In order to make it in forex, you have to make a few adjustments in the way you think and do things. Earlier on, I indicated that to learn new things, you must be willing to unlearn some old habits. Some of these old habits may have been brought about by our upbringing and people around us in general. Take the following steps to prepare and train your mind for forex markets.
Let your expectations be realistic about forex trading
Your expectations should be realistic and achievable in the first place. You will not make millions in your first month. Forex is a business, and not a get rich quick scheme. Being a business, take it slow; slowly learn from the mistakes you have made, learn to effectively use your trading platform, brick by brick until you are successful. I have never heard of a successful trader who made it through overtrading and overleveraging.
Make sure that you are investing money you can afford to lose. Market trading is very risky because you are dealing with leveraged investments. Tame your expectations do not invest all your savings and expect it to double in a month. The amount you invest in trading should not be giving you sleepless nights. Therefore, if you are losing your sleep in the middle of the night, then the possibility is you have risked too much. Do not take trading personally. Everybody at some point loses, and if it happens to you, it does not mean you are not good at it. On the other hand, if you win consecutive trades it does not mean you are a perfect trader.
Learn to be patient with forex markets
In forex, just like any business, patience is essential. I know as a newbie in forex; you want to double that account in one week. That is not how it works, a return of 2% per month is more than enough if you ask me. How many businesses will give you such a return on capital invested? The answer is not many. The moment you realize trading is a business, that is the time you will become a better trader.
Be a long-term trader
Like any other business, to be the successful trader you must learn to look at the bigger picture. Avoid the 5 min trading and focus on long-term trading. Try to understand where the markets will be headed in the long-term.
I always advise people to avoid scalping since it a short-term way of trading. When you teach you mind short-term thinking, you will have a hard time mastering trading.
Chose quality and not quantity
I always encourage those that I mentor to trade like snipers. Take time to analyze the markets, wait patiently for a signal, when the signal is right, execute with no emotions. Getting into every trade has a terrible downside, a good set up will present itself but you cannot take advantage because of margin requirements.
Maintain a trading journal
Maintaining a trading journal will not only help you in planning but also in tracking your entire journey. Having a written document will help you appreciate where you are coming from and also identify areas for improvements. It is also important to note that having a journal will be necessary for helping you avoid emotional trading.
Assume you are recording all you trades and action, you obviously wouldn’t like to see records of emotional trading right there in your journal. The recording will, in general, reinforce the good trading habit.
Have a written trading plan
As a serious trader, you should maintain a trading plan written or printed somewhere. Every time you are about to trade, take it out and confirm that you are following your plan faithfully. In your trading plan, mark important issues over that week, this could include important news and events and then a general view of the markets the coming week.
Develop your trading edge before diving into the market
You have heard it over and over, test before you trust. Always begin with a demo account, make all the mistakes you need to make. Learn as much as you can, back-test your system over time and make sure it will serve you right. From there, you need to have a 100% confidence in the system and yourself. From the demo, practice to trade with discipline. Take only high-quality setups, don’t take the “almost there” setups.