How To Trade Forex Without Getting Too Emotional?
How To Trade Forex Without Getting Too Emotional?
Forex trading is not only about creating the right trading strategy, conducting market analysis or possessing extensive knowledge. In order to be successful, a trader must know how to control his/her emotions too. While, you may have hundreds of excellent day trading strategies or you could be fully capable of using technical indicators to your favor, if you don’t know how to keep your emotions under check, then you will face difficulties in earning profits through trading. In this article, discover how to trade forex without getting too emotional.
How to Handle Emotions? What Experienced Traders Do?
A popular concept in foreign exchange trading psychology is that one should never get to emotional when it comes to trading forex. A number of traders are highly intelligent, but they continue to lose their trades, simply because they find it difficult to control their emotions with regard to fear, greed, intense euphoria and more. Emotional trading causes you to take hasty as well as irrational decisions that further results in huge losses.
So, how do experienced traders handle their emotions?
Well, to begin with professional traders know exactly when and how to trade forex and when it is good to avoid trading. Most importantly they never get greedy when it comes to trading. This allows them to avoid many situations that can cause an emotional and stressful response. Also, when experienced traders are full of fear and not up for trading, they avoid placing their trades.
Traders who choose to put emotions aside are fully aware of all the uncertainties that exists in the market. They know that even though they are good at trading.
their predictions can go wrong at any point in time. In fact, they are always prepared to handle losses and mentally accept them to move further. This is helpful in reducing the negative emotions.
In addition to this, they don’t expect to make quick profits. Unlike novice traders, the experienced ones are never in a hurry to earn quick money. They simply place their trades with huge volume as well as lot sizes. But, remember, when one picks a huge size of lot, he/she is also risking a lot of their money. Therefore, experienced traders never indulge in this kind of emotional and risky trading. They always create the best risk management strategy and know how and when to trade the market.
Strategies for trading forex without getting emotional
Trading forex has much to do with planning and preparation. It is always a good idea to have a solid trading strategy or plan before you venture into live forex trading. This is helpful in reducing risks as well as preventing any emotions that may impact your performance.
- Start Utilizing Limit Orders: One of the first things that traders need to do is that they need to start utilizing and placing limit orders for their trades. They are an excellent way to trading forex without getting too emotional. It basically requires you to fix the pricing at which your order limit will be executed. Thus, when the price touches that particular level, then your order limit gets automatically executed. Another strategy that traders could use is that they can set a reverse limit order at areas known as pivot points. Once the pricing reaches the pivot point, it loses steam. Also when your limits have been setup, you can relax and move away from the charts in order to avoid getting too emotional.
- Turn on Automated Robots: Another excellent strategy that traders could use is that they can turn on their auto forex robots. Remember, forex robots are precise and logical by design and they are capable of crunching numbers without getting emotional about it. Thus, traders can simply set the rules for their automated robots and walk away to return after a couple of hours. It is one of the best ways to trade foreign exchange without involving emotions.
- Switch to One Trade Per Day Strategy: A good method to trade forex is to practice one trade per day strategy. Placing a few trades is something that very few people can master. The desire to always keep their position open can be tempting. But remember, it is quality over quantity which is more important in forex trading. Hence, it is always a good idea to start small. Limit your trading to one trade each day, irrespective of whether it is a loss or win. This will help you to improve your focus and you’ll start feeling less anxious about always being present in the forex market. Having a good night’s sleep between each trade makes sure any leftover emotion is gone by the next day.
- Set and Forget About Your Stop Losses & Take Profits: You can simply open your trades and walk away to ensure that emotions don’t find their way into your head. But, what if you are not knowing about your trade? Will you still get upset or emotional about it? Well, the answer is obviously a ‘No’. Hence, you can set your Stop Loss & Take Profit and you will no longer have to involve emotions into trading.
5. Trade With Micro Lots: Never initiate trading with full size lots. This is almost equal to committing suicide. In fact, it inflates your anxiety levels and can result in margin calls and other wrong decision making. You can instead lower your stakes
as well as your stress through trading of micro lots. Remember, when you trade micro lots, you can always forgive yourself for a wrongly placed trade. Also, when you are less worried about losing all your money, it is much easier to earn some real profits.
Finally, always make it a point to discontinue trading when you have suffered consecutive losses. Similarly, don’t start considering yourself invincible after consecutive wins either. It is crucial that you don’t let your emotions explode under any circumstances. Apart from this, you should also refrain from revenge trading and ensure that you keep your emotions under check.
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Remember trading is not suitable for everyone, all the material here is for study only, trading is dangerous and can cause losses.
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