Many aspiring traders fail to become consistently profitable because they put too much time into trying to get rich from forex trading and not enough time into the actual process of trading. The paradox of this behavior lies in the fact that the more you concentrate on how much money you want to make in the forex market, the less money you are likely to make. Becoming a consistently profitable forex trader is the result of discipline, passion, and a willingness to recognize and conquer your own personal mental faults. As you begin to focus less of your mental energy on how badly you want to make money from forex trading and more of it on the actual process of mastering your trading strategy and managing your risk, you will find that making money in the forex market becomes much easier.
• How to focus on the trade…
It is quite difficult to focus your attention on only taking the best trade setups and following your trading plan if you are an emotional train wreck because you risk too much money on every trade or are entering numerous trades each day. Most traders get so wrapped up in calculating how much money they are “going to make” on any one trade, that they forget to calculate the risk of the trade and decide whether or not they are truly comfortable with it. Effective risk management is step 1 in having the ability to focus more of your time and energy on the actual process of selecting profitable trades.
Step 2 of focusing on the trade revolves around not entering too many trades in any given period of time. In other words, don’t over-trade, if you have been around the forex market for a while you probably understand the dangers of over-trading by now. However, one side effect of over-trading that you may have overlooked is that it forces you to focus less of your time and mental energy on becoming a great trader because you inherently become overly concerned with the money aspect of trading when you over trade. Over trading is really just another form of over leveraging your account or risking too much, so it is impossible to focus the proper amount of mental energy on mastering your trading strategy when you are freaking out over the amount of money you are losing because you trade too often. The more you over-trade and over-leverage your account (focusing on the money) the worse you will become at trading because you are not focusing your energy in the right places.
• Why Focusing on the Money will cause you to lose…
When you focus your mental energy and time on how much money you can make from the forex market you also put yourself on the path to emotional trading mistakes. The more you think about and focus on “getting rich” in forex, the more likely you are to induce the trading mistakes we discussed above; over-trading and risking too much. When you begin to shift your focus from money to the actual process of mastering your trading strategy and becoming a great market technician, you will naturally begin to money with greater ease. However, the whole point here is that you cannot focus enough of your mental powers on mastering your strategy and becoming a better trader if you do not stop over-trading and over-leveraging. Getting caught up in these emotional trading mistakes takes up most of your mental and emotional energy, losing large amounts of money and then trying to make it back can literally be mentally and physically exhausting.
Once you begin to “forget” about the money aspect of trading, by managing your risk and not over-trading, you will tend to naturally apply this extra mental focus to picking and choosing only the best trade setups, this will work to make you a more profitable and accurate trader, and much quicker than would otherwise be possible. Many traders erroneously believe that by trying to “control” market by trading short time frames and big position sizes they will make a ton of money really fast and then somehow parlay these negative habits into real wealth. What actually happens when you focus on the money this much is that you may get lucky and hit a couple winners and make some fast cash, but it ultimately will destroy your trading account and cause you to lose many times the amount you win, thus prolonging your ultimate trading success. So, the quickest path to making consistent money in forex is by elimination of emotions through risk management and proper trade selection, not by trying to control something that cannot be controlled.
• View forex trading as a challenge to conquer yourself and the money will follow…
Professional forex traders know that trading success is ultimately a function of learning to consciously master and control your own emotions. They also know that is one thing to understand this concept and another thing entirely to make it a reality. Most trader’s that have been involved in the markets for at least a couple of months have no doubt read at least an article or two on the importance of psychology and emotional control in becoming a consistently profitable trader. However, an almost equal number of traders conveniently “forget” about the importance of emotional control or simply don’t believe they have a problem with managing their own emotions. The truth is, if you are not consistently making money in the markets than you are not effectively managing your own emotions or “conquering yourself”. Once you truly believe you need to conquer your own emotions, and you implement a forex trading plan to help you do this, you will start to see your trading account build on a consistent basis, instead of the volatile profits and losses you are probably experiencing now.
If you can treat your forex trading as a measure of your own personal discipline and progression as a person who thinks logically about business matters and not emotionally, you will begin to see the money role in. As we discussed above, in order to forget about the money you have to not become emotionally attached to it and the way to do this is by not over-leveraging and not over-trading.
• Learn an effective method like price action and master it…
Finally, an obvious part of becoming a successful trader is using an effective trading strategy. After all, you don’t want to start implementing all the points above with a trading strategy that is ineffective or overly complicated. If you learn to trade with a simple trading method like price action analysis, you can learn to master this method in a relatively short amount of time, assuming you are following the points discussed above. Once you achieve this point of mastering your trading strategy, you will reach a level of confidence and clarity in your forex trading that you have not experienced before, this is what is known as “trading in the zone”, and is what Mark Douglas talks about in his book by this title. Remember, you cannot reach this “zone” of trading mastery if you do not first learn to master yourself.
If you enjoyed today’s article and are interested in learning more about my price action trading strategies and similar concepts to the those discussed in this article, you should definitely check out my forex trading course information page to learn more about what is offered inside my member’s community, I am also excited to have recently launched a completely revamped member’s back-end which contains the award winning V bulletin forum software, I am certain you will be impressed with the volume of content and services offered in my member’s area. Visit the course page here: forex trading course – Good trading as always – Nial Fuller
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