How to Develop a Profitable Forex Trading Mindset

Developing a successful trading mindset is perhaps the most important step to being profitable in the long term. Most traders fail to master their own psychology and lose money by succumbing to their emotions. After all, there is a famous saying in the trading world: “Bulls make money, bears money, but pigs get slaughtered.” This saying displays greed, a failure to develop a profitable mindset. This article explains how your psychology is the key to winning the forex game in the long run.

Most traders believe that trading by indicators will give them profit no matter how they react to the graphs, they are unaware of the importance of their own mindset. Successful traders are highly aware of their emotions and control their fears and greed to execute their trades in a robotic manner. If you are not making money in the market, then it is most probably your mindset that is affecting your trades.

Control Your Expectations

The modern world has made people find quick fixes to their problems; all they want to do is get rich as fast as possible. In the forex world, this leads to one having unrealistic expectations. You have to realize that it is highly improbable that you would be able to earn millions from your $1000 account in a few months. Instead, focus on managing your risk and only trade with money which you can stand to lose. Try not to cover your losses by doubling your positions and don’t get attached to your trades.

Slow  & Steady Wins the Race

Forex tends to attract high frequency traders due its 24/6 activity and tremendous liquidity. Active trading gives hope to traders that they will return a tenfold amount on their equity every month. Even though you may win big at times, active trading with a greedy mindset gets pigs slaughtered in the end. Develop a slow and steady approach instead; trade on 4H and daily charts to get a bigger picture and execute a few quality trades instead. Technical analysis tends to be more correct on longer charts with minimum noise. If you average slow monthly returns, you will compound your profits and reap the benefits later.

 Stay Organized

It is essential to have a trading plan and a journal so that you may know what you’re doing and then assess your performance. Your view of the markets will be more objective when you’re not trading; consequently your trading plans will be more successful. When you’re about to enter a trade, think before you execute.

 Be Confident

Assess your strengths and adjust your trading style to it. Once you are aware of your edge be confident about it and execute your trades without fear. This will make sure that you don’t gamble as you would only trade when you can assess the situation.However,don’t be over confident and keep greed in check.

Control Fear

While greed may get you slaughtered, fear will make your mind indecisive and make you avoid trades altogether. If your confidence vanishes you might have second thoughts while running your trades.This might lead to you closing trades early.

You Don’t Need Perfection

You have to realize that all of your trades can’t be profitable. Instead, your strategy should be to minimize your losses and maximize your gains, therefore always finishing higher than before.

Let Go of Your Ego

Lastly, it is very important that you don’t relate your wins and losses with your ego. Don’t treat winning trades as ego boosts as it will lead to a false sense of achievement. Similarly, try not to equate losses with your ego as you will start to take the markets personally. Remember, the markets don’t care about your mood and your ego,they will continue in spite of your emotions.

If you keep all these pointers in mind you will be closer to gaining profits consistently in the forex market. Develop a winning mindset to execute winning trades.