Mark Thomas — Trade On Track
In this article we’re taking a slight deviation from automated trading topics, but we will return to them for the weekend article (when I’ll present some “robot” code that you should find quite useful). In this article, we’ll discuss the importance of thinking positively when trading.
If you are trying to make profits out of the forex market then you’ll soon discover a myriad of different strategies and techniques that you can use in the operation of your trading enterprise. However, there is also a human element involved as ultimately it is you that makes the decision on whether to take a trade, how you manage the trade while you’re in it and when to exit from it.
There are obviously significant risks involved with trying to make forex profits, particularly with the magnifying effects of leverage, and this should always be kept in mind. However the potential risks and negative impacts should not dictate your trading behavior as this will eventually force you into decisions that are contrary to your original plan.
You won’t make profits from the forex market just from wishing that it will happen, but there are ways in which you can use positive thinking to assist you with the decisions that you make. The following are examples:
Keeping a positive expectation is important if you hope to make forex profits over the long term. You should not be making trades just for the sake of it or in the hope that there’s a big windfall just around the corner. Only commit to positions once you have done your due diligence and when you truly believe the trade will provide your required profit level.
Have confidence in your abilities and your plans. Believe that your strategies and methodologies are sound. Don’t be swayed by a losing trade or by fear of a market trending away from your opinion. Confidence and positive thinking will keep you coming back to the markets with your proven strategies to recover your losses and continue your profits. Negative thought on the other hand, will cause a lack of confidence and quite often you’ll give up on strategies that could have been very profitable for you in the long run.
Take personal responsibility for the trading decisions that you make. There is no one else to blame for your trading activity. Even if you’re just following trading signals provided by someone else, you are the one responsible for following those signals.
It is a fact that some of your trades will go badly and cost you money. You need to accept that losses will occur and are generally due to things you have no control over. Move on and have belief in your original strategies. Understand the risks but don’t let it change your overall plan.
Try not to get emotionally invested in every decision or transaction. Stay detached and business-like as much as possible. Too much emotion can only lead to bad choices over time.
Don’t lose sight of your overall objectives and profit targets. Consider the downside to every potential choice that you make but also go in thinking about what the potential upside can provide.
Believe in your systems and yourself. It is easy to change from something that works in the hope of finding some magical money making formula. Stick with what you know if you are sure that it has worked and will work in the future. In the world of forex trading, it is important to remember that the grass is NOT always greener on the other side. If you have a winning system, stick with it, expand on it, improve it, but don’t ditch it in the hope of finding the holy grail.
Negative thinking only instills fear – fear that you might be letting a trade go too long (so you exit early), fear that a minor pullback in price is actually a full reversal, fear that stops you from pulling the trigger or taking a full position when you should be. Think positively and you’ll find that you’re better able to stick with your original trading plans.
To think positively on a consistent basis requires discipline in itself. You need to be aware of your own thoughts and “catch” yourself when you find you’re having a less-than-favorable thought or feeling about something. In that moment when you catch yourself, make a conscious effort to turn your thinking around and replace the negative thought with a positive thought. This takes practice and diligence, but if you do it often enough and consistently enough (say, over the period of a few weeks), then you’ll find that it becomes a habit. With the habit in place, you’ll find you automatically think positively about certain situations where in the past, you would have thought negatively.
Your potential success as a currency trader will be dependent on many different factors but always consider how the power of positive thinking can assist you to make forex profits. A positive expectation combined with strong discipline makes an unbeatable combination.
Winner’s Edge Trading, as seen on: