MetaTrader 4 The Sequel – How To Place Trades in Price Action Trading

Hello people

Last time we learnt how to download and set up the Metatrader 4 platform for price action trading. Today we are going to do  Part II The Sequel, by far the most exciting part. We are finally going to learn how to place trades on the Metatrader 4 platform for price action trading. I’m sure most of you have been fantasizing about this part all week long. No need to wait any longer the moment has finally arrived.

I know  I said the last time that the Metatrading platform 4 platform is so user-friendly that anybody can use it. But at the same some people may be so intimidated by the numerous tabs and buttons splashed across the screen on the platform. But not to worry! If you are in that category of people, I will hold your hand right through this  post so you don’t fall. So onward:

How to Enter A Trade Via Market Execution

Image result for MT4 How To Enter A Trade Via Market Execution

  • First click on “New Order” .It’s right underneath the window label.

Image result for MT4 - select currency pair

  • Upon selecting your order, you select  the currency pair you want to trade from the menu at the top. Just click the arrow and make your selection.
  • Upon making your selection, you click on the menu label “Type” and select “Market Execution”
  • Next you indicate the size of the position you want to buy  by clicking on the menu labelled “Volume”. Keep in mind that one standard lot(1.0) is worth 100,000 units. So if you intend on buying 5,000 units select 0.5
  • If you have anything to say about your trade  just fill the ‘Comment’ column. But that’s optional.
  • Finally decide whether you want to buy or sell the currency pair.A dialogue box will then show up to inform you that your trade has been executed.

Next Up is:

Entering  A  Trade By Way of Pending Order

Image result for MT4 How To Enter A Trade Via Market Execution

Click on “New Order”Image result for MT4 - Entering Trade Through Pending Order

  • Next you choose your currency pair of choice from the topmost menu.
  • Your next task is ti select “Pending Order” from the menu labelled “Type”
  •  you  will want decide whether to buy or sel the currency pair in the order type drop down list.

Once you’ve made that decision, you will then be presented with 4 options:

And they are as follows:

Buy Limit – if you plan on going long at a level lower than market price

Sell Limit – if you plan on going short at a level higher than market price

Buy Stop – if you plan on going long at a level higher than market price

Sell Stop – if you plan on going short at a level lower than market price

  • Once you make your selection, fill in the price at which you want to make your appearance in the market.
  • After filling in the price, enter the size of your trading position in the volume field.
  • Next fill in your stop loss and take profit fields.
  • Keep in mind that you also have the option of setting an expiration date on your order. Better safe than sorry.
  • Once you have checked all the boxes,click the “Place”button to enter your trade
  • A dialogue box will then pop up to say “Voila! Your trade has been entered.”

If you’re not sure of your pending orders I suggest you read up on You Need To Protect Your Trading Position and Profits with Pending Orders

How To Modify Trades

CaptureSelect “Trade” tab at the bottom of the metatrader platform.  This contains all your trades including your entry prices, position sizes, stop losses,and profit targets.

However,if you want to add/modify your trades,here is what you do:

Image result for MT4 - Modifying Trades

  • Right click on the trade you want to modify and then select “Modify’ or “Delete.”
  • Next you fill the stop loss and take profit fields with your desired levels. And when you’re done, hit the “Modify” button.
  • A dialogue box then pops up to tell you that”Guess what,your adjustments have been Executed.”

And Finally:

How to Close Open Trades

Image result for MT4 - How to close open trade

  • Right click the  trade that you want close
  • If you want to close the entire position, select the yellow button below the “Buy” and “Sell” options.
  • After hitting the close button, you should see a change in your profit balance, reflecting  your profit or loss you made on your closed trade.
That’s  a wrap for ”MetaTrader 4 The Sequel – How To Place Trades in Price Action Trading.”  And sadly we’ve come to the end of th two part series on the Metatrader 4 platform. Yea,I know that  all good things must come to an end. but you can practice what you’ve learnt on a free demo account.This way, you’ll be better prepared when you decide to trade live.

 

Til next time take care.

Open Live  Forex Trading Account 

If you’re looking to open a live trading account  Sign Up With EasyMarkets

How To Find The Perfect High Probability Trade

Hello and welcome to another edition of the bulls vs the bears.  I know  a while back we touched on How To Spot High Probability Trades and Run All  The Way to the Bank. But how about we learn how to find the perfect high probability trade?  For those who have no idea what I’m talking about, I suggest you read the post I just mentioned before you join today’s class.

You absolutely want to create an edge when you enter a trade  on the market. I can hear somebody  muttering under his breath saying “Hmmm…How do I do this?” Just pick a trade that has a high probability of giving you a decent profit. The moment you see an obvious pattern your brain should scream ‘BULL’S EYE.” That’s what I call your trading edge. That candlestick pattern should be so obvious that you dont need to think twice about entering the trade. If the conditions aren’t present just dont trade.

So basically  we are going to learn various ways fo finding the perfect high probability trade So first off:

You Need to know How to use Support and Resistance Levels

One way of finding the perfect high probability trade is   knowing how to analyze support and resistance levels. Let me give you a simple tip for trading support and resistance levels.  If a resistance level holds, it means the bears are overwhelming the bulls. And if the reverse happens, the bulls have the bears number.

If you  see an obvious resistance level, it can only mean one thing. That the bears are  looking to go short(or put in orders to sell).  And if there is a reverse scenario at the level of support nobody has to tell you that the bulls have put in their market orders to go long. Neither level can   break until one party overruns the other. So for level of resistance to  be breached the the bulls must destroy the bears. And for the reverse to happen at the line of support the bears must clear out the bulls. Let’s take a look at an example

bulls and bears buyers and sellers

Here the bears are resisting the bulls with all their might. The yellow marking suggests that the level or resistance is holding nicely.Once that happens the bulls run out of gas and the bears will take over proceeding and head for the bottom of the hill.

Next up:

Mark Important Levels

Sure you need to know how to trade support and resistance levels. But you should mark the most important levels.Why? Because everybody is watching those levels like hawks. So you need to sharpen your tools in this regard. Please do not make the mistake of  going intraday (looking at 1hr 4 hr time frames) or else you will be trading from a position of weakness.

One thing you need to understand is that high probability trades are long term trades. You’re talking about entering trades that will last for days, weeks, sometimes months, not to mention rake in huge profits as well. . You’d be better off looking at the daily, weekly or monthly time frames. Let’s look at an illustration of  Gold facing facing resistance at the resistance level

gold support resistance

The yellow markings represent the the important levels that I mentioned earlier. You need to be aware of these areas as they are going to be closely watched by other traders also. The red arrows point to to these marked areas. Just make sure when marking important levels, that these  are the levels you want to locate your trades. You do not want to mark multiple levels just for the fun of it. Mark the levels you want to place your trades and once you mark those levels you place your  take profit and stop loss orders.

That’s a wrap for “How To Find The Perfect High Probability Trade.” High probability trading is more than just entering trades. You need a flawless mindset and meticulous preparation. Not only will this strategy save you precious time, but you can easily recognize these trades because you know they are from daily levels.

As they say price action always rules. Just find trades that increase your chances of making pofits and your  trade will be all the confirmation you need.  The best place to put this into practice is your demo account. It’s the best lab there is as far as putting this strategy into practice goes.  You then start looking for high probability signals at the key levels.

Til next time take care.

Open Live  Forex Trading Account 

If you’re looking to open a live trading account Sign Up With EasyMarkets

How To Let Forex Trades Run Their Course

Hello and welcome to another edition of the bulls vs the bears. Today we are going to learn how to let forex trades run their course. We are going to learn how to let the market do the heavy lifting for you instead of you manually exiting the markets and hurting your chances of making a decent profit.

Do you know why forex traders struggle  to make a profit? No, it’s not lack of knowledge nor trading skill, semi-empty trading accounts, terrible risk management, not negative mindset, It is rather them  shooting themselves in the foot. You see when you exit your account before your stop loss or take  profit hits, you are hurting your chances of  making a  solid profit. Instead of exiting the market prematurely how about letting the market hit your stop loss and your take profits?It will make a life a whole lot stress-free for you.

So  all we are going to do is to learn how to avoid shooting yourself in the foot  when trading on the market.

First of:

Never Close Your Trades Manually

One way of not trading like a deer caught in the headlights is NEVER close your trades manually. If you exit prematurely from the trade you are basically telling the whole. You see forex trading is all about winning to maximize  lost trades. Sure you are going to lose some trades, But it doesn’t mean that you have to jump out with your tail caught between your legs.

Let me give you a nice illustration. Let’s say you enter a trade on a demo account with the market chopping sideways for a week stuck in limbo. Next the market makes a  sharp turn stopping you out for a humongous loss. The difference here is that with a demo account you can afford to to take a loss that might  turn into a huge win. Next week this same trade comes your way  and hits your profit target by the end of the week. So instead of taking a humongous loss you take a  huge win simply by lying in wait like a sharp shooter.

I can hear somebody saying”What’s your point?” Well my point is let the market do the heavy lifting for you instead of you exiting your trade as if your pants are on fire. You cant control time in the forex trade. It has its own schedule. You just have to wait in line while it prepares to launch. I know you want to make your profits right away, but the forex market  plays to its own drummer.  You might have to sit tight for three weeks when trading live. That’s how trades set themselves up sometimes. Are you willing to wait that long? That’s for you to find out.

Just remember this. If a trade doesn’t smash your stop loss, then  your trade has more room to breath and you have the opportunity to rack up the profits.  It may take a breather(consolidate) for two weeks and then take off running again and hand you more profits.

Let’s look at a few examples of  letting the market work for you as against emotionally exiting trades

Cutting winners

This is a classic illustration of exiting a trade prematurely and leaving money on the table.  A trader takes of running  at the site of a diminishing  pin bar(as indicated by the small red arrow). However, see the huge upward trend that ensues after the emotional exit. That’s too much money to leave on the table. If this trading account were human, I can only imagine the insults it would be firing the trader’s way. It pays to just let the trade play out.

Next example please

How to Use Set and Forget Trading Strategies

Here we have an illustration of the popular set and forget strategy.  This strategy cures the habit of running with your tail between your legs the moment your brain screams “TROUBLE!” Based on your trading plan you make your entry set your sop loss and profit targets and take a walk outside the house. With this strategy, you can afford to  breath in fresh outside. By the time you get home , your profits should be waiting for you in your trading account.

However,  are three exceptions to this rule

  • When there is a sudden price reversal. This should be a clear sign to you to run for the  hills
  • The price chart keeps changing – Don’t forget that price charts are not static and so thing change.  Pay attention to what the charts are telling you
  • When your price signal  misfires when the market reverses or closes below or above the price pattern.

Finally we get to look at situations where it’s best to run for the hills.

First example please

Right in front of us is an  4 hour chart. Here we have a reversal situation after price attacked the previous key level numerous times. Unfortunately the support line refuses to yield and when that happens, now will be a good time to head for the exit.

That’s a wrap for “How To Let Forex Trades Run Their Course.” Do your trades a huge favour by not jumping off the bus too soon.   Letting the trades run their course increases your chnces of racking up  decent profits.

No one is saying you wont experience losses – they will come. But  dont take volountary losses by  making premature exits. One way of solving this habit is to review your isk per trade so that you are not emotionally frazzled when price hits your stop loss. You need to decide how much you can afford to part with. And you if you are not sure about your stop loss placement look up How To Place A Stop Loss To A Tee. And if you are stuck on how to place a profit look up A Few Rules on How To Take Profits From Forex Trades

Til next time take care.

Open Live  Forex Trading Account 

If you’re looking to open a live trading account  Sign Up With EasyMarkets

How To Take Advantage of Second Chance Trading Opportunities in Price Event Areas

Hello and welcome to another edition of the bulls vs the bears vs the bears. Today we are going to learn how to take advantage of trading opportunities in Price Event Areas. And I will start with a simple message. The market always retraces its steps.

Some of you are probably like “What is he talking about?” Well picture this scenario. The market retraces to a level started from only to hit a brick wall before  launching another strong move. What I’m trying to say is the market always finds its way back to where it started from. In other words, it never forgets where  a major move originated. And you know what, this scenario happens more often that you would care to know. Not only are these second chance opportunities regular occurrences but they also present high probability opportunities – not to mention high reward to risk benefits.

So guess what we’re going to do? We are going to look at a few pictorial illustrations of this powerful high probability technique.

Let’s take a look at Example 1

A Closer Look At Price Action Event Zones And Support & Resistance ...

Here we see a confluence of situations happening here. We have  key levels being established at both support and resistance. Notice how  old support becomes new resistance and vice versa. The big moves below these areas is what causes these event areas.

Notice the three arrows on the screen. They represent price hitting  the key levels These hits first result in bullish pin bars at the line of support and eventually bearish pin bars at the line of resistance. You need to understand that these  forays take place. when the  market reverses. Why? Because it has taken note of where the initial move started from. And when you spot such a reversal, you better jump in like a sharp shooter.

Now not only can you trade pin bar signals  at either key level but you can put a limit order at the test area  at both levels. So at the level of support you put a stop loss just below the level of support. Whereas at the level of resistance you place your stop loss  just above the the line.

Next to Example 2

Forex Filli | Free Price Action Trading Tips For Newbie Forex Traders

Now the next example covers how to use an event area with or with out a price action signal as your event area. Now do you see the bullish pin bar next to the bearish pin bar towards towards the far left corner?This forms the event area as a consequence of the strong move that followed. This area would most definitely come in handy in subsequent retests.

Now see the bullish pin bar next to the shaded level of support. That’s definitely a buy signal since it faked out and rejected through the event, creating much needed momentum for the bulls. And as you can see, the bulls are enjoying a nice ride up the mountain. Now see the retrace in the middle of the shaded area. Here you could a limited order or stop loss near the event area. OF course that wont bother the bulls as they enjoy their climb upwards.

Now on to Example 3

Here we have an event area given us a hint of a potential price signal. Notice the big move at the 1.667 level, This suggests the market has taken note of this hot event area A long-tailed pin bar has created this price action signal and the move below it has certified it as an event area. See how the market drifted from that level as price sold lower from the pin The event area experiences a retest, leading to a retest before the market pushed above the event area. Now as the market retraces back down to the event area, nobody has to tell you that this is an event area and that you need to take not of that.

You can do two things here. You place your stop loss near the 1.6700 -1.6670 area. Or you put your hunter’s hat on and wait patiently to see if a buy signal will take place.  As you can see a gorgeous long -tailed pin bar has taken shape and, upon this formation, the bulls push for the mountains. Now let’s look at another example of a price event area giving us a clue of a price signal

Notice the two pin bars forming an event area at the 0.8410. Then we see a a major price retracement taking place  in January of 2014. Your best option is to draw this key resistance level  and keep watch as price converges on this line. As you lie in wait watch out for the price signal for confirmation of  a possible move below this area.

See how the market plunges all the way down to the key support around the 0.8080 mark. This happens after the market runs out of steam  below that event area in January 14th. And see how price gives  props to the key support level. It’s its way of saying “I’ll be back”

For information on second chance trading look up How to Get a Second Crack at Missed Trading Signals

That’s  a wrap for ”How To Take Advantage of Second Chance Trading Opportunities in Price Event Areas ” . I hope you have gotten a full grasp of key levels and event areas. It’s pretty obvious that the market never forgets where event areas started from. Just mark these areas on your price charts and when the market retraces to these areas expect a  nice high risk/reward situation.

Take care til next time

Open Live  Forex Trading Account 

If you’re looking to open a live trading account Sign Up With EasyMarkets 

How to Smile All the Way To The Bank Trading Pullbacks In a Trend

Hello and welcome to another edition of the bulls vs the bears. Today we are going to learn how to smile a little bit. We are going to learn how to smile all the to the bank trading pullbacks in a trend. Trading pullbacks in a trend is one trading strategy that has stood the test of time. I can imagine somebody asking”Well, what’s so special about trading the pullback? Well just like any other strategy you make your entry in the market after confirming the direction of the trend. This way you don’t make your entry on a crazy whim and risk the market doing a nasty 360 on you.

If you want to successfully  trade the pullback you need to cultivate the mentality of a sharpshooter. Just like a sharpshooter, you wait for hours if not days for the  trade setup to take shape before pulling the trigger. Even more important you need to identify the point where the retracement move is likely to end. Because if you miss it, you miss out on a lot of cash.

So before we dive into how to trade the pullback  we are going to answer a few questions starting with:

What’s The Whole Idea Behind The PullBack Strategy?

Well the whole idea behind the pullback strategy is to buy low during the uptrend and sell high during the downtrend. You put your stop losscloser to your entry instead of placing your order in the direction of the trend.

Now before we get into illustrations of trading the pullback, there is a burning question that needs answered. And it is:

Why is The Trend The Trader’s Best Friend?

I’m sure most of you have heard the famous forex”The Trend Is Your Best Friend.” Newsflash!The trend is your only friend until it runs out of gas.

Anyways back to the main question. You see while most of the major forex players have access to all the current forex information, the forex market is pretty much in consolidation mode. Forex player pretty much take a breather trying to figure out their next moves. However things get very interesting when press releases about economic fundamentals are released. If the data differs from that of the forex market, expect to see significant price movements. Why? that’s because the forex market is trying to make sense of the new information to find a new alignment.

Now once price establishes a trend by pushing price up or down, traders start taking their profits and head for the exit. Their mindset is  price cannot for any higher or lower than it is now or they just want to save their hard earned cash. Better safe than sorry. Right?Anyways regardless of the traders, motives, they affect the trade’s momentum, causing the pullbacks that we see on the market.

There are two things you need to know about  pullbacks. First off they show up at a previous consolidation zone or pivot point on the price action chart. Second pullbacks test a previous support and resistance level. Now a lot of forex traders place their orders around this support and resistance area since they’ve seen these levels convert into pivot zones.

Consequently when a pullback of the trend touches these price levels, accompanied by market orders, the market sparks a resumption of the trend(Getting the picture now?). If the opposite happens, both support and resistance levels get breached, resulting in a deadly trend reversal.

If you are getting started as a trader I suggest you kick off with trading pullbacks rather venturing in the unknown with reverse trends. I assure you will be eaten alive trading countertrends. The good thing about trading pullbacks is that even if the price goes beyond your entry You get a second crack at a missed signal. As you get comfortable trading pullbacks you can now make the transition to more complex strategies to complement your pullback trading.

Now that we’ve identified why the trend  let’s get into how to trade pullbacka The first step is to trading pullbacks is:

Identify The Trend

Of course you should be able to identify the trend if you want to perfect the art of trading pullbacks. If the price on the left is lower than the price on the right and creating higher highs and higher lows, you have yourself an uptrend. You can’t  miss it. Y However, if the price on the left is higher than that of the right you have yourself a downtrend. You can’t miss either of the two.  can also employ the use of moving averages to confirm a trend when a crossover is in effect. You can also use the crossover to confirm a pullback resuming the prevailing trend. Let’s look at an illustration using the GBPUSD pair.GBPUSD-Moving-Average-Trend-Identification-Uptrend

The green line suggests the bulls are powering the GBP USD pair upwards. However, the addition of two moving averages  colored in red(13 EMA and 21 EMA)  confirmthe temporary momentum in the market.

Notice how the red EMA crosses the green EMA. That’s the pullback we’ve been talking about. However, the GBP ends and the uptrend resumes his journey when the red EMA crosses back above the green EMA(as indicated by the red arrow).

Now let’s look at an illustration of trading the pullback in the  downtrend  again using moving averages

GBPUSD-Moving-Average-Trend-Identification-Downtrend

We see a similar scenario in the downtrend. Just like the uptrend, red EMA crosses above the green EMA, signalling a pullback. As soon as  red EMA crosses below green EMA, it signals the end of the GBUSD pullback and the resumption of the downtrend.

Unfortunately there is one major stumbling block when using crossovers. You see, crossovers only take shape if the pullback momentum is strong, as was the case in the first scenario. The trend then resumes, leaving you acting like a deer stuck in the headlights. You start wondering whether whether to enter the market or not, which shouldn’t be the case especially if you have a solid trading edge.

Even worse, the EMA starts to lag as an indicator. Such that by the time it generatesthe signal,the market may have you buy and moved in the opposite direction of the prevailing trend.

Consequently the risk to reward ration of your trade also takes a substantial hit. In that case, you’d be better off trying to identify a potential reversal area during a pullback and using better price action analysis to place your trades.

For more information on moving averages look up We Moving Averages Parts I and II

Next up is

Identify Potential Pullback Reversal Area

Another way of trading the pullback in a prevailing trend is identifying a potential pullback reversal area. If you are familiar with support and resistance analysis you would know that old resistance turns into new support and  old support turns into new resistance. Let’s take a look at an illustration using the GBPUSD pair

Identify-Pullback-Reversal-Area

Initially GBPUSD run into strong resistance at the 1.5750 mark twice. Once price breaks through this level we witness the first pullback finding solid support at this level.. These old support levels are a convenient place to place your limit orders on the side of the prevailing trend.

Just place  your limit order a few pips above the old resistance, and you should earn yourself a decen trisk to reward ratio in the ensuing breakout. This only works if the pullback doesn’t penetrate below the pivot line.

Now let’s look at another illustration of potential pullback reversal zones using the Fibonacci retracement levels.

04-Fibonacci-Pullback

As you can see  Fibonacci retracement levels are also  very useful in identifying  potential pullback reversal areas.  Here we draw two Fibonacci retracement levels on the same uptrend at different levels using two different colors. The green colored retracement levels identify the first swing point while the red color retracement level spots the second swing point.

Notice how price pulled back to the 23.6 Fibonacci level after the first upsurge. Price then pulls back to the 38.2 retracement level after the second upswing. Price then resumes its upward climb.  When you make use of the Fibonacci tool whenever price carves a new high during aan uptrend, and a new low during the downtrend you will find that price defers to the retracement levels. Also Fibonacci levels act as support and resistance levels in disguise. You can also find confluence signals from both support and resistance levels and a Fibonacci resistance levels. And when you find these signals you have yourself a high probability setup.

For more information Fibonacci retracements look up Lighting Up Candlesticks with Fibonacci Retracements

And Finally:

Best Strategy For Entering The Market After A Pullback

One recommended strategy for entering the market after a pullback is the use of price action patterns such as a pin bar or engulfing patterns. When you find these two patterns near a previous support or resistance, or near a moving average, that is confirmation that the pullback is ending and the trend is about to resume, Let’s take a look at an illustration using the GBPUSD pair.

Price-Action-Enter-Market.-pullpack-trading

Here the moving average and the downward trendline tell us of an ongoing downtrend. Once that ‘s confirmed we then see strong resistance at the 1.5750 level as the GBPUSD pair get rejected a few times. Please do not jump into the lion’s den blindly. Just wait  for the bearish pin bar to make its appearance to tell you that the pullback has run out of steam.

The pin bar makes its entry when prices breaches below the low of the pin bar. And when that happens expect to make decent profits with minimum risk and fuss.

Understand that when trading pullbacks you are making use of the power of confluence and increasing your odds of making a profit.A combination of existing trend support and resistance, and price action patterns, cuts down your risk and increases your profits in the process

For more information on trading pullbacks  look up Trading The Pullback With Panache

That’s  a wrap for ” How to Smile All the Way To The Bank Trading Pullbacks In a Trend”  Trading pullbacks with a multiplicity of factors sets you up to trade high. However you need to a clearly defined trading trading strategy that identifies your trading edge.

Your  trading edge outlines the circumstances under which you will  enter the market. Instead of jumping into the deep end just wait for confirmation after identifying a trend and a potential reversal zone.When you sit and wait you are in absolute control of your trading situation. You decide where to place your stop loss and where to exit the trade. Do this, and you will be smiling all the way to the bank

Til next time take care

Open Live  Forex Trading Account 

If you’re looking to open a live trading account  Sign Up With EasyMarkets

How To Cultivate The Right Mindset For Forex Trading

Hello and welcome to another edition of the bull vs the bears. Today We are going to talk about having the right mindset for forex trading.  Inn short we will be looking into the psychology of forex trading.

If anybody ever tells you that prosperity in the forex market depends on your forex strategy , Ask that person” What have you been smoking?” Yes a solid forex strategy helps but that’s partly the story. you see success as a forex trader largely depends on having the correct trading mindset, your thought process and the way you respond to the movement of the forex markets. If  you go about chasing after the hottest trading bot or fancy indicator you are going to be sorely disappointed You should rather be focusing on cultivating a positive mindset and managing your trades and emotions properly. If you fail to do these two things you will just be chasing the shadows of the market and you will hemorrhage  a ton of money too.

The first question we need to ask ourself is:

Why Do Most Forex Traders Lose Money?

The answer is very simple. Most forex traders have this weird fantasy of making millions overnight.T  Consequently they  lose  all their money, leaving a nuclear-sized crater in their trading accounts. This mindset comes about as a result of unbearable pressure the put on themselves to  make these huge profits. And when you start out trading this way, you react with your emotions instead of thinking logically. Naturally youb end up blowing your trading account.

The next question you need to ask yourself is

What Emotions Should You Avoid While Trading?

Here are some toxic emotions you need to avoid like  the plague while trading.

First off:

Greed

If you act like a greedy price you will in all likelihood lose your money. The greed comes in when you don’t take your profits  Don’t make th costly mistake of not taking the profits because you think  the trade is going to run forever in your favor. The forex market  can do a 360 on you at any time. That’s why   the take profit option is there for you to make the exit when you price hits your target.

Another habit you should avoid is adding to your trading position simply because the market has moved in your favor. You only add to your trading position if it’s founded on price action logic. Anything else is just pure greed. Of course risking too much on one trade is also born out of greed. Too much greed will most certainly blow up your account.

Next up is :

Fear

Fear can hit you two ways. First it can hit you if you are just entering the forex market for the first time and have not yet developed a trading strategy on which you place your trades. Even worse, fear can also grip you when you lose successive trades or when you  sustain a loss so large that you suffer a humongous emotional breakdown, h

Now I can hear someone asking”How do I overcome those demons lingering in my head?”First of make sure  you decide how much you can afford to part company with in the event that you lose a trade. This is very important because the losses are going to happen. Just make sure you get that through your head. Once you get that sorted out you are able to move on when you lose a trade. There is one thing you need to understand about fear. Fear causes you to miss out on great trading opportunities. If  you want to take advantage of these trading opportunities, get rid of those demons in your head.

Revenge

How many times have you said to yourself”I’m going to get back at you guys for blowing up my trade?” Listen,  don’t blame it on the forex market. The thing is there are no guarantees that every trade that you enter in will be a winning trade. This why you need to develop a trading edge. If your trading edge doesn’t exist don’t trade. It’s a simple formula most traders just don’t seem to apply. Now don’t ask me why because I have no idea either.

Also revenge is also borne out of a need to jump back into the market to make  for what you lost on the market. Of course this will result into a loss more humongous than the previous loss, a loss largely based on emotional rather than logical trading.

Next up is:

Euphoria

Dont get me wrong! I have nothing against Euphoria. In fact euphoria is a good thing. But it can also work against you especially when you make a huge profit or you chalk consecutive winning trades. Overconfidence kicks in and all of a sudden you become swollen headed , thinking that you are the biggest thing since corn bread. Then all of a sudden, you experience back to back losses  and you are like “Hey what’s going on here.”

Of course you are tempted to jump  back into the market to make up for your losses(See a pattern developing here?). That’s your emotions going into whiplash mode after suffering those humongous  losses. You are so overconfident you fail to see the red flags  teling you that any trade can be lost. Like I mentioned earlier if you have your high probability trading edge, you should be able to make a fair amount of profit in the long term. Just make sure you apply discipline and patience. To borrow a line of a m song by legendary R&B group Midnight Star, Don’t force it. Just chill out and let it flow.

Now that we’ve gotten the emotional cancers out of the way, it’s off to the question of the day. Which is

How Do I cultivate The Right Trading Mindset?

The first thing you need to do is:

Know Your Trading Edge and Master It

You need to know your trading edge like the back of your hand. Your trading edge is your set of conditions that have to be present on the market for you to part with your money. That gives you that mental edge over the other traders. You can’t be sitting there waiting for the market to part the the Red sea before you make your entry.

Here is a very simple  piece of advice a veteran trader gave me  a few months ago.  She simply said “If your trading edge is not present on the market don’t trade.” It’s as simple as that.

Next up is:

Manage Your Risk Properly

If you value your cash you’d do well to manage your risk properly. If you do not control your risk on all your trades emotions take over your brain. And when that happens you know disaster starts knocking on your door. What’s so scary about emotional trading is that you are don’t even realize your emotions are kicking in. It’s like  an adrenaline flood. You’re just gambling instead of making use of  a well thought out trading strategy.

So how do you avoid trading emotionally? Only risk money you can afford to part company with per each trade.  Go into the trade with the mindset that you could lose on a given trade given what you know about the forex market. When  you get that sorted in your mind you won’t cry over spilt milk that often.

Next up is

Do Not Over-Trade

I cannnot stress this enough. over-trading will most certainly destroy your trading account. Like I mentioned a few minutes ago, only trade when your trading edge is present. Don’t trade when you feel like it or when you are only 50% sure your trading edge is present on the market. If your mind starts wavering, the market will most certainly make you pay for your uncertainty.

Once your emotions kick in they are hard to stop. It’s like an onrushing flood. Just apply  logic and your emotions will leave you alone.

Get Yourself Organized

If you want to prosper as a forex trader you absolutely have to get yourself organized. You need to develop a trading plan and apply religiously. Treat t forex trading as a business instead of a Las Vegas Casino. There should be a method to every trade that you place on the market. Even more important, stay calm. Don’t get carried away with your emotions.  Every trade must be thought out before you make your entry. Once you accomplish that, the demons will stay out of your way.

That’s  a wrap for ”How To Cultivate The Right Mindset For Forex Trading .”  You absolutely need  a solid mindset to succeed as a forex trader. You cannot approach forex trading with a gambler’s mentality or else you’ll lose heavily. Forex trading is a business just like any other enterprise. You must be calculating in all your trades. You must  be purposeful with every trade rather letting the  chips fall where they may. It could be the difference between prosperity and poverty.

Til next time take care

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