Do you want to improve your Forex trading right now? I’m sure you do if you are reading this, or you are at least interested in Forex trading, either way this is an excellent article for you to tread. I am going to talk about two things you can do to improve your trading immediately. These are “real” and practical Forex trading tips that you can implement right away. Ready? Ok, here we go…
• Only trade with money you can afford to lose
This one seems obvious I know. But, you would be surprised how many beginning and aspiring Forex traders do not trade ONLY with money they can TRULY afford to lose. The reason why this is so important may seem obvious; you don’t want to lose money that you actually NEED for any other life purposes. BUT, there is another more subtle reason why only trading with money you can truly afford to lose is so vitally important to long-term trading success…
That reason is that when you trade with money that you should not be trading with, it sets off all kinds of emotional reactions in your mind that otherwise would not be there. For example, you are very likely to get too attached to every single trade if you are trading with money you should not be trading with. This is going to cause you to over-analyze your trades and market variables, which will inevitably result in you “meddling” with your trades and messing them up. So, if you want to obtain and maintain the proper Forex trading mindset, you REALLY need to make sure you are only trading with TRULY disposable income.
• Stop over trading and over leveraging
Over trading and over leveraging are the “evil twins” of all trading mistakes. If you commit these two trading mistakes even on an irregular basis, you are probably not going to survive in the markets very long. A related note to point number one above is that if you trade with money you should not be trading with, you are a lot more likely to over trade or over leverage your trading account, because you will feel pressure to succeed due to the stronger emotional attachment to your money.
The main insights into over trading and over leveraging that I can give to you are these: Over trading is usually a result of jumping back into the market after a losing or winning trade. Losing trades tend to make you want to “ make back” the lost money, and winning trades tend to give you a sense of over-confidence which causes you to jump back in to try and make even more money, this is greed. So, we can see that over trading is a result of improper emotional control in the markets. So, you’ll have to devise away to stay objective and calm even after winning and losing trades; if you don’t you will lose money, period. One good way to help keep your emotions in check is to keep a Forex trading journal.
Over leveraging, or over risking, is equally as dangerous as over trading. The main insight into over leveraging that I can give you is that it usually happens for the same reasons discussed for over trading, but there is another one as well… Forex traders tend to over leverage when they become too confident in their Forex trading strategy; they think they have spotted a trade setup that just looks so “perfect” that they cannot resist “loading up” on it. It only takes one of these “perfect” setups that you have “loaded up” on going against you to kick off an avalanche of trading mistakes that can destroy your trading account faster than you think