A Guide to Thinking Like a Professional Forex Trader
The way that a professional Forex trader thinks about trading the market is quite different from how an amateur trader thinks about it. It is mainly this difference in perspective and psychology that separates winning traders from losers. So, how can you start thinking more like a professional and less like an amateur?…
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• Don’t make trading more complicated than it really is.
One of the first steps to thinking like a pro trader is to simply remove the clutter from your charts. It never ceases to amaze me how many amateur traders simply will not let go of the Forex indicators or Forex trading robots they are using. These things are unnecessary to become a consistently profitable trader, in fact they will actually induce over-analysis and hesitation, and they will work to create the wrong trading mindset.
Making the process of trading more complicated than it needs to be is one of the most prevalent trading mistakes that amateur traders make. Making consistent money in the markets is not easy, I am not going to lie to you, so don’t make it harder than it needs to be by using ineffective and overly-complicated analysis tools like trading robots and tons of indicators. The best analysis tool is, and will always be, simple price action trading strategies, this is because price reflects all market variables and provides us with the most relevant and accurate view of any financial market.
• Stop worrying about the news and fundamentals.
There really is no need to commit too much of your time worrying about or analyzing Forex fundamentals or news. While it is true that these variables are catalysts for price movement, it is also true that it is far more efficient and easier to just learn to read the price action, instead of trying to trade based off news.
Most successful Forex traders are trading very simple technical strategies and are not worried about news events, because they know that any global Forex news event will be reflected via the natural price movement on a plain vanilla price chart. So, if you want to start thinking like a professional Forex trader, spend more time learning to trade based off price action and less time worrying about news events. Price action shows the end result of a news event, and it is this result that matters, not what “might” happen based on something implied by an impending news event.
• Learn to trade higher time frames first.
Professional traders know that higher time frames provide a clearer and more useful view of the market. If you want to start thinking like a professional trader, you need to learn from and truly master the higher time frames before you even think about trading lower time frames. Your primary focus should be learning the daily chart first. The weekly chart is a great “helper” chart for longer term trend analysis and market bias, but as a beginning trader it is very important to your psychological development that you learn to trade the daily chart above all else. I still mainly use the daily chart and rarely look at lower time frames other than the 4 hour chart.
Trading higher time frames increases trading success because they work as natural filters; filtering out much of the “random” intra-day price movement that takes place in a market, and providing a much more pertinent view of what is going on. Also, the lower in time frame you go the less reliable and accurate any trade signal becomes, so professional traders take most of their signals off the daily charts because they want to avoid the less accurate trade signals off the lower time frames. This is all part of trading like a “sniper” instead of over-trading like a “machine-gunner”; most amateur traders do the latter instead of the former.
• Avoid becoming emotional.
I have talked about emotional trading mistakes in many of my articles. The truth is that most amateur traders set themselves up to make emotional trading mistakes by doing two basic things wrong. The first thing is that they typically do not manage their money correctly, improper Forex money management typically means you are risking too much, not taking profits when you should, not taking losses when you should, and other similar mistakes. Professional traders realize that they can consciously control their emotions by making sure they properly manage their money. If you do not manage your money properly your emotions are far more likely to get the best of you, so you must make proper money management a habit if you want to avoid becoming an emotional trader.
The next thing that amateurs do wrong which causes them to trade emotionally, is trading way too much. What you need to realize is that trading more is not going to help you achieve your long term trading goals. Most amateur traders are very surprised to learn just how often professional traders actually trade; it is typically a lot less than they think. Most traders go through a process of trying to trade lower time frames and over-trading, then they realize they need to trade less so they go to the higher time frames and still over-trade for a while. It is only after much trial and error that most traders figure out less is more in Forex trading, I am here to tell you that you can avoid most of this trial and error by learning to trade the higher time frames, mastering price action, and being patient.
• Track your trades.
All of the advice in this article will not mean much if you don’t follow it; you need some sort of “glue” to keep everything from falling apart every time you open your charts. This “glue” is your Forex trading plan and your Forex trading journal. I will discuss the trading plan in the next section. For now, let’s discuss trading journals.
Most traders are not disciplined; this is why they fail, for the most part. You need to create discipline in your trading routine if you want to become a professional trader, this is a prerequisite. After you become consistently profitable your discipline will become a habit and you won’t feel as much effort or resistance to discipline as you might early on, but you need to foster it. I have linked you to a very good Forex trading journal; I suggest you start tracking your trades immediately. If you are on a losing streak, start over and begin tracking every trade in that journal while making sure to manage your risk effectively and only trade “sniper-like” price action trade setups. Developing a track record will help keep you accountable and will foster discipline; this will help you to think like a professional Forex trader.
• Develop a routine.
If you don’t develop a trading routine you will end up over-analyzing and spending way too much time in front of your computer. Decide before hand that you will learn to trade the daily charts first, then check them each day at around the same time and for the same amount of time. Don’t deviate, follow your routine and develop a Forex trading plan around it. Your routine could be to read your trading plan each day just before you check the markets. If there is no valid price action setup, you walk away until the next day. If there is a valid setup, you then go through your trading plan and make sure it meets the criteria. Your trading plan should basically be a series of questions: Is there an obvious and well-defined setup? Is it occurring in a trending or ranging market? Is there confluence? If so what is the confluence? Is a risk: reward of 1:2 realistically attainable? These are the types of questions you should put each potential trade through. Doing this will help you keep your mind in the right place. You will be FAR less likely to get off track and start trading emotionally if you develop a trading routine like this.
• Master an effective trading strategy.
Of course, before you can develop a trading plan and trading routine, you must master an effective trading strategy. The price action strategies that I teach are easy to learn and easy to trade, they are also very effective when used correctly. However, you must REALLY learn to trade them correctly and focus on the daily charts first. Not enough traders do this, and they end up becoming frazzled and emotional. Developing the proper forex trading mindset takes time and work; it is like a garden that needs to be cared for consistently each day, if you stop taking care of it, it will become harder and harder to get it back on track. The clarity and effectiveness that price action trading provides makes it the best trading strategy to develop your Forex trading mindset from and gives you the best opportunity to learn how to think like a professional Forex trader.
40 Comments Leave a Comment
Thanks Mr. Nial! for a magnificent lesson!
best to learn, thanks, I’ll try
Hi Nail, i just read your article and it was fantastic. the mean reason for this article is( A Guide to Thinking like a Professional Forex Trader) after i read this article i just work to higher time frame and made success!!! thanks Nail
Naill Your lessons are very easy to follow am making steady progress in my lessons as a FX trade beginner .
Please keep it up.
Reading your articles, I feel like I have a mentor. Thanks, Nial.
Great lesson my friend!!!
THANK YOU for this wonderful lesson which you posted. I am using it to set up my trading plan.
Hi Nial. I hv gone thru a number of courses in forex trading and hv never been successful at it. I joined your course mainly because of the simplicity of your trading methodology and making a lot of sense to succeed in this business. Thanks for your unvaluable mentorship…
thanq u sir great article for new trader like me and hope same in future
Thanks, Nial. The outline of the routine and trading plan are timed well. This is the point that I must now make automatic for me.
I seriously could not agree more with your first point! i hate seeing a cluttered chart, all you really need is a naked chart with the occasional support and resistance lines or fib’s, even then after trading enough years you can begin to analyse your charts completely naked without even a visual aid. Great post as usual!
Hey, Nial I always enjoy your articles I will get your course as soon as I can. It is time to change what is not working for me now. Going to longer time frame. I get whipsaw all the time in smaller time frames.
i really appreciate u, u are helping in my trading carrer thanks
Words of wisdom. Becoming a professional trader is a journey and needs time and patients by following trading plan and creating a consistent income over the time.
This article must have been written for me. I have opened a live account today and before I have traded you have set out my must do checklist. I have covered all the areas mentioned but I am fully aware that I have much to improve on.
Thank Nial for the cyber classroom.
It’s lessons like these that are going to help turn this rookie into a consistently profitable and confident trader. Thanks and yes I signed up on your dotted line two days ago.
You and your course (to me) are like Christmas and Santa was—some 67 yrs ago—I CAN’T WAIT!!! Thank…Larry
Thanks a bunch Nial!!!!
Thanks for your advise, it is very helpful for me as a newbie for learning to be a profesional.
Probably if your article came earlier,I would not be crying a river over the same mistakes you’ve pointed out.this was personal and thanks Nial
Great content nial
Thanks to remember me on that strategy (daily grafs) which I trading on begining of this year I was profitable with !
As one who has written almost a hundred EA’s, Nial’s advice is correct. Unplug your robot and plug your mind into trading. Robot’s can never match the intuition and experience of a real, live trader. I know because I tried it. Robots can never be a substitute for human intelligence.
Thanks Nial for the excellent article and reminder.
I wanted to let you know that I like your trading style. Also, I read your articles often in order to measure my progress. It has taken me years for many reasons to make progress in trading, but I have to admit that I love it. More importantly, I have a somewhat different trading style than yours, but I have been able to incorporate some of your strategies into mine. I decided long time ago that I was not just going to be a one frame trader (long or short). I have always known that if I want to become a really good trader, I needed to learn short, mid and long term frame trading. I have focused on the short term because it provides immediate income. I have come to the conclusion over time that it isn’t as hard as people make it out to be. Moreover, with discipline and practice, it is possible to day trade and make between 50/75 pips daily; plus, the earnings from long term trades, like, the ones you do. The goal is to trade not only short term; as well as; long term in order to produce higher revenue. I know the reason why it has taken me so long is because my mind has made it complicated. There’s an overload of information about trading out there which causes confusion in the minds of amateur traders. As a result, our minds are plagued by excessive information we don’t know how to dessiminate properly due to our lack of experience creating a turbid projection of what is happening in the markets from our ilucid minds. Consequently, flawed decisions our made and trading accounts are drained. Thus, I am glad I have gone through all of these experiences. They have strengthened and made me a better trader. Be well and keep doing what you are doing Nial. You trading and marketing efforts are commendable.
Mr. Fuller, u have exposed all secrets about forex to us, i think its time to buy ur training and join the community.
When i started to trade alive a 3 months ago I didnt realise how important such article can became for me.
It can be said that our Mentor really helps to us.
Great lesson!! Consistency seems to be key and I really like the set of questions you listed that one may go through before each trade. Thanks for all your posts :)
I’m impressed. I’ll be buying your course soon
Hope you are well. Thank you for another fantastic lesson.
Thank you for all your help
Thanks and Regards
Each years have different market conditions, what do you think
to the anticipation.
Thank for the lesson God bless you
It is a brilliant article Nial. I will get in touch with you regarding your course soon.
This article helped reinforce my routine and sticking to my trading plan. The hardest thing to do is the routine.
Thanks for a well written concise article Nial,
You daily course had been a helping material to me since i have creat time to read it. Thank you for helping the amateur.
As a newbie to Forex and Price Action trading this article is both very relevant and timely. Thanks, Nial, for your continued advice.
I will absorb your advice.
Nial,thanks so much for all your great lessons and all your effort you put in every day.I think what you have written here is very important to follow.
After going thru your course material my every days has gone in GREEN with good amount of sum …. Thanks a lot ….
Nial – you continue to amaze me man. Your articles are spot on and very timely. You are a great coach and I wish there was a way to pay you back for all the valuable lessons that you have given so freely to many of us.
Great Artical Nial.
The point about mind-set is key, it was the last piece of the jigsaw for me in becoming successful.
Hope this similar email you have posted earlier. But no doubt as we keep reading this again and again our mind will be deeply imprinted the do’s and dont’s of trading .
Thank you GURU :)
Nial, Just letting you know, I am buying your course and joining your trading community today so look out for me :). I would like to thank you for all your great lessons, you have helped me become a better trader no doubt, thanks, Len.