“Trade What You See… Logic Over Emotion” in Forex Trading…
As a Forex trader, you’ve likely been told that you need to control your emotions and make decisions based on logic and objectivity. However, it’s one thing to understand this concept, and another to put it into practice.
Forex traders often face an uphill battle in the markets due to the ancient “fight or flight” mechanisms that have been wired into our brains for thousands of years. These same mechanisms often prevent Forex traders from reaching their full potential in the market. To become a consistently profitable trader, it’s essential to use our more logical and objective frontal lobe when making decisions.
Trading what we see, instead of what we think, ensures that our decisions are based on logic and objectivity, rather than emotions. The following tips will help Forex traders understand why this is important, and how to implement it in their own trading.
Don’t Try to Outsmart the Market
Trying to predict the market’s next move without a solid trading plan is the same as gambling. Yet, many inexperienced and unsuccessful Forex traders make this emotional mistake every day. Instead of checking the price chart against their forex trading plan to see if any price action setups are present, they simply imagine what price “should” do.
Trading based on anything other than an obvious price action setup or your pre-defined strategy means you’re operating on emotion, not objective analysis. This is often the case after a losing trade, when Forex traders give in to feelings of revenge, or after a winning trade, when they give in to greed. At these moments, Forex traders stop looking at the chart and start acting on what they “think” or feel, which separates the consistently profitable Forex traders from the unsuccessful amateurs.
Don’t Get Attached to Any One Trade
It’s important to remember that just because you think something will happen in the market doesn’t mean it will. Even if you find a perfect-looking setup, keep in mind that the Forex market is constantly changing, and anything can happen at any time. Don’t bet everything on a “sure thing” because there is no such thing in the Forex market.
Instead, learn to trade emotionally detached from your trades. Let the price action guide you through the market’s noise and confusion, and always manage your risk, even on seemingly “perfect” trade setups. Trade according to the concepts of your forex trading strategy and not just on a whim. If you’re a price action trader, follow the trail left by price, instead of giving into what you think the market “should” do or “might” do.
Control Yourself to Make Money in Forex
One often overlooked fact of Forex trading is that the market doesn’t care about you or if you win or lose money. It doesn’t have emotions, and it doesn’t know you exist. Yet, many Forex traders get emotional about their trades and the market, allowing a non-living entity to control their behavior instead of themselves. You won’t make consistent money in the market until you learn to control your emotions.
Once you learn to trade based on what you see on the price chart, instead of what you think, you’ll be on your way to becoming a consistently profitable trader. Consistently trading what you see, not what you think or feel, helps Forex traders avoid giving in to the emotions of revenge or greed after a losing or winning trade. Forex traders who consistently trade based on what they see on the price chart, manage their risk effectively, and control their emotions, are the ones who make money in Forex.
Tips for Trading What You See
In order to achieve success as a Forex trader, it’s important to understand the importance of discipline and control. Forex traders who give in to emotions like hope, greed, or fear often make impulsive decisions that can result in significant losses. To minimize the risk of these losses, Forex traders need to focus on using logic and objectivity in their trading decisions.
One of the key ways to achieve this is by trading what you see, not what you think. This means that Forex traders should base their trades on the information provided by the price chart, rather than making assumptions about what might happen in the market. This approach helps to eliminate the influence of emotions and allows Forex traders to make more informed decisions.
Forex traders should also be mindful of their risk management strategies. By taking a disciplined approach to risk management, Forex traders can reduce the impact of losing trades and ensure that they have the capital they need to capitalize on winning trades. This requires Forex traders to have a well-defined trading plan that outlines their risk management strategies and helps them stay focused on their goals.
Forex traders who want to be successful need to focus on trading what they see, not what they think. This requires Forex traders to be disciplined, focused, and objective in their approach to trading. By using logic and objectivity in their trading decisions, Forex traders can minimize the impact of emotions and achieve the long-term success they are seeking.