The importance of controlling your emotions when trading Forex

Sep 22 • Forex Trading Articles • 972 Views • No Comments on The importance of controlling your emotions when trading Forex

We are not machines, we’re emotional beings. None of us like to lose, none of us like to fail. Most of us appear to be either programmed through our DNA, or via our evolutionary development, to strive. In simple terms; the majority of us want to achieve, we want to do better, and we want to build better lives for ourselves and those we care deeply for. But there are so many barriers to success were forex trading is concerned, that at times you have to wonder where we derive the energy, fortitude and grit to simply carry on.

There’s precious few of us who are born as trading savants; geniuses who hit the ground running and are profitable from day one. You’d have to possess the inherent, prodigious, brilliance of a chess grand master such as Magnus Carlsen, or Bobby Fischer (RIP) to be able to cope with the full complexity of trading forex and be successful, immediately. In mentioning two such child prodigies, it may also be noted how obsessive they were. How, for example, Fischer would occupy practically every waking moment with thoughts of chess, continually practicing in both the physical world and in his mind, constantly planning moves ahead. So much so that, during the pinnacle of his relatively short career and during his self-enforced retirement and hermit like existence in Iceland, there were fears for his mental health.

 

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Becoming a grand master at chess, or becoming a grand master at forex trading, doesn’t actually come to us as easily as we initially believe. The tens of thousands of hours of practice and engagement, which we have to dedicate to either occupation and potential career, comes at a price, most notably during our early forex trading career, whilst we struggle to become profitable; “what else could we be doing with our time?” is a natural question when we’re struggling as we’ve immersed our self in this new all-encompassing obsession.

In many ways we need to be kinder to ourselves when we’re learning this new craft of forex trading. You could put forward an argument that chess, whilst having similarities with forex trading, is a natural form of gaming; it requires deep thought, strategy, a winning mentality, the ability to accept losses for a greater gain, the development of a rock hard psychological constitution, etc. Whereas with trading we also have to contend with these skills and many more issues. We’re not just trying to game a system, or beat (or outthink) an opponent (the market), not only do have to contend with the complexity of our chess board (the market) we have to understand money management, control our (at times) destructive psyche, get to grips with a trading platform, understand how fundamental news events moves our markets, etc.

There are times early into our fledging careers when we’re close to thoughts of giving up, but why let such destructive thoughts occupy your mind? You never have to give up on forex trading, as you only have to lower your risk, until you figure out what’s harming your performance. Consider it this way; you could end up level, by trading a demo account with the same level of dedication as you would a real account. So the solution is obvious; if we’re losing then we simply lower our risk per trade. Still losing and still suffering? Then we keep lowering our risk until we decide that the corrections required are so severe that we need to take time out trading actual money and defer to demo trading. And bear in mind that gone are the days where we couldn’t trade with small amounts of money to practice our skills, micro and mini accounts allow us to continue to trade within our tolerance boundaries, with very little commitment. We never have to stop trading, we will eventually work through our temporary situation and come out back on top.

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