Trade What You See, Not What You Think

As a Forex trader, you have probably read that you need to control your emotions and focus on logic and objectivity instead of giving into the impulses of greed, hope, and fear. However, it is one thing to know you should not trade emotionally and another to actually know HOW to NOT trade emotionally and how to implement this knowledge.

The human brain is primed to work against us in the markets due to the primitive “fight or flight” brain mechanisms that have guided our existence as a species for thousands of years. Unfortunately, these same mechanisms actually inhibit most traders from achieving their full potential in the market. So in order to become a consistently profitable trader it is necessary to devise a plan using our more logical and objective frontal lobe section of the brain, which is the newest area of the human brain and allows us to plan, reason, and comprehend complicated ideas.

By learning to trade what we see, and not what we think, we can make sure that we are operating on logic and objectivity instead of emotion. The following points will provide you with some insight and solid tips so that you more clearly understand why you need to trade what you see and NOT only what you think and how to make sure you follow through with it.

Stop trying to ‘out-smart’ the market

Trying to guess what the market will do next with no real rational or trade setup is exactly the same as gambling your money away in a slot machine or on the roulette wheel. Yet, every day beginning traders as well as unsuccessful experienced traders commit this exact emotional trading error. Rather than looking at the price chart and checking it against their forex trading plan to see if any price action setups are present, many traders simply “manifest” some idea about what price “should” do.

When you trade off anything other than an obvious and visible price action setup, or in accordance with whatever your pre-defined trading strategy says, you are simply operating on emotion and feeling rather than objective analysis of price movement. Many traders trade emotionally after a losing trade or after a winning trade because they give into the revenge feeling that a losing trade elicits or the greed that a winning trade often elicits. It is at these exact moments when traders stop trading off what they see on the chart and begin trading off what they “think” or feel, and it is also these moments that separate consistently profitable traders from unsuccessful amateurs.

Don’t get attached to any one trade

It is important to understand that just because you “think” something will happen in the market does not mean it will. Similarly, even if you do find a very obvious and “perfect” looking setup, you should always remember that the Forex market is a dynamic and a constantly ebbing and flowing arena where anything can happen at any time, so don’t bet the farm just because you think you have spotted a “sure-thing”, because there is no such thing in the Forex market, or any market for that matter.

Rather than allowing yourself to become emotionally attached to any trade or any idea about what the market might do, you need to learn to trade emotionally detached from your trades. Allow the price action to light your way through the noise and confusion of the market, all the while keeping in mind that you must constantly manage your risk even on trade setups that look “perfect”. Always make sure you are trading according to the concepts of your forex trading strategy, and not just on a “whim”, if you are a price action trader then follow the trail left by price instead of getting off track and giving into what you think the market “should” do or “might” do.

Learn to control yourself if you want to make money in Forex

One obvious yet often over-looked fact of Forex trading is that the market simply does not care at all about you or if you win or lose money, the market does not know you exist, and it doesn’t get emotional about you. Yet, most traders get emotional about their trades and about the market, thus they are letting a non-living entity control their behavior instead of controlling it themselves. You will not make consistent money in the market until you learn to control your emotions and reactions to the market.

Once you learn to trade only what you see on the price chart instead of what you think, you will be well on your way to becoming a consistently profitable trader, because trading what you see and not just what you think means you are controlling yourself instead of being controlled by the market. The key is to consistently trade only what you see and not what you think or feel, this will help to keep you from giving into the emotions of revenge or greed after a losing or winning trade. Traders who consistently trade only what they see on the price chart and not what they think “might” happen, along with managing their risk effectively, are the traders who make money in forex. When you learn to trade with high-probability price action setups while simultaneously controlling your emotion and risk, you will be in an even better position to make money in the Forex market.

Tips to make sure you only trade what you see and not what you think

It is one thing to fully understand exactly why you need to only trade what you see instead of what you think, and it is another thing to actually make sure you do it. Here are some concrete tips that you can use to make sure you only trade what you see and instead of giving into emotion:

• Take a moment and ask yourself before each trade “what I am doing?”, “what is the setup?”, “does it meet my trading plan criteria?”, “am I acting logically or emotionally?”, “am I controlling myself or is the market controlling me?”, “is there a setup or am I am just making one up”? These are all good questions to ask yourself before you enter any trade, doing this will make you think deeper about what you are doing and if a trade is logically justified or if you are simply acting on emotion.

• If you are trading a specific Forex trading strategy, like price action, make sure each trade you take is in accordance with the concepts that you learned in the trading course or educational material. Ask yourself any or all of the above questions before every trade that you take, until it becomes second nature to only trade what you see. Eventually you will develop a refined discretionary trading perspective that will allow you to almost instantly look at a price chart and spot price action setups. Trading only obvious price action trade setups that have already formed, and that are not just ideas or “possible” setups, provides us with a type of “check and balance” to make sure that we are not trading from emotion.

If you are interested in learning to trade with price action and in developing your “pure” price action trading skills, then please check out my forex trading course, in it you will learn how to trade with the same simple price action setups that I have mastered during my trading career. When you combine the concepts that I teach with a consistent ability to only trade what you see and not what you think, you will be headed towards achieving your goals as a consistently profitable Forex trader.

Good trading, Nial Fuller

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Nial Fuller

About Nial Fuller

Nial Fuller is a Professional Trader, Investor & Author who is considered ‘The Authority’ on Price Action Trading. His blog is read by over 200,000+ followers and he has taught 25,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.