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How to Keep Your Emotions Out of the Equation When Forex Trading

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5:33 am
June 27, 2013


John Smith

Member

posts 26

The number one enemy that is going to haunt your forex trading is your emotions. There are two emotions that are going to haunt your forex trading decisions. One is fear and the other is greed. If you are able to control these emotions as a trader, you will become a winning trader otherwise, you will always be a loser.

Fear will come into play telling you to avoid a trade when you have a high probability trade setup staring infront of your on the chart. Greed will come into play when you will want to enter into a trade when the risk/reward ratio is not good and there is no confluence on indicators telling you that this is a high probability trade setup but still you will want to take that trade.

So, how do you keep your emotions out of the equation when trading forex? The only way to keep your emotions out of the equation as a trader is to follow a rule based trading system that tells you exactly when to enter into a trade, where to place the stop loss and when to get out of that trade.

Once, you have that ruled based trading system, you should follow it rigorously under all market conditions. When the trading system tells you to enter into a trade, you should enter. When it says to get out, you should get out. No matter what! Even if your profit target has not been achieved.

Stop trading like a gambler who wants to make one big winning trade and in an attempt gambles all the capital on one big trade and loses everything. What you have to develop is the mentality of a consistent winner who makes consistent small wins and off and on one or two big wins.

You will have to follow strict money and risk management rules when entering into any trade. For example, you should never risk more than 2% of your capital on a single trade. This way if you are trading with a $5,000 deposit, you should not risk more than $100 or 10 pips on a single trade.

Sometimes, you will get tempted to trade it big. You need to learn how to avoid it. If you can make just 20-30% low risk return per month, overtime, this small monthly gain will compound into a huge sum. Compounding is a powerful force that will help translate your small monthly gains into a big amount overtime. Always stick to the rules and you will be a winner. Don't follow the rules and you will fall victim to your emotions, your number one enemy!


2:35 pm
August 30, 2014


Muhammad Perkins

Member

posts 39

It’s impossible for anyone to keep his/her emotions out of trading at best it can be minimize but can’t be completely removed as we are humans not robots so there is no way we would be able to work properly if somehow the emotions disappear it will hamper our life in a big way.

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