Trading Psychology

HELLO, IN THIS BOOK WE WILL BE COVERING ONLY TRADING PSYCHOLOGY.

INFORMATION IN THIS BOOK WAS COLLECTED FROM INTERNET AND SOME OF THE BEST
TRADING PSYCHOLOGY BOOKS

PLEASE READ ALL OF THIS BOOK , YOU WILL THANK ME LATER

 Trading Psychology
Forex traders have to not only compete with other traders in the forex market but also
with themselves. Oftentimes as a Forex trader, you will be your own worst enemy.
We, as humans, are naturally emotional. Our egos want to be validated— we want to
prove to ourselves that we know what we are doing and we are capable of taking care
of ourselves. We also have a natural instinct to survive. All of these emotions and
instincts can combine to provide us with trading successes every now and then. Most
of the time, however, our emotions get the best of us and lead us to trading losses
unless we learn to control them. Many Forex traders believe it would be ideal if you
could completely divorce yourself from your emotions. Unfortunately, that is next to
impossible, and some of your emotions may actually help improve your trading
success. The best thing you can do for yourself is learn to understand yourself as a
trader. Identify your strengths and your weakness and pick a trading style that is right
for you.
In this section, you will learn about the following four psychological biases that
may be affecting your trading results and what you can do to overcome them:
• Overconfidence bias
• Confirmation bias
• Anchoring bias
• Loss aversion bias
Overconfidence Bias
Overconfidence bias is an over-inflated belief in your skills as a Forex trader. If
you ever find yourself thinking to yourself that you have got everything figured
out, that you have nothing more to learn and money is yours for the taking in the
forex market, you probably suffer from an overconfidence bias.
Dangers of Overconfidence
Overconfident traders tend to get themselves into trouble by trading too frequently or
by placing extremely large trades as they go for the home run. Inevitably, an
overconfident trader will end up either trading in and out and in and out of trades—
churning the trader‘s account—or risking too much on the one trade that goes bad
and wipes out most of the trader‘s account.
Are You Overconfident?
If you want to know if you have any overconfidence tendencies, ask yourself, ―Have
I ever jumped right back into a trade I had just been stopped out of not because I saw
another entry opportunity but because I couldn‘t believe I was wrong?‖ You can
also ask yourself, ―Have I ever put more on a trade than I normally would because I
was just sure this trade was going to be the one?‖ If you have, you need to be aware
of those tendencies
Overcoming Overconfidence
The best way to overcome an overconfidence bias is to establish a strict set of risk-
management rules. These rules
should at least cover how many trades you will allow yourself to be in at one time,
how much of your account you are willing to risk on any one trade and how much of
your account are you willing to lose before you take a break from trading and
re-evaluate your trading strategy. By limiting the number of trades you are willing to
be in and the amount of risk you are willing to take, you can spread your risk out
evenly over your portfolio.
Anchoring Bias
Anchoring bias is a propensity to believe that the future is going to look extremely
similar to the status quo. When you anchor yourself too closely to the present, you
fail to see the dramatic changes that are possible as currency pairs fluctuate and the
underlying fundamentals shift.
Dangers of Anchoring
Anchored traders tend to get themselves into trouble by convincing themselves that
the current trend will never end and a reversal in the economic strength of a particular
country is next to impossible. Alas, they become emotionally attached to the previous
trend of a currency pair, and they continue to place trades that go against the new,
current trend. With each trade, they lose more and more money because they are
bucking the trend.
Are You Anchoring?
If you want to know if you have any anchoring tendencies, ask yourself, ―Have I
ever lost money because I couldn‘t accept that the trend had ended?‖ If you have,
you need to be aware of that tendency.
Overcoming Anchoring
The best way to overcome anchoring is to look at multiple time frames on your
charts. If you usually trade on the hourly charts, take a look at the daily and weekly
charts every now and then to see where some of the longer-term levels of support and
resistance are and what the longer-term trends look like. You should also take a look
at the shorter-term charts to see when the shorter-term trends are reversing.
Broadening your perspective will help you avoid anchoring yourself to any one
point.

Confirmation Bias
Confirmation bias is a propensity to look only for the information that confirms the
beliefs that you already have. For instance, if you believe the NASDAQ is going to
go up, you will look for the news, the technical indicators and the fundamental factors
that support your belief.

Dangers of Seeking Confirmation

Traders who over-actively pursue confirmation of their beliefs tend to miss key
warning signs that would normally have protected them from unnecessary losses. In
an attempt to build a case for their beliefs, traders miss the facts. Ultimately, this
leads to them fighting the trend and losing money with each ill-conceived trade.

Do You Seek Confirmation?

If you want to know if you have any confirmation bias tendencies, ask yourself,
―How often do I look for signs that I may be wrong in my analysis?‖ If your
answer is rarely or never, you may be a confirmation seeker, and you need to be
aware of those tendencies.
Overcoming Confirmation Bias
The best way to overcome confirmation bias is to find someone, or a group of
people, you can talk to about your trading. Hopefully the person, or people, you talk
about your trading with will not always agree with you. Talking with traders with
diverse perspectives and ideas will help you look at your trades from multiple
angles. Sometimes you will strengthen your convictions by talking with other
traders. Other times, talking with your trading partner will cause you to change your
mind. Keeping an open mind will help you catch new moves and avoid holding on
too long to past beliefs.
Loss Aversion Bias
Loss aversion bias is based on the theory that the pain that is caused by losing
$1,000(14,000 ZAR) is greater than the joy that comes from gaining $1,000 (14,000
ZAR). In other words, fear is a more powerful motivator than greed.

Dangers of Loss Aversion

Traders who fear losses are much more likely to hold onto losing positions than
traders who are able to accept short-term losses and move onto other, more-
profitable trades. Holding onto losing positions jeopardizes the stability of your
portfolio by not only incurring losses but also keeping you out of better trades.

Do You Fear Losses?

If you want to know if you have any loss aversion tendencies, ask yourself, ―Have I
ever held onto a losing trade past the point where I knew I should have gotten out
because I hoped the currency pair would turn around and wipe out my losses?‖ If you
have, you need to be aware of those tendencies.

Overcoming Loss Aversion

The best way to overcome a loss aversion bias is to trade with physically set stop loss
orders. Many traders tell themselves that they will trade with a mental stop loss—a
stop loss level that they think about and promise themselves they will act on if the
currency pair ever reaches it. All too Often, however, traders fail to act on their
mental stop losses. They let their emotions get in the way, and they start rationalizing
their choice to stay in the trade until it turns around. As soon as you
enter a trade, you should set your stop loss order. Take your emotions out of the
picture.
Fear of Missing Out
FOMO stands for "Fear of Missing Out" and a FOMO trade is simply a trade you
enter out of fear of missing the move. When a stock experiences sudden volatility, it
can make some traders very anxious. You may feel like you are faced with an
opportunity that will not present itself again, and, of course, you don't want to miss
the move. Due to the high volatility, you are forced to make a fast decision: do I enter
or leave it alone?

Sensory Derived Bias:

We pull information from around us to form an opinion or bias and this allows us to
function and learn, in many cases. However, we must realize that, while we may
believe we are forming an opinion based on factual evidence, often we are not. If a
trader watches the business news each day and forms an opinion that the market is
going higher, based on all the available information, he may feel he came to this
conclusion by stripping away the media personnel's opinions and only listening to
the facts. However, this trader still may face a problem: When the source of our
information is biased, our own bias will be affected by that. Even facts can be
presented to give credence to the bias or opinion, but we must remember there is
always another side to the story. Furthermore, constant exposure to a single opinion
or viewpoint will lead individuals to believe that that is the only practical stance on
the subject. Since they are deprived of counterevidence, their opinion will be biased
by the available information.
Avoiding the Vague:
Also known as fear of the unknown, avoiding what may occur, or what is not totally
clear to us, prevents us from doing many things and can keep us locked in an
unprofitable state. While it may sound ridiculous to some, traders may actually fear
making money. They may not be aware of it consciously, but traders often worry
about expanding their comfort zone, or simply fear that their profits will be taken
away through taxes. Inevitably, this may lead to self-sabotage. Another source of
bias may come from trading only in the industry with which one is most familiar,
even if that industry has been, and is predicted to continue, declining. The trader is
avoiding an outcome because of the uncertainty associated with the investment.
 Another common tendency relates to holding onto the losers too long, while selling
the winners too quickly. When prices fluctuate we must factor in the magnitude of the
movement, to determine if the change is due to noise or is the result of a fundamental
effect. Pulling out of trades too quickly often results from ignoring the trend of the
security, as investors adopt a risk-averse mentality. On the other hand, when
investors experience a loss, they often become risk seekers, resulting in an over held
losing position. These deviations from rational behaviour lead to irrational actions,
causing investors to miss out on potential gains, due to psychological biases.
Tangibility of Anticipation:
Anticipation is a powerful feeling. Anticipation is often associated with an "I want"
or "I need" type of mentality. What we anticipate coming is some time in the future,
but the feeling of anticipation is here now and it can be an enjoyable emotion. It can
be so enjoyable, in fact, that we make feeling anticipation our focus, instead of
achieving what it is we are anticipating in the first place. Knowing that a million
dollars is going to show up on your doorstep tomorrow would create a fantastic
feeling of excitement and anticipation. It is possible to become "addicted" to this
feeling and thus put off taking payment.
While easy money delivered to the door is more than likely to be grabbed by the
eager homeowner, when things are not quite as easy to come by, we can fall into
using the feeling of anticipation as a consolation prize. Watching billions of dollars
change hands each day, but not having the confidence to follow a plan and take a
chunk of the money, can mean we subconsciously decided that dreaming about the
profits is good enough. We want to be profitable, but "wanting" has become our goal,
not profitability.
What to Do About It
Once we are aware that we may be affected by our own psychology, we realize it
may affect our trading on a subconscious level. Awareness is often enough to
inspire change, if we do in fact work to improve our trading.
There are several things we can do to overcome our psychological roadblocks,
beginning with removing inputs that are obviously biased. Charts don't lie, but our
perceptions of them may. We stand the best chance of success if we remain objective
and focus on simple strategies that extract profits from price movements. Many great
traders avoid the opinions of others, when it comes to the market and realize when an
opinion may be affecting their trading.
Knowing how the markets operate and move will help us overcome our fear, or
greed, while in trades. When we feel we have entered unknown territory where we
don't know the outcome, we make mistakes. However, if we have a firm
understanding, at least probabilistically, of how the markets move, we can base our
actions on objective decision making.
Finally, we need to lay out what we really want, why we want it and how we are
going to get there. Listen in on the thoughts that run through your head right when
you make a mistake, and think about the belief behind it—then work to change that
belief in your everyday life.
The Problem of System Hopping or Switching
One of the major stumbling blocks all traders face at some time is the nasty habit of
switching systems whenever they suffer a string of losses.
It was certainly a problem for me in the past, borne out by the many excellent
strategies and systems on this site, that I tried out at one time or another, only to
move on when the inevitable losing streak arrived.
Why do we do this? It comes down to what is known as Regency Bias. This
concept describes the way we feel about our current trading.
If we‘ve just had a string of wins, we are highly likely to consider ourselves Gun
Traders who can do no wrong! In this frame of mind we are more likely to stick
with the current system we are using.
However, if we have a string of losers, our frame of mind changes radically and
rapidly. Doubt sets in, compounded by Fear. Our heart rate elevates, we kick
ourselves over trading decisions, and above all we begin to question the validity of
the system or strategy we are currently employing. We begin to wonder:
―Hey, it‘s just lost five times in a row, that can‘t be good! Maybe there‘s
something out there that hardly ever loses?‖
So we go on and do our research, choose another system and begin to trade it. At
first our suspicions about the last system are confirmed as we rack up a series of
wins with the new system. We congratulate ourselves for a wise decision. We are
incredibly intelligent for having found this new system that hardly ever loses!
Wow, we‘ve really arrived as a trader now.…
And of course, when the inevitable string of losses comes along – as it always does
with ANY system – the old cycle of doubt and fear sets in once more and we go
looking for yet another Holy Grail system to trade. We have sadly and pathetically
come to resemble a hamster on a wheel, a long fall from the state of grace of Master
Trader!
The way to escape from this horrible cycle is a process of:
1. Back testing. What you who are about to test must have shown some kind of
promise in back testing. Back testing is a complex concept that‘s really outside the
scope of this post – which concerns itself with the next step in the process – but you
must have some kind of confidence that the strategy you‘re about to test may
produce results.
Though back testing is outside the scope of this post, I will say that I usually just
rely on a manual, ―eyeball‖ approach these days, as the parameters I use such as
pivots, round numbers, support and resistance levels etc. can be easily plotted on
past charts.
2. Forward Testing. Otherwise known as live trading, using either a demo account,
or preferably a live micro account (generally speaking, live accounts give more
accurate and reliable results).
3. Strategy Verification. We do this by logging the results of all our trades, most
commonly in an Excel spreadsheet. I have included an example from my own back
testing verification below.
4. Trade or Discard. Based on our analysis of the trades logged in the above step,
we decide whether to persist with the strategy or not.
Note that sometimes even if a strategy proves to be profitable over the period of
testing and verification, we may choose to discard it anyway. For example, if we
chose to test the strategy based on a certain time frame that we were able to trade,
and now we are no longer able to trade that timeframe, it would be foolish to persist
with the strategy.
Another reason for discarding a profitable strategy at this stage is that, though it
may have shown a profit, you may judge the return on your effort too poor to
continue. This was the case with the strategy depicted in my own trading log
below. I‘ve included screenshots of the two relevant Excel spreadsheet tabs.
The strategy was for an automated system I had devised, based around news trading.
In some ways it worked quite well. For example, I was able to leave trades in the
market overnight (my time) for news events that occurred in the New York
session. Overall, these trades proved profitable, even when I left orders in the
market with the automated strategy, just prior to Non-Farm Payrolls data releases.
However, in the end I discarded this strategy because once I had done the 100
trades required to ―prove/disprove‖ the approach, I realised I‘d be better off
(mostly) if I traded the events manually.
The bottom line is this: never stop trading a strategy just because it‘s losing. Have
some methodology in place that you use with every trade you take, that verifies
whether or not the strategy is a loser over the longer term.
Trading psychology tips for beginners
If you‘re a new trader trying to make sense of forex market movements and making
money while you‘re at it, the whole experience can be exciting and overwhelming at
the same time. This is why it is important to work on your trading psychology from
the very start of your trading endeavour.
Perhaps one of the most important things to remember when you‘re starting out is to
just take it easy. It can be tempting to try all technical indicators all at once or trade
every single top-tier news release out there, but you might run the risk of overdoing
it and feeling burned out later on. Stick with what you‘re comfortable with and just
add what you learn along the way.
Another thing to keep in mind is to know yourself. Make sure you come up with a
trading strategy that is in tune with your personality and your risk preferences. For
instance, if you thrive in fast-paced movements and if you‘re comfortable with
managing many open positions at once, then you could look into scalp trading
techniques. On the other hand, if you get easily stressed with quick price movements
and would rather just check your charts every now and then, swing trading might be
better for you.
Lifestyle considerations must also be taken into account when coming up with a
trading strategy so as to not set yourself up for stress or failure. If you are planning
on trading part-time while holding on to your day job, then you could look into
trading techniques that won‘t require you to be in front of your trading platform all
the time.
Easier said than done is the trading psychology recommendation to stay on top of
your emotions. After all, we are human and we can‘t help but sometimes give in to
poor decision-making when our minds are clouded with fear or greed. The trick in
forex trading is to keep an objective mind set to be able to focus on what the
market is telling you instead of letting emotions cloud your judgment.
This particular skill takes time to master and even experienced traders can still be
guilty of being too emotional, which is why it is also important to constantly
remind yourself to isolate these emotions when trading.
Staying disciplined goes hand in hand with trading psychology, as this enables you
to stick to your strategy and risk management rules. After all, it can be tempting to
deviate from your plan when the markets are going haywire but with the right mind
set and discipline, you should be able to focus on the right action steps to take.
Lastly, it is important to note that keeping a trade journal is one of the best ways to
work on your trading psychology, and this is a habit that must be started by beginner
traders from the very start. This allows you to keep track of your profit and loss,
trading decisions, trade strategies, and even the factors that influenced your
decisions. In analysing these, you can be able to identify your strengths and build on
them while working on your weaknesses.
How to make the most of your Demo Trading
Beginner traders are often recommended to start with a demo trading account
before risking real money on a live account. However, there are also many who
question whether this step is necessary as demo trading has several stark
differences with live trading, particularly in the trading psychology aspect.
Despite that, demo trading is a good way to practice one‘s newly learned trading
skills without the risk of losing real money. It is also an effective method of putting a
new trade strategy to the test and monitoring its results before making adjustments.
While demo trading does not exactly replicate the emotions and stress involved in
live trading, there are several ways to make the most out of this experience.
The main difference in demo trading and live trading is that the latter typically has
more pain involved when one loses a trade. Not only did you have a wrong or poorly
implemented trade idea, but you also lost real money in the process. When it comes to
demo trading, even though there is no real money involved yet, you can try to feel the
pain by coming up with real-life penalties when you lose a trade. For instance, you
can have a small jar wherein you put a dollar for every lost trade so that you are
reminded that trading decisions have a real money aspect tied to it.
 Another way to make the demo experience feel more like live trading is to assign
grades to each aspect of the trade. You can evaluate your entries and exits, whether
you were able to press your advantage or cut your losses, or if you stuck to your risk
management rules. Deductions can apply if you gave in to emotions and deviated
from your plan in the middle of volatile market movements. From there, you can be
more conscious of your decision-making and apply the same kind of self-assessment
when you are trading live.
Bear in mind though that the temptation to give in to fear of losing or greed is much
stronger when real money is on the line so it is important to master this aspect of
trading psychology on a demo level then simply repeat the process even when real
money is being traded.
As discussed in the earlier section, it is crucial to keep a trading journal even as you
are trading demo. This way you can easily identify your usual mistakes and
weaknesses, then be able to work on them before transitioning to live trading. You
can list your emotions involved when you make a trade decision or change in plans,
then be in a better position to evaluate if you made the proper action or if you just
had a panic reaction.
When you are able to take the leap and start trading live, just remember all the
lessons you learned in demo trading and don‘t be too overwhelmed about risking
real money. As mentioned earlier, it is crucial in trading psychology to focus on the
process and not the profits as you are learning the ropes.
Are you ready to trade real money?
If you think you are finally ready to make the transition from demo trading to having
a live account, then you should also be psychologically prepared for it. Not only will
you have real money on the line, your emotions might also have a bigger impact on
your trading decisions.
A good rule of thumb to remember before going from demo to live is to ensure that
you have had a good trading run for at least three months. Of course this time frame
can vary depending on how much time you spent learning about trading but it is a
reasonable length of time to make sure that you have had a strong grasp of basic
trading concepts and are able to make consistent profits. This can also ensure
that you‘ve spent a considerable amount of time getting in sync with market
movements and that you can hold your own even when real money is at risk.
Another factor to consider is whether or not you‘ve tried various trading styles and
found the most appropriate one for you. As mentioned in an earlier section, this has
 to do with your personality and lifestyle, as you should be using a strategy that you
are comfortable with. When you have found the trading style that suits you, it will
make for a smoother transition from demo to live, as you simply have to go for
consistent execution instead of having to experiment with different trading
techniques with a live account.
To make sure that you will be keeping track of your improvements both in profits and
in your trading mind set, you should also have a trading journal up for review when
you transition from demo to live. Before forking over your hard-earned cash, it
would be a good practice to have a quick review of your trading journal from demo to
remind yourself of which aspects of your trading you can still improve on and to take
note of the strengths you should play.
Lastly, you can gain enough confidence to carry on with your demo success in live
trading if you have the numbers to back it up. Unless you‘ve been able to make
consistent gains and have a good expectancy in demo trading, you might just wind
up doubting your trade decisions when you start trading live. This is why it is crucial
to get your risk management practices right and have rules for maximizing your
winners and minimizing your losses. With a positive track record, you can be able to
place full trust in your trading strategies and be confident to put this to use on a live
account.
Psychological differences of demo and live trading
Some beginner traders in their first few months of live trading end up surprised that
they are having difficulties replicating their success in demo trading to a real
account. This is perhaps a result of underestimating the psychological differences
between demo and live trading and not being able to make the proper preparations
for it.
For one, having real money on the line can mean stronger emotions. While you were
able to master controlling your fear of losing or your greed while demo trading, these
emotions can have a larger impact when you are trading a live account. After all, it is
not easy watching real money being lost during a losing trade so the temptation to
give in to these emotions can be stronger. Some traders might even wind up reverting
to their old trading habits of setting stops too tight or not sticking to one‘s trade plan
when starting out with live trading.

This can be avoided by treating your demo trading mistakes as though they happened
on a live account. Although demo losses don‘t translate to losing money,
you can come up with penalties when you make trading mistakes such as putting
money in a jar or keeping a tally of your losing trades.
The pressure to make up for a losing streak on a live account is also considerably
stronger compared to having a drawdown on demo. When you are trading a live
account, each consecutive losing trade becomes all the more painful since you
know that you will have to come up with really good trade ideas just to make the
money back. In demo, while the losses might hurt your pride, you know in the back
of your mind that you can simply reset your account and start over without much
damage.
Lack of proper psychological preparation can also lead traders to overtrade when
they move over from demo to live. For some, this can be a result of a winning
streak that makes them overconfident and forget all about trading discipline and
proper execution. Overleveraging might also be a problem if one hasn‘t mastered
proper position sizing and risk management techniques.
Remember that success in demo trading isn‘t a guarantee that your live trading
experience will be profitable. At the start, it may be a bit of a challenge to adjust to
your emotions and stay focused, but maintaining a solid mind set and working on
consistent execution can be the key to long-term profits.
Keeping a trading journal that notes your decisions and rationale behind them can
help you master trading psychology and take the lessons you learned from demo
trading to live trading. Having a strong foundation in forex concepts and being able to
keep a calm mind even in a volatile market environment can help you achieve a more
seamless transition from demo to live trading.
Tips for part-time forex traders
Since forex is a 24-hour market, trading can be done part-time on top of a full-time
job. However, it is also important to be psychologically prepared for this trading
approach as it requires some lifestyle considerations and adjustments. Without
making these, you might be setting yourself up to fail and letting the frustration take
its toll on your mind set.

First, consider how much time you can spend trading. If you have a full-time job
that has a regular schedule, then you can set your trading hours before or after
work. It is not recommended that you trade while you are working since this will
lead to concentration issues, aside from being unethical and irresponsible.
Instead, make sure you set a trading schedule and you stick to it. By having a pre-
defined time of when you will look at the charts and execute trades, you can also
adapt your trading strategy to it. If you are able to trade during session overlaps, then
you could focus on day trades that can be entered and exited in a short span of time
and with more potential for volatility. If your trading schedule happens to fall on
periods of lower volatility such as the middle of the Asian trading session, then you
might want to consider taking longer-term setups that can be kept open for a long
while and monitored every now and then.
Second, make sure you are able to maximize your trading hours. Since you have a
limited time to spend on watching the markets, you shouldn‘t stay idle when you
can‘t spot a trade setup. You can use this time to read more on the market happenings
or to expand your trading skill set. You can also broaden your horizons and look into
currency pairs that you don‘t normally trade to see if there are profit opportunities
there as well.
Third, learn how to prioritize. Again, with a limited amount of time spent watching
the markets and taking trades, you should be able to determine which tasks need
more of your attention. You can come up with a simple schedule to stick to in order to
ensure that all bases are covered.
For instance, you can start your trading time by spending a few minutes on research
and fundamental analysis. During this time, you can check out the economic calendar
to mark the upcoming reports that you can trade and potential event risks to your
open trade. After that, you can spend time browsing through the forex charts to spot
any technical setups that are aligned with your fundamental biases. Don‘t forget to
allot a few minutes to trade journaling since these notes will definitely come in handy
later on as you review your trades.

Lastly, build on what you‘ve learned by thinking of ways to improve. Forex trading is
a never-ending learning experience, as the market environment often shifts. You
should be able to have a trading strategy that can adapt to these changes or at least a
mind-set that can be flexible to dynamic market factors. Make sure that you review
the trading psychology lessons you‘ve learned throughout your experience and make
mental notes on the things you need to remember and work on while trading.
Are you ready to be a full-time trader?
While the prospect of making money on the forex market full-time seems like a
very enticing career for many, it is not for everyone. It takes a specific kind of
individual with certain must-have traits in order to succeed in this battlefield.
Of course this is not to discourage those who are looking to pursue trading as a
full-time career, as some believe that these traits can be developed. For instance, the
Turtle Traders came from various backgrounds and were trained under a specialized
forex trading method, eventually achieving success in the field. In fact, many believe
that successful traders are made, not born.
It is not an easy feat though, as statistics reveal that nearly 90% of traders wind up
failing. For the fortunate 10%, the road to forex trading success probably hasn‘t
been all too easy, as it requires a lot of patience, fortitude and discipline to make it.
For one, having enough capital is a huge consideration, as it would take a reasonable
trading balance to be able to generate returns enough to sustain a living if you‘re
trading full-time. Bear in mind that there will be losing days and there will be
instances when the markets barely move, so the profit potential is not always
guaranteed.
Another thing to consider if you‘re thinking of trading full-time is whether or not
you are able to generate consistent returns in your part-time forex trading stint. If
you have the track record to show that you can be able to stay profitable in the
long-run, then you have a better shot at making it full-time.
Aside from that, you have to keep in mind that the pressure to make money in full-
time trading is considerably stronger. If you‘ve had trouble adjusting to the pressure
and staying focused when transitioning from demo to live trading, then you might
not be mentally strong enough to withstand the shift from part-time to full-time
trading.

As mentioned earlier, this is not to discourage those looking to trade full-time but
rather to disclose the risks involved. If you feel that you are not emotionally or
mentally ready yet, you can always take your time to develop your skills or to train
your mind in order to be in a better position to trade full-time. As always, the
importance of keeping a trade journal comes in, as this will allow you to keep track of
your progress and pinpoint areas which you can improve on.
 It might help to think of full-time trading as a business, wherein you evaluate the
strengths, weaknesses, opportunities, and threats. Once these have been
determined, you can better align your skills in order to come up with a good
strategy to stay profitable. You need to be aware of the risks involved so that you
can prepare for these beforehand and limit your exposure.
Above all, it is important to be honest with your self-assessment before making the
transition from part-time to full-time trading. There‘s no use fooling yourself or
being in denial about the skills you haven‘t mastered, as these can lead to costly
mistakes. Instead, examine your motivations for going full-time in forex trading and
make sure you set reasonable expectations for yourself.
The importance of keeping a trade journal
While the idea of keeping track of every single trade idea, decision, and outcome
seems tedious, it could hold the key for forex trading consistency and long-term
profitability. Here‘s why it is important to develop the habit of maintaining a trade
journal and its benefits for your trading psychology.
A complete trading journal not only contains the pertinent trade details, such as entry
and exit prices or the number of pips gained or lost, but it should also indicate notes
on your trade decisions. This covers trading psychology details such as your
confidence in taking the trade setup, your reaction to expected and unexpected
market events, your decisions midway through the trade and the rationale for those.
By keeping track of these, you can gain better insight on how your emotions and
mind set are influencing your trading performance.
Keeping a trade journal is similar to a professional athlete taping games and
reviewing them. Too often there are details and plays missed when simply trying to
recall a game from memory so watching a play-by-play tape could reveal crucial
strategies or tendencies that can lead to improvements. Whether its football,
basketball, or even performance sports such as gymnastics, elite athletes often refer
to tapes to analyse their performance and figure out what they need to work on.
When it comes to forex trading, some traders also try to have a recording of their
trades, particularly those who are into scalp trading. Others resort to having a
trading mentor or coach who can provide a rundown of how a trade played out and
the decisions that influenced profitability. For those who don‘t have the resources or
time to do so, keeping a detailed trade journal is a viable alternative.
 In reviewing a trade journal, you can be able monitor the common mistakes you
make and take specific action steps to avoid them. For instance, if you notice that
you are setting your stop losses too tight when trading news releases, you can be
able to remind yourself to add more leeway next time. If you notice that entering
trades at market makes you more nervous and uneasy with your trading decisions,
then you can make it a point to go for limit entries on your next trades to ensure that
you have a better and more relaxed trading mind set.
From there, you can gain more confidence in taking your usual trade setups or
sticking to your trade strategies. Having a trade journal also allows you to keep
track of the numbers and statistics, adding to the assurance that your plan can
generate consistent profits. With that kind of confidence, you can focus your
energy into executing properly instead of doubting your trade decisions.
Components of a complete trading journal
Much has been said about the importance of having a trade journal but it is also
necessary to emphasize that its efficiency hinges on its completeness. Not only must
it have the pertinent trade details such as entry and exit prices, but it should also
have notes on your fundamental bias and your decision-making process. Here are
some of the components that should be part of your trade journal.
First, the trade-specific details such as the entry and exit areas must be discussed. It is
not enough to list down the prices where you plan to open or close your trade, as you
should also mention why you are watching those particular levels. To take it a step
further, you should also include various price scenarios or the potential impact of
upcoming events to list levels that would be optimal to cut losses or add to your
position.
Next, your fundamental bias for taking the trade must also be written down. This
would allow you to have a clearer insight and would give you something to review
later on. Did you miss anything in your analysis? Was your bias spot on or
completely off? Were there any changes that you should‘ve adjusted to? These are
just some of the questions from which you can draw observations and trading
lessons from.
Aside from that, your trading journal should also have a risk management portion.
Apart from detailing how much you plan on risking per trade, you can also include
your strategies if you will scale in or scale out later on. This way, you can be able to
plan ahead and avoid panicking when price action starts moving too quickly.
 Another helpful component of your trade journal is a list of the upcoming event
risks. This will help you know what to watch out for if you‘re going to keep your
trade open for a few days instead of being blindsided when an economic event
blows your trade out of the water. This can also help you identify opportunities in
which you can add to your position and maximize your profit potential.
Of course it is not enough to just write down your pre-trade thoughts, as you should
also input your decision-making process throughout the trade. While your trade is
open, you might have some adjustments that need to be made so you should also note
these down and how it influenced the result later on. Were you able to cut losses just
in time? Was there an unforeseen event that you were able to
adapt quickly to? By taking note of these actions that occur while your trade is
open, you can be able to fine-tune your trade execution process later on.
Lastly, it is also crucial to have a post-mortem of your trade. This part should indicate
whether or not you were happy with your trade idea and decisions and if you need to
make changes in your next trade setups. In fact, this might be one of the most
important parts of your trade journal as you make sense of what happened in the
markets and how you handled your trade.
It is important to have a review of each trade and your overall trading performance
so that you can see the details while assessing the bigger picture. Only then can you
be able to determine which areas you need to improve on or what you are doing
right, then keep improving your trade performance as you go along.
How to learn from your losses
As discussed in the previous section, it is very important to have a thorough review of
your trade in order to determine what you did wrong or what you did right. In
case the trade turns out to be a losing one, you can still benefit from it by figuring
out what you could‘ve done better and applying these lessons to your future trades.
While it‘s true that it can be painful to review a losing trade, remember that
experience is the best teacher and that your losses can be a good reminder of what you
should avoid later on. Did you fail to watch an important economic release that
wound up in a price reversal? Were you unable to adjust your stop loss in time? Were
you too greedy with your profit targets? By remembering these mistakes, you can
remind yourself not to repeat them in your next setups.
Most losing trades stem from either a completely wrong price bias or improper trade
execution. The former one may be easier to correct as it could simply demand better
analysis or a more precise outlook for future economic releases. On the other
 hand, the latter could take time to develop as it requires the formation of better
trading habits.
Quite too often, human emotion interferes with proper trade execution, as the fear of
losing can lead you to set stop losses that are too tight or to lock in profits too early
and miss out on larger moves. Meanwhile, greed or overconfidence can tempt you to
set profit targets that are too ambitious or to overtrade. What‘s important in your
learning process and trade journaling is that you note down your motivations
for setting your stops or targets or for making trade adjustments midway so that
you are able to identify behavioural patterns that you might need to correct.
Another factor that can interfere with trade execution is indifference, particularly
when you are in a long losing streak and you feel numb to consecutive losses. This
can be damaging to your trading psychology and may be a sign that you need to take
some time off instead of forcing your trades. When you spot this kind of thought
pattern in your losing trades, you should remind yourself to take it easy or take a step
back from trading for a while.
Some say that the worst can bring out the best when it comes to the learning process.
While a terrible trade can have some sort of trauma on a trader, it can also be an
excellent reminder of how a trading mistake can impact profitability and one‘s mind
set.
How to learn from your winning trades
While the previous section focused on how you can learn from your losing trades,
this article breaks down how you can learn from winning ones. More often than not,
winning trades contain valuable lessons that a trader can build on to get more profits
later on.
While losing traders offer the chance to learn from your mistakes, winning trades
allow you to identify your strengths. In noting what you did right, you can remind
yourself of the good trading habits that you can keep in order to improve your
profitability.
In some cases though, consecutive winning trades can lead to overconfidence,
which can delude a trader into thinking that he no longer has anything new to learn.
This is a dangerous assumption, as it might lead to overtrading or overleveraging.
Always remind yourself to assess your recent trades and even try do identify if you
could‘ve done anything better.
 Even if a trade turns out to be a winning one, there may be a few opportunities
missed or trading rules not followed. Just because you wound up with profits
doesn‘t mean that your execution was perfect. In any case, it is important for your
long-term consistency and profitability to review your trades and decision-making
process.
What‘s great about reviewing winning trades is that you are able to keep a positive
mind set in trading. If you are in a losing streak, go over your previous winning
trades and figure out why you were able to make profits off those. Was it a result of
good foresight? Were you able to adjust more quickly to changing market factors?
Was your analysis more thorough?
As you review your winning trades or compare it to losing ones, it might also be
helpful to keep a list of lessons learned. That way, you will have a constant reminder
of the takeaways from each trade and come up with methods to do better in your
next trades. You can even add to your trading strategy rules or make the necessary
adjustments.
Keeping track of your winning trades also reminds you to maximize your profit
potential. For instance, if you had been comfortable with a 1:1 return-on-risk in the
past, you can take a look at your winners and see if you could‘ve made a 2:1 or 3:1
return-on-risk with a few adjustments. If you are consistently profitable with a
particular strategy, you can also gradually adjust your risk for that kind of trade
setup.
Always keep in mind that there is no end to learning in the forex market. Even if you
are able to come up with one winning trade after another, there will always be a way
to do better and lessons to learn so that you can sustain your progress. Market
conditions may change from time to time but if you were able to build on your
strengths, you can retain the same level of confidence in your skills and be in a better
to position to make adjustments.
How to deal with forex trading stress
Given the fast-paced nature of the forex market and its potential to result in monetary
losses, it is not surprising that a lot of traders suffer from stress. After all, the idea of
losing real money in a forex trade can lead to frustration and in some cases, anger
aimed at oneself or the markets.
During these times of stress, traders can be prone to not thinking clearly or making
plenty of trading mistakes. Proper habits in trading execution might be thrown out
the window when one is desperate to make money back after a series of losing
 trades. A trader might wind up overtrading in an effort to bounce back from a loss,
failing to focus on adjustments that might need to be made.
When you feel that you are stressed because of trading, you could try to take a step
back to identify what‘s causing your stress. Is it because you have been losing trades
one after another? Are you missing out on key market events? Either way, you can
have a quick review of your trading journal in order to determine if you need to make
any changes.
Stress might also be induced by external factors and in this case, taking time off is
also recommended. If you are under a lot of pressure in your job or having problems
in your family, then you might be better off focusing your energy on addressing
these concerns first instead of letting your stress interfere with your trading.
The first way to deal with stress is to acknowledge it. Identify where the stress is
coming from so that you would be able to figure out how to eliminate it. If you refuse
to admit that your stress levels are rising, your trading account might take the brunt
of it and you would wind up in a worse position than before. It is important to
address the problem early on before it compounds and leaves you in a much more
stressful situation that is more difficult to get out of.
The next step is to calm down. While trading under stress can lead to panic or
indecision during volatile market situations, you should remind yourself to take it
easy and keep a clearer head. It is easier said than done but you can try isolating the
negative emotions influencing your trading and start focusing on pertinent market
factors and price action.
Lastly, keep track of your source of stress so that you can be able to deal with the
situation when it comes up again. Do you get easily stressed when an economic event
is coming up? Then you can come up with ways to limit your exposure or remind
yourself to stay on the side-lines next time. Do you feel the stress when you are
trading larger positions? Remind yourself to stick to a standard risk amount or make
more gradual increases next time.
Even if stress will come and go throughout the course of your trading career, it is
important that you know how to handle it and prevent it from interfering with your
trade decisions. In fact, you can even turn it around and make yourself more alert to
the trading aspects that you should be more focused on.
Keeping your focus with volatility and uncertainty
Some say that the only thing certain in the forex market is uncertainty. While there
are ways to predict more probable price movements, there will always be that
element of surprise from time to time, as unforeseen events or shifting market
dynamics could play a larger role in determining forex action.
These kinds of market changes or surprises could result in a few losing trades every
now and then, yet traders who are aiming for long-run profitability know that having
an edge in the markets and going for high-probability setups could still lead to
consistent gains. Traders who haven‘t properly developed their trading
psychology or mind set might wind up getting frustrated when they can‘t seem to
understand how the market is behaving and wind up getting more losing trades.
What‘s important is that you are able to develop a trading process or strategy that
can allow you to stay flexible and on top of your game even when market dynamics
are changing. Bear in mind that seasonality can also come into play and affect forex
movements, which means that your trade plan should be able to adapt to these
situations.
In particular, liquidity starts to decline during summer months, which means that
trends are weaker and that most forex pairs might stay in range. If you make use of a
trend-following system, you might not be able to catch as many signals or profitable
setups during this period. Instead of abandoning your system entirely, you can focus
on figuring out what you can adjust in your trade plan during periods of low liquidity
and ranging market behaviour.
As for unprecedented market factors, perhaps the best way to deal with losing a
trade from a ―black swan‖ event is to understand whether it affects the bigger
picture or if it is just a one-off event. In doing so, you can be able to figure out if
you should adjust your biases or risk preferences in order to take the event into
account. Being too stubborn and discarding the future market impact of the event
might prove to be costly if you are unable to make the proper trading adjustments
for it.
For instance, geopolitical risks can sometimes lead to sharp price spikes that can
wipe you out of a trade in an instant. Even if you wind up with a losing trade from
this, you don‘t have to sit on the side-lines until the risks fade completely. Instead,
you can weigh in on how these risks affect overall market sentiment and take trade
setups based on this prediction.
 Keep in mind that each trade setup is statistically independent and that you can be
able to shake off any losses if you regain focus and figure out how you can improve
your analysis and performance. Always remember that, even if you are not in
control of market factors, you are still in control of which trade setups you choose to
take and your risk per trade.
How to recover after blowing up your account
It‘s not unusual for beginner Forex traders to wind up completely wiping out an
account through a series of losses or poor risk management. While this unfortunate
scenario can be avoided with the right amount of trading knowledge and discipline, it
would also help to have a battle plan to bounce back from blowing up your account.
Instead of dwelling on frustration and anger, you should take a more constructive
approach in dealing with blowing up your forex account. Perhaps the first step you
can take is acceptance, as this will put you in a better position to start recovering
from the loss. There is no need to focus on the negative aspect though, take it as a
lesson learned and an opportunity to bounce back.
After accepting the reality of losing your money, look back and try to figure out
where you went wrong. Did you risk too much on each trade? Did you overtrade in
an effort to recover money lost on a bad trade idea? Were you over-leveraged? Did
you fail to conduct proper analysis before taking trades? These are just some of the
questions you can think about when analysing your decisions.
At this point, you should have a trade journal that you can review in order to
pinpoint the mistakes you‘ve made and how you can avoid them in the future.
Without a proper trade journal, it might be difficult for you to recall your trades
and figure out what you can improve.
Another factor that you can review is whether or not your trading system is working
for you. Even if you have the proper discipline and risk management rules, if your
trading system isn‘t appropriate for the market environment, then you could still
wind up with a terrible trading performance. You can opt to run another set of back
tests on your mechanical system or take some time to review the rules of your trading
system to see if any adjustments need to be made.
The next step after figuring out where you went wrong is to go back to demo
trading. This can allow you to forward test the adjustments you are planning to
make in order to have a more profitable performance and avoid wiping out your
 entire forex account again. Apart from that, this can be a helpful exercise in
regaining your confidence in trading.
Of course, there are plenty of psychological differences in demo and live trading as
discussed in a previous section, but this shouldn‘t stop you from taking it easy and
relearning the ropes. The important thing to remember is to take your time in
recovering and that there is no need to rush when it comes to proving that you can
trade better.
Once you have your trading confidence back and are able to see consistent results on
demo, you can open a live trading account again and stick to the lessons you‘ve
learned.
Developing good trading habits
Most expert traders credit their success to good trading habits, which can be
developed over time through a solid daily routine. Once these habits are ingrained
in your processes, discipline and proper decision-making can become second
nature.
As mentioned, habits take quite some time to develop. For instance, becoming a
morning person doesn‘t happen in an instant as you have to get used to waking up
earlier on a regular basis before you get the habit of starting your day earlier.
Athletes or performers go through a set of drills regularly before developing muscle
memory and strength to do better in their endeavour.
As with trading, you need to be able to repeat certain routines day in and day out in
order to turn those into habits. For some, this involves starting the trading day by
reading up on economic updates and market events before looking at price action.
From there, trading setups can be identified using technical indicators before
higher-probability trades are taken. After that, trade review and journaling must be
conducted before ending the trading day.
Of course these routines can vary from trader to trader, as some might place more
emphasis on technical price patterns and be less inclined to analyse fundamentals.
On the flip side, some traders might be more focused on economic reports and
schedule their trading routine around news releases.
What‘s important is that you are able to set your regular trading routine based on
your strategy and trading preferences. In figuring out which methods work best for
you, one can be able to fine-tune the trading approach and develop the necessary
trading habits.
Another crucial part of coming up with your own trading routine is developing the
habit of reviewing your performance for the day. This should include logging in
your progress, profits or losses, and market thoughts in your trade journal so you can
have something to review and work on later on. Apart from that, being able to sum
up how your trading day went can enable you to gauge whether you are on track to
meeting your trading goals or not.
Remember that having losing trades doesn‘t necessarily equate to a bad trading day,
as you can still be able to draw helpful lessons from these losses. In addition, having
large wins doesn‘t mean that you no longer need to review your performance, as you
should be able to build from what you did right and turn these decisions into habits as
time goes by.
While some might find a trading routine too tedious to repeat every single day,
remind yourself that you can reap longer-term benefits in being able to develop the
proper habits throughout the course of your trading career.
How to Get Started With Trading Meditation
You may have heard that meditation can help you trade better. Just like anything
else, it is not for everyone, but I have yet to hear a case where it has not helped, at
least a little, after the person gave it an honest effort.
So in this post, I will introduce you meditation for traders and hopefully remove
some of the roadblocks that have prevented you from giving it a try in the past.
You will understand why it works, how it can benefit and how to meditate
properly.
It is something that I believe should be part of what I call Holistic Trading, where
you are not simply looking for entries and exits, but consider all aspects of your life
and how they can improve your trading.
Trading better then usually means that your quality of life will also improve, and
the two will continually build upon each other.
Before we get started, you may think that doing meditation means that you have to
join a religion or live in a commune or something. Although many meditation
practices do have religious roots, it is not a requirement that you join any type of
group to get the benefits.
It is similar to trading, where you are free to learn from different teachers and take
what works and leave what doesn't.
Another misconception is that it is time consuming, complicated or mystical. It can
really be as simple or complex as you make it. You can start to see results in as little
as 2 minutes a day.
like in trading, I opt for simple…but Just do what works for you.

Why Trading Developmental Process needs to be effortful but

trading itself needs to be effortless?
Many beginner traders fall in the trap of effortful trading. They spend so much time
analysing charts and working too hard in order to generate high frequency of trades.
They think the more they trade the better will be the outcome which completely a
myth and leads to over trading. Over trading introduces too many problems in not
only on his trading account but also in his personal life. Stop looking for massive
unlimited profits in a given period. You as a trader must have clear, objective and
achievable goals. Patience is the key to big rewards. You do not have to hunt for
every opportunity presented by the market but hunt for best opportunities. To
extract best opportunities from the market, you need to pay its price in the form of
patience. Surely, your patience is highly rewarded. You have to commute a lot of
time in practising your trading system before you acquire its perfection. You need
10,000+ hours screen time, a lot of back testing and forward testing before you
totally reach a stage of your trading system mastery. This why the title itself says
that Trading‘s Developmental Process needs to be effortful. Once you have
mastered your trading system, now you just have to be calm, relaxed and patient to
hunt for best trading opportunities in the market. This is where the effortlessness
comes in.
As I am not looking to immediately jump back in and initiate new positions I‘ll write
a bit more about my thoughts and what motivated me to go to cash. Going to cash
serves a lot of purposes. The most important one is recharging one‘s batteries. The
number one goal as a trader is to reach a ‗flow state of mind‘ in order to be able to
trade at ‗peak performance‘. You can‘t possibly expect to be able to trade in such a
way every day, year in year out. That‘s why recharging your batteries and taking
breaks on a regular basis is vital.

Money comes in bunches.

That one says it all. You can‘t force trades. You can‘t simply work harder in order to
be ‗in sync‘. Sometimes you are, sometimes you are not. You simply have to accept
that as being part of the trading business. What you can do, is to closely monitor if
your performance is in sync with the market‘s performance. If the markets make
new highs and your overall portfolio is going down something is wrong. You need
to address that issue. Fast. The best way is to step aside and drastically reduce
exposure and risk. That‘s what I did.
Trading should be effortless.
A true piece of wisdom. In my experience when I trade well it is like shooting fish in
a barrel. Almost everything works. I don‘t need to be overly patient with positions.
The money comes in very fast. That‘s exactly how trading should be. The exact
opposite was the case during the first 2 months of this year. So I did what I had to do.
I recognized the situation for what it was and admitted my efforts were not leading
my portfolio anywhere. It was like folding when you are dealt a bad hand in poker.
So I folded. Now I am waiting for the next hand. If it is a bad one I fold again. If a
series of trades start to really go my way I push it hard and increase exposure and
trade aggressively.

When in doubt stay out.

This one is key. That‘s how I interpret the adage: It doesn‘t mean you don‘t trust your
instincts or your methodology. As a trader you should adapt to new situations. You
constantly analyse the markets and your performance. Then you adjust your trading.
Then you compare your expectations with the actual outcome. Then you adjust your
trading. Then you repeat the process. At times things simply do not work. That‘s
when doubt creeps in. You know something is not ‗feeling right‘. Your job is to
protect your capital. Your job is not ‗to be right‘. Put another way: You should be
able to exit or reduce exposure without the need for explanations. The markets
usually give you those explanations at some later point in time. As a trader your goal
is to be able to live with and embrace uncertainty.

PROCRASTINATION: IT CAN PUT OFF YOUR

DESIRED TRADING RESULTS
There it is, that unfinished Macro Trade Plan that you committed to finishing before
your next live trade, that stack of books that you promised yourself you‘d read and
the list of unfinished to-dos that go back weeks. You find yourself thinking, ―What
is wrong with me, why can‘t I follow through with at least the stuff that is
important?‖ Yes, this is all too familiar because it happens over and over, and you
may feel powerless to stop it. In fact, it may be the story of your life. You‘ve missed
deadlines, squandered resources and embarrassed yourself all because you didn‘t
follow through… you procrastinate.

Procrastination – putting something off till a later time or date – appears to haunt
many a trader‘s life. It can ease up on you like a fog rolling in, and before you know
it you can‘t clearly see the path to getting the results that you want. If you‘ve ever
said something like, ―I‘ll do it when I get around to it‖ or ―tomorrow I‘ll feel better
about it‖ or ―I‘m more creative when I‘m close to deadline,‖ then you have suffered
with procrastination. In fact, you may be plagued by this so much that you think
nothing can be done about it. However, the reality is that procrastinators are made not
born.
Let‘s look at procrastination little more closely. Often procrastination begins early in
life and is related to parents that are authoritarian and controlling. As a consequence
of this environment, children become more anxious about performing and
hyper-sensitive concerning criticism and judgement from others. This creates an
attitude of self-incrimination that anticipates a poor performance which causes the
individual to procrastinate resulting in a self-fulfilling prophecy as they have little
time left and have allocated insufficient resources to accomplish their task. The
anxiety and fear associated with this behaviour debilitates their resolve and often
generates what appears to be an insurmountable barrier that separates them from
carrying out an intention. When left unchecked, this situation can create a depression
filled life that is strewn with the ghosts of things that could have been but never were.
Though the above scenario is common, procrastination has affected just about
everyone at one time or another. Essentially there are two types:
Deadline Related Procrastination is commonly experienced by students and
professionals when that important paper or expense report is due. The deadline
type is a little easier to tackle and subdue.
Commitment Related Procrastination affects those who keep putting off making a
desired change or personal accomplishment such as completing a Macro Trade Plan
or writing a book or taking up a hobby. People that consider themselves to have
good self-discipline and to have conquered deadline procrastination would
probably be hard pressed, if they are honest, not to admit to struggling with some
form of commitment procrastination.
It doesn‘t have to be that way. It may not be all your fault but it is all your
responsibility. You can change; however, it depends on how badly you want to
change.
Tips to Stop Procrastinating:
Make a List
Identify what accomplishments are expected of you. Make a list of the steps that
are required to complete each item. After you have written them down, prioritize
them and use them as a checklist. If you have ever had a to-do list then you have
experienced how good it feels to scratch an item off that list. This will provide a
reinforcing force and every time you scratch another item off you will be in a
stronger position to continue.
Break Projects Down into More Manageable Segments
Rather than approach an item that is big and may seem daunting as one task, break it
down into smaller ―bite-sized‖ pieces. This will help both your willingness and your
ability to follow through to get it done.
Be Specific With Goals and Time Tables
Don‘t allow vague descriptions of the things you want to achieve. When you are
specific, detailed and clear about your objectives along with creating realistic but
challenging time tables you are much more likely to remain on target and on task to
complete your items.

Recognize the Onset of Procrastination

When you are in the about-to-procrastinate mode, you are likely to experience a
thought. For instance, ―I‘ll feel better about this tomorrow,‖ followed by a lowered
anxiety, then the avoidance behaviour. When this happens, change the thought to, for
instance, ―Actually, I‘ll feel better once it is done.‖ This will help you to feel more
positive about taking a step toward completing the task. In this way, you are interrupting
the emerging pattern that ends with the evasive conduct and replacing it with a
proactive action. How to overcome procrastination
Eliminate Distractions
Turn off the TV, put away the book and put down the phone. These and other
things like them become distractions that take you away from your intention to
complete the task.
Reward Yourself
When you have achieved your objective, either completing a step in the process of
accomplishing the goal or the goal itself, celebrate by giving yourself a reward. You
have realized a private victory that warrants being good to yourself. This will
reinforce the process, and the more you do it the closer you will come to
incorporating this pattern as a habit. Doing what it takes to position yourself one step
at a time to become a consistently successful trader involves remaining diligent and
vigilant to those small steps that will take you to achieving the results you want.
Procrastination, and in particular trading hesitation, over your trade set-ups is very
frustrating and detrimental to the health of your trading account and your emotional
and physical wellbeing. Whenever we observe behaviour patterns that prevent us
from trading profitably value conflicts born out of incorrect assumptions about your
reality are always at the root of the issue.
In a world that is changing in all areas faster than is comfortable for the
conditioned limited mind, hesitation is a common coping mechanism that is
designed to slow down the information intake in an attempt to gain time to make
sense of events and harmonize the value conflicts which run deep in the
subconscious part of the brain.
The conditioned, conscious part of your mind functions in a linear fashion. It
always seeks out existing reference points to make decisions. Naturally, those
reference points stem from the past beliefs and conditioning and are mostly of no
use in your trading.
Trading asks you to operate in a fast changing environment with little or no
reference points. I might also say that everything you have learned until you started
trading has no or at best very little value in making consistently good trading calls.
While the conditioned mind is checking for reference points in an attempt to make
sense of the charts and provide you with valid assessments for your next trade, your
subconscious mind, which accesses larger amounts of information much quicker in
a non-linear, lateral manner will be in conflict with the slower part of your
conditioned brain. The conditioned part of your brain from which you
predominantly are operating is slow, it cannot access any kind of information for
which it has no reference points.
This conflict between the conditioned side of you and the higher self-part of you
creates many a state of disharmony and friction. Two sides are fighting inside of
you for dominance. You will experience inner battle as anxiety, stress and other
trading fears. Fear, stress and anxiety point to value conflicts which in turn make
you doubt yourself causing you to hesitate and procrastinate.
The stagnation of the energy feels most uncomfortable and needs to be resolved, alas
not in the way you have been used to. The big issue is this —you cannot will
yourself, or discipline yourself out of hesitation and procrastination. Therefore, a
new way of looking at yourself is required and this is something most traders don‘t
like because it challenges what they have come to believe in as their identity.
Resolving the dilemma of the mind requires moving beyond it. While you are stuck
in a rut, as the saying goes, using the same old mental processes to get out of
hesitation, you are in a no win situation: After all, it is your conditioned mind which
is causing the problem. In order to free yourself from the shackles of hesitation you
have to expand into other areas of your mind.
I am talking about accessing that creative, intuitive side of your mind that observes
free from conditioning and free from judgement. It therefore has the ability to notice
things the linear mind simply cannot see.
Moving beyond the constraints of the linear mind feels uncomfortable. You are not
used to operating from a whole brain perspective; rather you are favouring one part
of your brain over the other parts. This skews your reality and obviously affects the
way you trade, creating tension, as already discussed.

Getting Out Of Immersion

While one is still fully immersed in a behaviour one cannot change it. Alas, the very
moment you notice a habitual pattern you are beginning to free yourself from the
grips of immersion.
At this point you can take positive action and start making changes.
In order to lift procrastination and hesitation you have to let go of old belief
structures and learn to operate from a holistic perspective. This means learning
new techniques that assist you to make change.
Your willingness to embrace new ways of thinking is more important today than ever
before. The world is changing, and so is the world of trading. Paradigms in all areas
of our existence are being challenged and examined for their usefulness and value to
our lives today. The findings in quantum physics are bringing us many new insights
and are changing the way we see our world.
This shift is cyclical and you are an integral part of it. As the old value conflicts are
brought into our consciousness our job is to embrace the uncomfortable feelings and
emotions that may arise as a result of our expanding awareness, instead of fighting
them.
Learning to use tools to help you establish and maintain equanimity, self-
confidence and eliminating self-doubt should be high on the agenda for every
trader.
Your true self is the only asset you possess that is timeless and everlasting, it is not
your trading account, or your trading strategy, or your conditioned self. All mastery
is about uncovering that true self that resides behind the false perceptions and
conditioning of the conscious mind.
Finding a Trading Style That Suits Your Personality
There are four main styles of trading, namely scalping, day trading, swing trading,
and position trading. Technically, scalping is a type of trading within day trading,
but scalping is so different from all other forms of day trading, that I consider it to be
a separate style.
The difference between the styles is based on the length of time that trades are held
for. Scalping trades are only held for a few seconds, or at most a few minutes.
Day trading trades are held for anywhere from a few seconds to a couple of hours.
Swing trading trades are usually held for a few days. Position trading trades are held
for anywhere from a few days to several years.
Choosing the trading style that best suits their personality can be a difficult task for
new traders, but is absolutely necessary to their long-term success as a professional
trader. If you are a new trader (or even an experienced trader) that does not yet feel as
though you have found your trading style, the following are some of the personality
traits that are compatible with the different styles of trading. By choosing the trading
style that best suits your personality, you will have a better chance of being a
profitable trader, so be honest, even if you don't like some of the personality traits
that are listed.
Scalping
Scalping is a very rapid trading style. Scalpers often make trades within just a few
seconds of each other, and often in opposite directions (i.e. they are long one
minute, but short the next).
Scalping is best suited to active traders that can make immediate decisions and act
on those decisions without hesitation. Impatient people often make the best scalpers
because they expect their trades to become profitable immediately, and will exit the
trade promptly if it goes against them.
Being a successful scalper requires focus and concentration, so it is not a suitable
trading style for people who are easily distracted or who often find themselves
daydreaming (i.e. if you've been thinking about something else while reading this,
then scalping is not for you).

Day Trading
Day trading as a style is more suitable for traders that prefer starting and completing a
task on the same day. For example, if you were painting your kitchen, and you would
not go to bed until the kitchen was finished, even if that meant staying up until 3:00
AM.
Many day traders would not consider making swing or position trades because they
would not be able to sleep at night knowing that they had an active trade that could be
affected by price movements during the night (such as those that cause opening
gaps).
Swing Trading
Swing trading is compatible with people that have the patience to wait for a trade,
but once they have entered a trade they want it to become profitable quite quickly.
Swing traders almost always hold their trades overnight, so it is not suitable for
people that would be nervous holding a trade while they were away from their
computer (i.e. overnight, in the shower, at the movies, etc.). Swing trading generally
requires a larger stop loss than day trading, so the ability to keep calm when a trade
is against you is a necessity.
Position Trading
Position trading is the longest term trading of all and often has trades that last for
several years. Therefore, position trading is only suitable for the most patient and
least excitable traders.
Position trading targets are often several thousand ticks, so if your heart starts
beating fast when a trade is 25 ticks in profit, position trading is probably not
suitable for you.
Position trading also requires the ability to ignore popular opinion because a single
position trade will often hold through both bull and bear markets. For example, a
long position trade may need to be held through an entire year when the general
public is convinced that the economy is in a recession. If you are easily swayed by
other people, then position trading is going to be difficult for you.
Being Faithful to Your Trading Style
Choosing a trading style requires the flexibility to know when a trading style is not
working for you, but also requires the consistency to stick with the right trading style
even when it is not performing optimally.
One of the biggest mistakes that new traders often make is to change trading styles
(and trading systems) at the first sign of trouble.
Constantly changing your trading style or trading system is a sure way to catch
every losing streak. Once you are comfortable with a particular trading style,
remain faithful to it, and it will reward you for your loyalty in the long run.

How to Find the Trading Strategy That Fits Your Exact

Personality
Almost every trader I have met starts on the wrong end of the trading education
process. Yes, myself included. The journey becomes too difficult for most aspiring
traders, so they give up and return to their cubicles. That's why the success rate of
traders is so low. But for those who stick it out, the rewards can be tremendous. To
give you the best shot at success, I will show you the three elements of your trading
personality that you will have to understand, to get the best results…and hopefully
shave years off your learning curve.
I'll also show you what will probably happen if you do not work out your trading
personality first. I mention this because I want to help you avoid the pitfalls of
learning to trade and also help you understand the importance of figuring out your
trading personality early in the process.
What if You Started With the End in Mind?
Wondering about results
Many traders get interested in trading because they want to make a lot of money, quit
their job and travel the world…and that's great! But therein also lies their biggest
downfall. They only chase the money and look for the trading method that has the
highest return…and that works sometimes. Like about as often as Hailey's Comet
comes around. But for the vast majority of traders, that doesn't work and they just
end up tired and frustrated.
However, with a little bit of foresight, you can greatly improve your chances of
success in the trading game. The key is to understand what types of trading
methods would work with your personality and desired lifestyle.
I think you will be surprised at how many trading strategies you can let go of, once
you know what is more likely to work for you. That leaves you free to focus on
becoming a master at just one trading strategy.
Need more return every month?
No problem, simply add more currency pairs, timeframes or trading strategies. But
without one profitable trading strategy you are just spinning your wheels and will
probably fail. That might sound harsh, but it's the grim reality of trading. Hopefully I
have communicated the benefits of understanding your trading personality first. So
with that in mind, here are the three pillars of your Trading Personality.
Trading Timeframe Personality
The first thing that you need to understand is your ideal trading timeframe. I call it
your Trading Timeframe Personality (TTP). It will take a bit of experimenting to
find out which timeframe works for you. There are basically three timeframes:
 Day trading
 Swing trading
 Long-term investing
 Scalping
You can take a few systems that you learn on the forums and trade them in a demo
account. This will allow you to get a good feel for which timeframe suits your
personality and daily schedule the best.
Remember, you are looking for the timeframe that matches you best. Not the
system that makes the most money.
You can usually make more profits by trading more currency pairs or trading more
systems. But is it much harder to trade against your personality and daily schedule.
Trading Setup Personality
Along the same lines as trading timeframes, are the different trading setups out
there. There are basically two types of setups that traders look for:
 Technical setups
 Fundamental setups
You might be good at one or both. But the key is to start with just one and master it,
before moving on. I call this figuring out your Trading Setup Personality (TSP). It is
possible to make money as a technical trader or a fundamental trader…or some mix
of the two. My eyes start to glaze over after I read a couple of fundamental reports,
so I prefer to stick to 90% technicals and use only 10% fundamentals in the form of
Commitment of Traders Reports.
But it will probably be different for you. If you are more of a technical trader, then
you can break that down into three different categories:
 Breakout patterns
 Trend patterns
 Countertrend patterns
Figure out which one suits you best and start there.
Trading Risk Tolerance Personality
The third important thing to figure out is your personal risk tolerance. I'm sure that
you have heard many times on the internet that you should not risk more than 2% of
your total account on one trade…and this is excellent advice.
But the question then becomes, how much should you risk?
In reality, there is a per-trade risk tolerance that you will feel comfortable with, and
you should not risk more than that, or you will see your performance degrade
dramatically.
This is your Trading Risk Tolerance Personality (TRTP).
It is actually hard to figure this out in a demo account because you are not risking
real money. So I would recommend opening a small live account with $100 and
trade nano lots.
After you backtest a trading strategy, you can also use a drawdown calculator to
show you how much you should risk per trade, in order to avoid a X% drawdown.
For example, if you would freak out if you lost 20% of your account, but you would
be OK at 19%, then put 20% into the calculator. Next, put in the other stats of your
system. Then play with the risk per trade until your risk of hitting a 20% drawdown
goes to zero (or close enough).
The payoff
When you start your trading journey knowing these three things about yourself,
will you give yourself a much better chance of success.
If you know your ideal trading timeframe and market conditions, you can choose
the right education that will help you work with your innate strengths and not
against them. This will eliminate a big percentage of courses and mentorships out
there and will save you a lot of money.
When you understand the risk tolerance that suits you best, you can use the risk
that you are comfortable with, when you take any trading course. When you do
this, you reduce the chances of blowing out your account and you can stay in the
game longer.
You will also have greater confidence in your ability to learn to trade for yourself
and that will help you stay away from trading robots, money managers and green
fairies.
Now let's take a look at what happens when you don't commit to your trading and
you don't figure out your trading personality.
The Typical Trading Journey
It is a little painful to write about this because I have spent way too long on some of
these steps. You can probably relate.
Hopefully, by understanding the common stops on the trading journey, you can
avoid the ones that won't help you progress as a trader.
Here we go…
You Hate Your Job and Discover Forex…Among Other Things
Office
It's Monday morning and you are sitting in your desk at work. ―Shit, this sucks,‖
you tell yourself. So you start surfing the internet to look for ways out of your
J.O.B. and the usual stuff comes up…
 Real estate investing
 Stock trading
 Forex
 Online Marketing
 Futures
 Creating travel videos on YouTube
 Ecommerce on Shopify
 Sales Funnels

Since you found this book, I'm assuming that you picked Forex. You are excited it
get started on your new trading journey, so you rush into it.
Here's what happens next…
You Join a Trading Forum or Group
Forex Forum example
Now that you are committed to becoming a Forex billionaire, you join a free
trading group or forum to start learning the basics.
This is actually a great place to start. You can learn the lingo and get help setting
up your software. The best part is that it's free!
You follow a few of the most active threads and try some of the trading systems. The
forums help get you started, but they are also really confusing. Some people say one
thing. Others say the opposite…and they start to get annoying. Conversations tend to
degrade into third grade name calling. So you look for some real education to move
you forward.
You Take Your First Course
Next, you start Googling for a reputable trading course to take. You choose a
course based on how profitable the instructor is and if he or she trades
professionally.
Things go well for a while and you are excited to be learning this proven trading
system. Learning the system is simple enough and you start trading it in that real
money account you just opened.
You Make Some Money
The trading system is working pretty well and you have your first profitable week!
This trading stuff is easy, you think.
So instead of risking 1% on every trade, like your instructor recommends, you start
risking more.
Maybe 5% on some trades.
But you risk 10% only on trades that you are really sure about.
It won't be long until you turn that $500 into $100,000!
You Blow Out Your Account. Explosion. Then it happens. You take too much risk
on a trade, forget to use a stop loss and when you are at work…BAAAM! You get an
alert on your phone, telling you that you just had a margin call. All of your trading
capital is gone.
So now what?
The Search Begins For a Trading Robot (EA)
Trading robot
You fund your trading account again, but this time you are going to be smart. Since
you cannot check your trades while you are at work, you will get a trading robot to
take care of your trades for you.
So you get back onto the internets and pick out a couple of Expert Advisors that
look promising. You load them onto a VPS and let them rip.
Guess what?! They actually start making money…in the first week.
Now that your trading income is ―on autopilot,‖ thanks to your EAs, you decided to
branch out into other areas of income generation.
At this point, you tell your friends and family that you have finally figured out this
trading thing.
You Do the Other Things Too
Remember those other money-making opportunities that you found at the office?
Why not explore those too?
So you start going to real estate investing meetings and even try your hand at
online marketing. These activities distract you from your trading and you lose
focus.
I call these activities green fairies because they tempt you with the lure of making
more money, but they fly away as quickly as they came.
Around this time, your EAs usually starts to crap out. It usually begins with the
robots trading flat.
Losing a few trades, winning a few trades, then losing again. Then they start to
lose more money than usual.
What's going on here?
You finally realize that if you don't know how an EA works, you don't know when it
has stopped working. So you pull the plug on your automated trading and re- commit
to learning to trade for yourself again.
Welcome to the Trading Silodrome
Thus begins the cycle I call the Trading Silodrome. You jump from course to
course and trading system to trading system, in search of your holy grail. This
phase can last months or even years. Every time you lose money with a trading
system, you think that it's the trading system's fault. So you keep paying for
courses, hoping that the next one will finally be the one that leads you to the
Promised Land.
Rock Bottom
After a while, system hopping gets tiring. Right about now, you are at rock bottom
and are questioning if trading is right for you or not. This is where most people quit
and crawl back to their cubicles.
Now you have a decision to make…
Admit defeat, or keep going?
You have always succeeded at what you set your mind to, so you keep going…
The Search Begins for a Money Manager
Money manager
Wouldn't it be great if you could get a professional money manager to trade your
money for you?
Instead of having a mindless robot trade your money, you decide to find a
professional money manager.
Yeah, that's the ticket!
So you split your remaining risk capital between two traders, John and Roger.
Well, John turns out to be a crook like this guy and last you heard, the authorities
ere chasing him twhrough South America. Roger is actually a really good trader.
But the technology that copies his trades into your account screws up and you end
up losing money, instead of making the 10% that Roger made last month.

You decide that getting a money manager isn't always all it's cracked up to be.
Back to square one.

You Find a Mentor

Determined to figure this thing out, you assess your options.
At this point, you have tried a lot of different things.
So what's left?
Get a mentor of course.
So you look around for the most successful trader you can find and schedule a
private mentoring session. It costs $200 an hour, but you figure it's worth it.
The first mentor doesn't work out, so you try another.
Then another. You are back on the Trading Silodrome again, but this time it's
costing a lot more money.
But what else is there?
You Figure Out Your Trading Personality and Trade with It
You are just about ready to give up, then it hits you!
There are some trading systems that you absolutely hate to trade and others that
you are sure you could figure out, if given enough time and coaching.
Now you go back through all of the notes that you collected over the years, from
your trading courses and private mentoring.
Which ones appealed to you the most? You revisit those and start to learn how to
back test and forward test. You figure out which ones match your personality and
lifestyle.
That's when this usually start to click.
But if you did this in the beginning, you could have saved yourself a world of hurt.

Conclusion
As you can see, starting with understanding your personality, instead of only
learning trading systems, can have a huge payoff.
But most traders don't do it that way. I don't blame them, it goes against human
nature. It goes against how trading was traditionally taught.
Hopefully, now that you understand the right way to do it, this will help you
improve your trading faster.
If you have been through the entire process, is that about right? If you haven't, then
where are you in the process?
I do not want to waste your precious time and even my time. Time is money and I
damn care a lot about saving my time. I believe it does not matter which timeframe
you are trading or which strategy you are using. I do not want to argue which method
is best. We leave everything on time and market to decide these factors for us. All I
want to say that no trading system is superior to another system. Everyone should
find a trading system that fits their personality. What the heck does it mean? Fits your
personality? Well you can interpret this phrase in simple words. If you
are trading based on what you learnt from a book or some internet blog or some fancy
course and you are blindly following that system without any logic or rationale
attached to it then you are likely to fail. What works for others, may not necessarily
work for you. One man‘s strength is other man‘s weakness. One man‘s success is
other man‘s failure. It all comes down to what fits your personality. If you can‘t
explain your trading system to yourself then this means you are just setting yourself
up for a huge failure. Think this way: ―You heard a news that it will rain today but
you saw the sky is clear and it is sunny with no signs of probability of raining today.
You will be fool to live to the expectation that it will rain today‖. Does this make
sense to you? What you perceive from others and blindly follow it then you are living
in illusion but what you perceive from others and you are able to explain that
perception to yourself then you are closer to reality. Choose a trading system that
justifies your rationale, logic and is explainable to your own self. That is what I
actually mean by finding a system that fits your personality. I believe that a trader
must try every system that he can get his hands onto. Let it be Harmonics, Elliot
Waves, VSA, etc. Then he must do some back testing, forward testing and try to
 logically understand how the trading system works and under what conditions it
works and fails. He must start by explaining the trading system to himself and then try
to fit his rationale and logic to it. If the system validates his logic and rationale then he
must chose that system as it fits his personality otherwise he must discard it and carry
on his research of the system that eventually fits his personality. Let me give you a
simple example: If you are a footballer and your speciality is defending then would it
make any sense to get training from Messy? Or you must find a good defender to train
you? If you can answer this question then it means you have clearly understood the
message I am trying to give you above.

Trading Affirmations: to improve your trading psychology

Positive affirmations work – in all areas of our life, including trading financial
markets! Talk to any life coach, mentor or motivational speaker (the ones who
actually have some form of credentials!) and they will most likely tell you that they
are useful in helping to manifest your goals and bring about positive and
permanent change to your life...in whatever area you so desire. Why should trading
financial markets be an exception? We have trading affirmations too!
An affirmation is every word and inner dialogue you have and are generally present
to the subconscious mind and they help to construct our life experience. Some do this
positively, others negatively. Bearing this in mind, it is a very useful exercise to
programme the mind so that not only can you feel better about who you are and what
you do, you can also manifest the changes in your life that you so desire.
Affirmations can work in any situation. Whether it‘s affirmations for love, self-
esteem, success, or health...you can be rest assured you can come up with your
own in order to quash old beliefs that may have hindered you and manifest real
change in your life.
They can enable you to achieve the life you've always wanted for yourself!
Here are some rule-based, positive trading affirmations. I have modelled on the
common habits of the winning minority of profitable traders and what they do to
obtain their consistency.
Repeat these trading affirmations daily in front of the mirror and see how they can
help dramatically improve you and your trading.

Trading Affirmations #1:

―I am a successful and profitable trader‖. Make this statement your first affirmation
as this sets the frame for the following rule-based affirmations which are all
cornerstones to successful trading. Even if you are not yet consistently profitable, say
it. Do NOT say it in the future tense, ie: ―I will become a successful trader,‖ as you
will be nudging this end-game objective into the distance every time you say it...very
much like dangling a carrot in front of a donkey, or even a heavy smoker perpetually
saying that they will give up the habit ―tomorrow‖.

Trading Affirmations #2:

―I have full belief in my strategy‖. If you are trading a strategy that resonates with
your personality, availability to trade and has been back tested and forward tested to
be consistently profitable over a number of years, then what is not to like?

Trading Affirmations #3:

―I will trade according to my strategy‘s rules and not gut feeling‖. Stick to your
strategy! After all, the very strategy you have belief in (which dictates your rules for
entry, management and exit) are powerful filters designed to keep you away from
whimsically trading the market ―noise‖ which many rookies are seduced into trading.
Accept that the market can do anything ay anytime and that ‗gut feeling‘ is not a
sufficient reason to overrule a profitable trading strategy...not least the one you chose
to trade as you have belief in it!

Trading Affirmations #4:

―I will be fully accountable to for my actions in the market‖. You are master of
your own destiny, from choosing to pursue trading in the first place, to selecting
the strategy which works for you to executing it according to its rules.
If you place a trade based on a set-up outside of your strategy and it loses money, it‘s
a bad trade and you are to blame. After all, you pulled the trigger and made the
decision to place it. Conversely, if you placed a trade which, again, wasn‘t based on
your rules and it made you money, it is still a ―bad trade‖. This is because even
though you‘ve enjoyed the process of making money, you have subconsciously
communicated to your brain that it‘s ok to do that and you will be far more likely to
do this again, perpetuating what is often a vicious circle.

Trading Affirmations #5:

―I keep a journal of all of my trades – both losers and winners‖. Many see this as a
tiresome and laborious process...and, boy, it is! However, if you keep a log of your
trades and their outcomes, then you‘re far more likely to stick to your plan and be
accountable for your own actions. After all, your written trade journal is a reflection
on your ability to demonstrate you are a successful and profitable trader over the
long-term...by trading set-ups which fully conform to the rules of the strategy you
have belief in and have chosen to trade.

Trading Affirmations #6:

―I always keep the trade risk low‖ (i.e.: 1-2% of account value). The success of any
given strategy is determined over as sample of trades – the bigger the sample the
more representative it will be. In order for back testing and forward testing results to
be as scientific as possible (and to get a clearer perspective as possible as to its
success), it makes sense to risk the same amount for each and every trade you take.
You should always keep the risk low as there is nothing worse than watching the
fluctuating balance of your trading account when you know you have risked big
amount based on feeling.
This is especially the case when you consider how there is no guaranteed outcome
for a trade set-up, no matter how good it looks!

Trading Affirmations #7:

―If there is no set-up based on my strategy I happily stay out of the market to preserve
my capital‖. It‘s ok not to place a trade if the rules to your strategy are not met. A lot
of have-a-go traders (who ultimately blow up their account) self- sabotage by
endeavouring to have a trade running all the time as they feel that the more trades
they place, the more money they will make. This is simply hogwash! It is often the
trades you don‘t take are the ones that make you the money – the trades which may
not fulfil the rules of your strategy but you may ―feel‖ are worth
―taking a punt‖ on. Leave them well alone! Unknown to many, the first objective for
professional traders is to breakeven, then make a profit. In order to make a profit
regularly, they must have an edge in the market and this is through sticking to rigidly
to a strategy. Accept a day/week when there are no trade-setups as a worthwhile
money saving exercise rather than getting frustrated and placing a trade out of
boredom.

Trading Affirmations #8:

―I only follow trades with a high reward/risk‖. By trading trade set-ups which are
high in reward (while keeping the risk low), not only are you are making the trade
more worthwhile you can also have console yourself with the fact that if the trade
goes your way, you are set to make a lot more than you can potentially lose...but if
you lose, at least this is kept to a small fraction of your account. By selecting trade
set-ups with, say, a 3:1 reward/risk profile (targeting 3% of profit potential by
risking only 1% of your account), you can also afford to trade fewer trades and be
yet more discerning in your trade selection.

Trading Affirmations #9:

―I choose trading for long term gain rather than a quick buck‖. Be realistic in your
expectations from trading and accept that and small percentage gains made on your
trading account over the long term in a conservative fashion are far more desirable,
and stable, than making a wild percentage gain only to be followed by a heckle-
raising drawdown. Which would you prefer? Consider that the bigger the
percentage gain the strategy may make you, the bigger the drawdown will also be.
Remember that the percentage gain or loss touted by a ―system‖ or strategy is not
representative unless it has at least 5 years of back testing results to demonstrate
that it has at least stood the test of time in a variety of different market conditions.
Unfortunately there are a lot of scammy products and services in this industry
which publish jaw-dropping returns, but are very selective in the date given!
Treat learning to trade as a skill-set learned and developed over the course of
year(s) very much like a university degree. Do you think that a heart surgeon
mastered surgery in his spare bedroom in his free time?!

Trading Affirmations #10:

―I shall not have an emotional attachment to the outcome of my trades‖. Simply place
the trade and let go...assured by the fact if the trade does go in your favour then you
are set to make potentially a lot more than if it goes against you, thanks to our
selection of trades with a reward potential. Too many people self-sabotage by
watching their losing trades by crossing their fingers and legs in the hope it will go in
their favour without accepting that some battles should be lost in order to win the
war.

Trading Affirmations #11:

Other people‘s beliefs, news and fundamentals will not affect my trading decisions.
Every Tom, Dick and Harry will have an opinion about there they think the market
will go or where they think the market will turn next. But do they trade your strategy
or your timeframe? Are they one of those people who only crow about their winning
trades and never their losers? It‘s crucial that you stick to your guns and trade the
rules according to your chosen strategy. Turn off Bloomberg and fold that newspaper
away as they will only serve to be a distraction. If someone influences your trading
decision and you ultimately lose money, it will still be your fault.

Trading Affirmations #12:

I shall base my trading decision on probabilities, trading what I see and not what I
think. Don‘t fall into the temptation of trying to over analyse the market too by
looking at fundamental data and reading news reports. This is analysis paralysis. We
are technical traders after all, using technical analysis to gauge the probability the
market turning in any given direction and this is based solely on what we see on the
chart in the moment. After all, when our consistently profitably strategy was back
tested on the charts you can be assured that this was done based on price action and
not the news released which may have been released at the same time.
Trading Affirmations #13:
The market is irrational and can do anything at any time. The market doesn‘t owe
anyone anything, apart from those who are disciplined to play the odds by following
rules over the long-term. Just because you‘ve told yourself turned up on time to the
London open, it doesn‘t mean she will smile on you...no matter how much you‘ve
brushed up on your homework! The market can do anything at any time, and as
profitable and successful traders we need to accept that our chosen edge is what will
keep us going in the long-run, through the inevitable drawdowns and percentage
gains along the way.

Why Forex trading discipline is important?

Forex market is a very attractive place for novice traders. Many of them join the
retail Forex industry every day. However, many of those newcomers often fail to
make it in Forex.

Why is this happening?

The reasons are numerous, but there probably two of the most important.
First, many newbies lack trading discipline and patience. Second, they cannot
assess risk potential and apply their risk management.
Usually, traders believe that development of a Forex strategy is the most important
thing to do and invest their efforts into it, forgetting about Forex trading discipline.
While a good strategy is important, being able to actually carry it out is even more
crucial for a trader.
In this article, I will describe the role of patience in successful Forex trading and
how to practice it.

Rules of Forex trading discipline

Successful Forex trading requires a successful trading strategy, competence to
amend it according to market movements, and, certainly, proper strategy execution.
Such proper execution relies mostly on trading discipline, and most of investors
believe that this is one of the core abilities of a successful Forex trader. The question
is how to breed this discipline in your trading? There are three major rules that can
guide you on how to understand and apply the Forex trading discipline.
Develop a plan
It can be said about any discipline that it involves not only following of certain rules,
but also the development of this very set of rules. The first thing to start with when
enhancing your trading discipline is a plan. You can use any methodology available
for its creation, but the plan of your trading activities should follow the guidelines
below:
 Set your entry signals precisely
 Define your exit signals clearly
 Prescribe maximum amount of trades per day, per week, and per month
 Set a list of trading instruments
 Define you trading hours
 Decide on maximum duration of your trade
 Select minimum duration of your trade
Listing the rules you need to abide by helps you to improve your Forex discipline. In
addition to trading guidelines, your analysing of the market should be also marked
in the trading plan to see if it fits there.
As soon as you get to the practice of online Forex trading, make sure you follow the
plan. All the items of the plan that you have set for yourself – trading frequency,
entry and exit signals, trading instrument to use – must be now put into practice.
Having the rules developed is not enough; you need to be able to follow them in
order to become a successful Forex trader.

Abide by a stop-loss
It is difficult to overestimate the importance of this when learning how to become a
disciplined Forex trader. In the process of trading knowing your exact stop-loss level
is crucial. You have to set it before opening a position and never lower it during the
trade. Certainly, if a trade does not look profitable at all, you can close it off before
hitting your stop-loss level.
However, learn how to resist the temptation of lowering your stop-loss simply for
the sake of keeping this position open.
Although this sounds simple, it's a crucial element of Forex trading. Seasoned
investors know that the more you trade, the more you will have situations when you
would hope that a losing position will turn into a profitable one. This happens
because it is generally difficult for traders to accept failure and close a trade with a
loss.
This is why you must set your stop-loss strictly – it facilitates the very moment of
closing the position from psychological standpoint, as the closure is conducted
automatically. As long as you might be emotional during a trade, especially a losing
one, never allow yourself changing your stop-loss after opening the position.
You can, however, modify it when you sit down and analyse the market and your
results with clear mind.
It is a bit different with take-profit levels. For beginners, it is recommended that a
take-profit level is fixed for every trade.
Try not to modify it even if you think that the market will continue going in your
direction. Take-profits can be amended when you become a more experienced
trader, especially if you know by that time how to set your stop-loss to bring profits
as well.
As a rule, regardless of your level of trading proficiency, it is advised to only
commit to a trade if you have your profit target set.

Schedule your trading

Another foundation for developing Forex trading patience and discipline is a
trading schedule. Decide on the best times for your Forex trading and stick to
them. Train yourself not to trade outside of this set time period.
For instance, if your plan says you should trade along with London, start when
London opens and end when it closes. There might be a temptation to continue
trading after that, for you might think of some more investment opportunities
ahead.
However, try and resist it, because other markets might behave differently due to
economic and market peculiarities you are not aware of. This, of course, may lead to
losses in your unplanned trade.
Then, decide on your trading limits. This means setting a certain number of trades
that you allow yourself within a certain period of time and never exceed it. The time
period should be considered according to your trading strategy. Thus, intraday
traders limit themselves to a day, and medium-term investors think of this in terms of
a weekly or a monthly period.
This practice is crucial for developing discipline in Forex trading, because at times
when you lose money in your trades, you would most probably want to open new
positions to compensate the loss.
By doing so, traders tend to focus on wrong things and take unnecessary risks,
which undermines their risk management plans.

Patience in Forex trading

Patience is another important quality that every trader must strive to. It might seem
similar to discipline, but they differ. When you trade FX online, sometimes you
might be tempted to close winning trades too early in order to take the profit or
prevent this trade from losses. This might also happen to you when a winning trade
decreases it profit.
In general, trading itself is quite simple, but being patient might require some
effort. Let's look at the ways of improving patience for your FX experience.
The first step to enhance patience is to take away the fear. After you have made a
decision on certain trade, do not let anything make you doubt it. When, for
instance, you just opened a EUR/USD short and there come several upward
candles, do not hurry to close your trade.
On the other hand, if some surprising news is released, you might take a hint on when
to close your position. For these purposes, you should keep in mind the exact levels
of losses you might take and minimal profit you seek for each trade.
Other than these, market fluctuations should not affect your decision. If you stick
to this practice, your Forex patience will definitely go up.
Then, assessment of your winning trades is another important step towards FX
market patience. When an opened position is almost reaching the take-profit level,
you might want to close it in order to grab your profit immediately.
Well, if you do so, you will, but with this you do not let your trade reach its full
potential. This is also a loss – on further profit. In this case you might want to set
your stop-loss to a minimal level of profit for this position and amend your take-
profit to a level where the trend line will reach, on your opinion.
If needed, this can be fulfilled several times per trade. Although this is a violation of
the above idea of a trading plan, such strategy is a good instrument for seasoned
traders as it teaches how to be disciplined in Forex trading.

Summary
Now, after learning these fundamentals about how to become more patient and
disciplined FX trader, go and try to implement them in practice. Do some market
analysis first, and then create your trading plan for next week. For that you will
need to select your trading instruments, decide on entry and exit signals, set the
levels of stop-loss and take-profit, as well as the number of trades you intend to
carry out at most.
For all of the above you would need a trading account. You can open a live
account with Admiral Markets or start from paper trading by setting up a demo
account. We believe you are ready to apply you knowledge now, so enjoy your
trading!
Besides the market knowledge, traders need to have a certain psychological profile to
be successful in their career. Picture a person who has to take swift decisions and
stick to the strategy, while showing as little emotion as possible. Most likely, this
person doesn‘t even exist. However, this doesn‘t mean you can‘t achieve the same
results - especially if you‘ve got automated trading at your side. But let‘s take one
thing at a time. The worst of the human emotions that will definitely mess up your
trading is greed. When you make money, you want to make more money. This is
human nature - we want to improve and greed is just our way of saying we can do
better. Another strong emotion is fear - fear of success, failure, mistake and
consequences. Fear can lead to bad decisions - from selling too early to buying too
late. You may feel like fear will never go away, but here‘s where knowledge comes
into play. The more information you have, the more trust you have in your strategy -
and the calmer you can act.