Forex price action trading strategies provide much more than just high probability entry signals, they also work to influence the proper trading mindset. Many traders know that in order to find success in the Forex market they need to be disciplined and remain calm yet confident in their interactions with the market. However, very few traders understand just how much the specific trading strategy they use can influence their mindset and emotions. Since not trading from emotional impulses is a necessity for making consistent money in the market, it is of paramount importance to use a simple method like price action trading so that you do not unknowingly contribute to your own confusion and emotional stress in the Forex market.
Why Emotional Management is Critical to Trading Success
Traders who do not pre-define their Forex trading activity will inevitably fall into a cycle of emotional trading ups and downs. The problem with emotional trading is that it can be very hard to realize you are stuck in this rut until you get out of it, it’s sort of like the old saying “can’t see the forest for the trees”; it is hard to obtain the proper trading perspective when you are caught up in emotional impulse and feeling.
If you want to become a calm and calculating forex trader who never has to deal with emotional trading mistakes, you will really need to first understand why emotional management is so critical to trading success. The reason emotional management is so vitally important to forex trading success is because the market simply does not care about how you feel or what you think. To put it another way, you will not gain any upper hand in the market by acting on your feelings of fear, greed, hope, anger, euphoria, or desperation. In reality, there will be a positive correlation between how much you trade from emotion and how much money you lose in the market. This means that the more you trade based on emotion, the more money you will lose. It may take a year or even 5 years for you to blow out your account, and you may have many winning trades in between, but one thing you can bet your house on is that if you do not learn to control your emotions while trading the market you will eventually drop into the 90% statistic of losing traders.
Over-complicating Forex trading can easily induce emotional trading, leading to lost money and lost time.
If you are using a Forex trading strategy that is too complicated for its own good or is just simply too confusing for you to understand, you are likely to end up entering trades out of desperation or frustration. Many traders use fancy sounding indicator trading systems or Forex trading robots, these systems sound nice and might look sophisticated to the untrained eye, but in the end they are doing nothing more than inhibiting your view of the natural price dynamics underneath and the predictive power they contain.
Traders often shoot themselves in the foot right out of the gate by using complicated trading strategies that require them to cloud up their charts with a million different bells and whistles. Many traders are not even aware of how much stress and complication they put on themselves by using overly-complicated trading strategies until they switch to a simple trading strategy like price action trading. The switch between lagging indicator based methods or trading software to raw price action trading strategies is often described by Forex traders as an “ah ha” moment, like turning on your headlights after trying to drive in the dark your whole life.
How the simplicity of price action trading can work to foster and maintain an objective trading mindset
Once you begin sliding down the slippery slope of emotional trading mistakes it can literally take a near miracle to pull you out of this habit and get back on the right path. The simplicity in price action trading will permeate through all your Forex trading activity and thinking and will work to foster and maintain an objective or emotion-less thinking pattern about the Forex market. This type of objective thinking pattern is the cornerstone of consistently profitable forex trading, and the fact that many traders lack this thinking pattern is the biggest reason why most traders fail in the end.
To put it concisely, the difficulty in successful forex trading lies in the difficulty most people have with disciplining themselves in the Forex market, not in the actual act of analyzing a chart and entering and exiting trades. Many people are drawn to Forex trading because it does look very easy on the surface; anyone can look at a price chart and identify a trending market or a range bound market and make a decent prediction about what price is likely to do next. The real difficulty in achieving Forex trading success lies in the fact that most people lack the ability to keep themselves accountable each day and maintain an objective mindset. So, if you can acknowledge that Forex trading is not really as technically difficult as most people think it is, but that the real difficulty lies in maintaining control of your emotions, it only makes sense to use a simplistic, logical, and effective method like price action trading strategies.
The importance of making a Forex trading plan based on price action setups
There really is only one real way to make sure you do not fall into the trap of emotional trading mistakes; developing your own personal forex trading plan. Making a trading plan based on simple price action concepts will be easy to follow and won’t bog you down with the haphazard details that many other trading strategies contain. By having a Forex trading plan based on price action setups you can create a daily trading routine that you can use to physically and mentally treat your Forex trading like a business. If you do not do this than the risk of entering into the emotional trading cycle becomes greatly elevated. The main concept to keep in mind is that you need to approach and think about all aspects of the Forex market from a simplistic point of view. This theme of simplicity should resonate throughout your Forex trading strategy, your Forex trading plan, and your Forex trading mindset. Once you have achieved this level of universal simplicity in your Forex trading, you will likely no longer experience emotional trading mistakes. To get started trading simple price action trading strategies that will help you eliminate emotional trading mistakes, checkout my price action trading course for more information.