Last week I posted 6 things that need to be kept out of your forex trading. With this post, I want to just focus on just one of them: Emotion. If you've been around the market long enough you have heard traders say that you must trade without emotion, but how do you do that? Here are some tips that might help:
To take some of the emotion out of your trading you must do at least 3 things.
1. You need to plan your trade. When you see an entry signal you should also know how you plan on exiting the trade. You need to know how much you are willing to risk on this trade.
2. Have a set of indicators (not many) that you know how to use and you trust the signals they are giving you.
3. You must have a set of rules to follow. Can I emphasize the word FOLLOW? When the rule says you should do something then do it. Do not question it or analyze it just do it. If one of your rules says to enter a trade, and another rule says do not risk anymore than a certain amount of capital on a trade, what do you do if the risk is more than your rule allows? DO NOT TAKE THE TRADE because it would be breaking one of your rules. Yes you could have made some money but you will gain confidence and take some of the emotion out of your trading. It becomes mechanical. When you think to much then you become too emotional.
When you eliminate most of the emotion out of trading you will start to have fun and make more money. It is a real pleasure when a plan comes together.