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Erika Austin
5 years ago
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www.fxcc.com +357 25 870750 support@fxcc.com FXCC is a regulated Foreign Exchange Broker that offers a wide range of trading technologies and services.

2 FXCC is a regulated Foreign Exchange Broker that offers a wide range of trading technologies and services. Our ECN/STP business model allows our clients to take advantage of transparent real-time pricing. All our clients have access to a unique Forex Trading environment that offers sophisticated STP (Straight Through Processing) liquidity, execution and trading functionality. RISK WARNING: Trading in Forex and Contracts for Difference (CFDs), which are leveraged products, is highly speculative and involves substantial risk of loss. It is possible to lose all the initial capital invested. Therefore, Forex and CFDs may not be suitable for all investors. Only invest with money you can afford to lose. So please ensure that you fully understand the risks involved. Seek independent advice if necessary.

3 CONTENTS p.2 Mindset p.3 None of us are Mister Spocks p.5 Having a blueprint trading plan and never violating it p.6 Eliminating over-trading p.6 Confusion p.8 Trade smart - Make more - Take control p.8 Taking ownership and responsibility for your trades p.9 Have the confidence to stand by and up to your decisions p.10 Automation helps to smooth emotions p.11 Fail to plan plan to fail

4 Mindset Out of the three Ms of trading perhaps the most contentious is the M referring to a trader s mindset. Often market commentators and analysts will refer to the mindset as your psyche, or your emotions. But whatever reference we use we are all agreed on the singular issue that getting your mindset, your psyche and your emotions right, in order that you can give yourself the greatest chance of success when trading FX, is absolutely essential. What we were attempting to work to when discussing emotions whilst trading, is to reach a state of mind where you have developed such control of your emotions that you are able to trade whilst eliminating emotional decisions. In this message we will cover many issues, such as revenge trading, going on tilt, and other harmful emotional trading phenomena that can affect your development. In many ways taking a forensic and technical approach towards your emotions and discipline, similar to how you would take a technical approach towards analysing a chart, can work in eliminating and controlling your emotions when trading. 2 Contents

5 None of us are Mister Spocks Nearly every book on trading you read will tell you that controlling your emotions and approaching your trading in a disciplined fashion, are essential to your success. All traders visualise the market differently because our emotional intelligence, our past, our current lives, combined with our perceptions, are unique to us. It is important to recognise that none of us come to the market as supreme beings with Vulcan control of our emotions, we all have baggage. Similar to cleaning up the harddrive on a computer, that baggage needs to be thoroughly de-fragged in order for your own personal trading hard drive to perform to its optimum. 3 Contents

6 The larger the capital size and base a trader has to trade, it is presumed the more emotional control and discipline that trader will have developed. An institutional investor/ manager trading billions of dollars, will have surely developed ultimate control and discipline. The emotions may have also been removed by automation. The small retail trader, with a couple of thousand dollars to trade, probably has the least emotional control. The smaller the capital base, the less knowledge a person has and therefore it is safely assumed the greater risk they take. However, there are many small retail traders who can remain calm, cool, and collected no matter how their trades are developing at any given market moment.? How you do achieve this kind of control whatever the size of account you trade? Contents 4

7 Having a blueprint trading plan and never violating it One easily over-looked aspect, which helps to remove emotions from your trading, is to have developed a robust trading plan which you never violate. This plan can cover everything from risk, the times of day you trade, the signals and alerts you respond to, how many trades you will take in any given day or week and how you will respond to drawdowns. The plan can also cover how you will address your losses and your drawdowns. Perhaps you will stop trading if certain losses are reached, even taking yourself away from your trading screen set up should you experience a losing session. What is certain is that sticking to your plan makes trading less of an emotional issue and more of a forensic auditing exercise. 5 Contents

8 Eliminating over-trading The majority of retail traders trade far too often, eliminating over trading and only trading when your optimum set up occurs, will create a calmness in your mind. The majority of retail traders are re-active to the market instead of being proactive. It is hardly a surprise when you consider the all-encompassing pressure from: brokers, clearing houses, the media, seminars, exchanges, who all benefit from increased retail traders activity. Check out the amount of copy created, when market events highlighted as high impact are published. Confusion Over-trading affects new traders as they confuse being busy with being successful. They often have a view in their imagination that trading is a frenetic, highly active, addictive emotional rush. They surmise that in order to work hard at trading you have to put in a shift. Many aspects of trading behave contrary to the accepted notion of hard work. Many deeply embedded views will have been developed through catching glimpses of traders at work on televisions. And yet the reality is that successful trading is calm, measured and deliberate and once you have developed your edge it could never be described as hard work. 6 Contents

10 Trade smart - Make more - Take control Every time you trade, there are costs incurred. With losing trades it is more than just the loss of that trade, it is the cost of the order, time spent and the overhead incurred when you are trading as a business. If you only trade a few set ups, with low risk and strong profit potential, you will be way ahead of your peers trading hundreds of times every month. This is a proven statistical fact that many in the FX industry avoid discussing. However, it is a proven statistic; Those who trade less make more. Taking ownership and responsibility for your trades In gambling circles the phrase going on tilt is used to describe gamblers who develop tunnel vision and can t stop trading. It happens in the FX trading world too. This going on tilt description can often encompass revenge trading; this is when a trader ignores all the signals he is relying on for his set up to trigger and instead fights 8 Contents

11 with the market to win back his losses. This dangerous spiral can lead to account destruction in record time. At such time it is not uncommon for traders to blame their broker, the market, their technology, their internet service provider, when in reality no one is to blame for trading losses except the trader. There are days when you will experience poor fills, the spreads may widen as your trade is triggered, your internet connection may drop. All these issues should be regarded as the price of doing business in what (at times) can be an imprecise environment. Have the confidence to stand by and up to your decisions Professional traders make their own choices and take their own decisions. They will probably select only one or two websites for technical and fundamental analysis. They will have one primary charting program, and one or two brokers they use and have built up trust with. They will be comfortable and confident in every trade they take and they will remain calm, assured and secure with their decisions, especially when trades go against them. One bad trade will never knock their self-confidence 9 Contents

12 as they have gained control of their decision making through use of their trading plan and money management techniques. They will always use stop losses to minimise the risk of a large loss. They accept that nothing in trading is ever 100% certain and that being prepared for all possibilities is the best way to maintain consistent success. Automation helps to smooth emotions Eventually new traders will gravitate towards automation, the majority of successful traders will always employ an element of automation to their trading. The minimum could be receiving alerts if certain conditions are met. This could be as simple as experiencing an audio alert if a moving average is reached, or if two MAs are crossed. An alarm could sound if several indicators converge as per a trader s set up. What any amount of automation does is provide focus and once again this assists in controlling emotions. The trader may watch charts periodically, but know that unless an action is required he will be able to sit on his or her hands. Further automation can help remove any emotional involvement. For example traders could choose to fully automate their strategy by way of expert advisors on their MetaTrader 4 platform. 10 Contents

13 Fail to plan plan to fail So let s re-visit the points we have made in this message and highlight some extra issues. Let s see if we can sum up how your approach to trading can lessen your stress, thereby leading you to trade by your trading plan, as opposed to trading through emotion, or allowing emotion to; interfere, interrupt and affect your trading and trading decisions. A trading plan is essential You must create a trading plan and never compromise your set of rules. Risk per trade Adjust your position size until you feel comfortable with your risk per trade. Set drawdown limits Whether ten percent or more set yourself drawdown limits and never violate them. If reached then forensically analyse your recent trades to ascertain what mistakes are being made. 11 Contents

14 Never over trade You will learn more and earn more through trading less. Trading is not hard work, despite the fact that the journey to profitability and proficient is a hard road to navigate. Be comfortable with your style of trading Good traders can adapt to trading most time frames and most styles such as; swing trading, intraday trading, and scalping. However, there will be one style that they prefer. Identify it and stick to it through a series of trades before changing. Take responsibility for your trades They are your trades, no one else s. No one forced you to take the trade. Good, bad or indifferent you are in the game once you are in the market and you must accept the results as part of the variance and probabilities that the market churns up. Automation lessens stress All professionals use a form of automation even the most basic form to provide price alerts. Use technology to your advantage. 12 Contents

15 GET STARTED PRACTICE ACCOUNT Why not put the ideas you ve read in this e-book to good use by opening up a demo account with FXCC? Click here to make that first step. LIVE ACCOUNT Are you ready to put your trading plan into practice? Then click here to open a live account with FXCC. Contents

16 CONTACT US Phone CLICK HERE to connect to our Live Chat Chat CLICK HERE to send us an RISK WARNING: Trading in Forex and Contracts for Difference (CFDs), which are leveraged products, is highly speculative and involves substantial risk of loss. It is possible to lose all the initial capital invested. Therefore, Forex and CFDs may not be suitable for all investors. Only invest with money you can afford to lose. So please ensure that you fully understand the risks involved. Seek independent advice if necessary. 14

PSYCHOLOGY OF FOREX TRADING EBOOK 05. GFtrade Inc

PSYCHOLOGY OF FOREX TRADING EBOOK 05 02 Psychology of Forex Trading Psychology is the study of all aspects of behavior and mental processes. It s basically how our brain works, how our memory is organized