Making “anger” trades after either having a bad loss or making a bad decision is known to every forex trader, a beginner and a pro. As soon as emotions get a grip of a trader, useless trades are almost inevitable. Anger and revenge trades are so fatal that can wipe out a forex trading account within minutes. How to identify what triggers trader to emotional trading and what is the way to get out of self-destruction pass immediately with a minimal losses?
Emotional trades in forex happen often and whenever a trader looses the control, the account gets wiped out fast. Even with reliable trading strategy, strict discipline and good money management it is easy to become emotional after making bad choices, start increasing size to make it back, moving stops, averaging down, creating excuses to continue trading, look for opportunities that are not even there.
The biggest problem of all is when it comes to crazy trading, you don’t even know you are doing it! So it is up to you to come with a right technique to snap out of it.
Below are tips on how to stop the self-destruction before it actually began:
1. Take a Break
After three consecutive losses the best thing you can do is to quit trading for a day. Some forex traders even have a “punishment” included in their trading plan: lost a trade, no forex for a week! Forex market is not going to disappear and tomorrow is another day with million forex opportunities. Instead of anger trades, your best option is to take a breath and give yourself a break.
2. Decrease Size
Make a substantial decrease in size traded. This way you will be able to take your mind off serious trading for a while and become sane again. Give yourself time and go back to appropriate size trading only when you are truly ready.
3. Add Money You Didn’t Win
Consider putting the amount equal to the winning trade you didn’t take in your forex account. To see the money in the account will make you feel better and think rationally again.
4. Add Amount You Lost
If you lost a trade, you might want to add the amount you have lost back to the forex account. It is surprising how easy it is to become normal again when you don’t see your account with losses.
5. Use Visual Effects!
Make a poster or a note which will help you to remember not to make irrational decisions after bad trades. The note will help you to stay rational, take only the trades that you fully understand and pass on all the rest.
6. Trade With Reason
Psychology is one of the most important factors influencing success or failure in forex trading. Make sure that you have right psychological reasons to enter a trade.
7. Be Military Precise
Be disciplined. In fact, be army disciplined! It is important to enter the forex market only when all your criteria are met. This way emotion has nothing to do with your decision to enter a trade.
8. Confess and Talk It All Out
Confess about your losses to someone nearby or even over the net, a fellow forex trader or someone who can understand your pain. Talking helps to free your mind from the negative thoughts about loss and bring you back to reality and objectivity.
Originally written by ForexExplore.
Brought to you by Alan’s Forex Blog:
http://alansforexblog.com
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