Forex trading thinking training

1. Understand the truth of the system

Trading is a game of probability. Imagine we are flipping a coin, heads I win a dollar (USD) - tails you win a dollar (USD). Simple. Heads and tails appear half the time, and neither of us wins the other. However, without my knowledge, you change a lead coin. For every 100 tosses, heads produce 49 and tails 51.

You now have a license to print money. Let's call it a reverse trading system. All you have to do is sit back and bet on tails forever. In the end, you will win all my money. (Same for anyone else)

All trading systems give you a favorable bias against certain more likely scenarios, regardless of what trading system you are using. Let's look at: pattern breakouts, trend following, Fibo series numbers, moving averages, channel following, oscillating signals, Bollinger Bands, swing indicators, opening gaps Does that include your system? You are relying on a definite bias. Essentially, the trading system is saying that when X happens....................... Y usually follows. Sometimes this is not the case, although most of the time it is. And all trading systems do is help you identify high-probability opportunities, build positions correctly, protect your capital, and keep your profits growing.

Some systems are better than others, but don't obsess over finding the perfect one - as the mysterious hand of the market (the Holy Grail) does - to generate profits at your request and never make mistakes.

Find a trading system that you like, one that you feel comfortable with, one that you can understand. Then stick with it, be sure to stick with it. A calm, disciplined trader will choose a general system and make money with it. A nervous and paranoid trader will choose the perfect system and keep losing money.

All traders have good days and bad days. Some days you make small profits, and other days you will suffer small losses. Generally speaking, there are one or two days a month when you will make a lot of profits. As a trader, that is the money you should make, not nine to five. The problem is that you never know when the big trade will come. As we mentioned above with the negative trading system (winning is only one more time than losing!), it is possible that the trade you did not take happened to be a winning one, and the market will never give you a chance to regret it. You must look further and realize that the current trade is just one in a series. In this way, the current trade is not important, it is like a drop in the ocean.

Trading is all about managing risk and obeying the oldest law in the universe: probability.

2. Controlling investment is the key to success

As a trader, one of the biggest mistakes you can make is to invest too much money in one trade. The more you invest, the more emotionally stressful you become, which can eventually overwhelm you. More seriously, this emotional damage is difficult to repair.

Most novice traders build big positions and hope to get rich overnight. Experienced traders know more. In short-term trading, in and out are fast, most trades are large, and a few large losses will quickly eat up your capital. A good short-term trader who can survive will only invest a very small percentage of his capital into any trade. If you don't have much capital, the preferred trading system should have a close stop loss. Also consider looking at short-term charts, such as 1-5 minute charts, so that losses can be minimized.

Overconfidence can lead to huge risks. Hey, heads have been out 10 times in a row, let's bet half of our money on tails (this is the one below) and take a gamble.

The problem with this confident trading is that:

1) Markets rarely have to go anywhere.

2) Others also think they are certain and actively involved, so when they make mistakes, they actually exacerbate them (e.g., more flips, more flips).

By investing a small percentage of your risk in each trade, you will be more relaxed and able to handle transactions better.

3. How to manage emotions

Does your subconscious mind want to lose money?

It's easy to see self-destructive behavior in the market, especially among day traders. When the market dances around in front of your eyes, it grips you tightly. You start to feel as if it's teasing you.

That's why you have to be very, very careful to avoid emotional trading. If your blood is boiling and you could explode at any moment, then you are about to have one of the worst experiences in the market.

Don't bring emotion into trading. Remember that the current trade is just one in a long series of trading experiences. Keep this in mind and never get too invested in any one trade.

You must think of yourself as a professional trader. At the beginning of each trading day, before the market opens, set aside a few minutes for yourself. Close your eyes and watch the market in your imagination, as if seeing the real-time chart on your computer screen, the market spinning up and down.

Watch yourself enter the trade. Notice how relaxed you feel. You stay alert, but calm and completely non-emotional. Watch how the market moves after you enter and how it approaches your stop loss.

You lost money on a trade, notice that you see a lot of your trading scenes, you are non-emotional. Completely calm. You start another trade. This time you make money. Once again, you are relieved. These are all part of trading.

It takes practice, and you have to do it often to benefit. Any time you start to feel nervous and can't concentrate, you can practice.

The advantage of this technology is that it is free, and you will benefit a lot.