of the Right Decision
You want to put yourself in a situation that gives you the power to choose, not that forces you to make a choice.
This might sound a bit far fetched, but many traders have felt the frustration of being given a problem that is not of their making. You might have been handed a losing position when all you had to do was have a little patience.
Or you might have been in a position where you had to pay a penalty to break even, when all you had to do was sell the position.
If the market went up, you can say you were “too greedy“. If the market went down, you can say you “were too scared“. You can also say you were “lucky“, but if you choose to follow the “whispers” from the market, you could have doubled your money.
#8 The Power of the Right Mindset
One of the key factors that can impact your success at trading Forex is a positive mindset.
The modern world is a very competitive place. It is very difficult to stand out in a sea of successful people who do the same thing that you do.
The key to success is to develop a positive mindset that enables you to not only survive in this competitive environment, but thrive and grow. However, many traders fail to build the right mindset.
As a result, they see little value in the opportunities that this competitive landscape presents.
They focus on the negatives and remain stuck in their comfort zone, losing their motivation and progress in their career. The first step towards overcoming this mindset is to overcome its negative consequences.
#9 The Power of Self-Control
The most powerful tool in the mind of a trader is self-control.
Self-control is the ability to delay gratification and exert self-control. By being able to delay gratification you are able to work for a short-term gain and gain more than you would if you were to immediately pursue your gain.
By exerting self-control, you are able to exert discipline in your own behaviour. If you are able to delay gratification then you can make good money.
Still to this day… I have found trading with supply and demand strategy is what gives me more discipline and self control. Even more so with the use of limit orders and the set and forget trading strategy.
If you want to fast track your success to trading Forex… then with a supply and demand strategy is a optimal choice. You can start today with learning from myself with ono-on-one support. To find out more check out these courses available right now clicking here.
One of the most effective ways of determining self discipline is to know when not to trade in the markets. This being not over-trading… if you want to learn ways to avoid over trading, then this trading article will be perfect read for you by clicking here now.
Once you have the reward, you can then decide to either save the reward for a later time, or not to have the reward at all. You can either choose to save the money or invest it.
The more money you save for later, the greater the opportunity that money is going to make you. This can allow you to increase your money even more when you need it.
#10 The Power of Trading Psychology
A Forex trader must be able to act quickly and confidently, be aware of everything going on around them, and use other traders’ actions to trade ahead of the crowd.
To be successful, you must first understand the power of psychology in trading. Many successful forex traders learn to trade with a variety of trading techniques and develop unique strategies that work in different market conditions.
These psychological techniques can be used when trying to make your trading decisions and increase your profits. If you use them regularly, you can potentially increase your profits by up to 50%.
By adopting a psychological perspective, a trader can learn to master their trading tools and strategies, and use them to achieve their goals.
Even though you are a human and not a machine, you can use the power of psychology in your trading.
Your brain is an amazing tool that can help you both predict and identify patterns and trends. The more you understand about how your brain works, the more effective you can be at trading.
By looking at the psychology of trading, you can make better trading decisions and use it to your advantage. Here are some of the ways in which the power of trading psychology can be used in Forex trading:
- Using small wins as motivation.
- Using loss aversion to your advantage.
- Focus on the long-term.
- Reading the signs of the market.
There are a number of different techniques for making profit trading forex, and the best traders in the world use a combination of techniques. Most traders utilise the psychology of trading extensively, and many of the above techniques have been used by successful traders for decades.
Make use of these techniques in your Forex trading to make yourself a better trader, and increase your profitability.
What trading psychology techniques do you use? What are some of the techniques that you do not use? Think about those two questions and see if there is something in today’s article to help you to become a better trader.