petek, 29. april 2016
torek, 26. april 2016
ponedeljek, 25. april 2016
nedelja, 24. april 2016
TRADE WHAT YOU SEE, NOT WHAT YOU THINK
As a forex trader, you have probably read that you need to control your emotions and focus on logic and objectivity instead of giving into the impulses of greed, hope, and fear. However, it is one thing to know you should not trade emotionally and another thing all together to actually know HOW to NOT trade emotionally and how to implement this knowledge. The human brain is primed to work against us in the markets due to the primitive “fight or flight” brain mechanisms that have guided our existence as a species for thousands of years. Unfortunately, these same mechanisms actually inhibit most traders from achieving their full potential in the market. So in order to become a consistently profitable trader it is necessary to devise a plan using our more logical and objective frontal lobe section of the brain, which is the newest area of the human brain and allows us to plan, reason, and comprehend complicated ideas. By learning to trade what we see, and not what we think, we can make sure that we are operating on logic and objectivity instead of emotion. Trading only obvious price action trading setups that have already formed, and that are not just ideas or “possible” setups, provides us with a type of “check and balance” to make sure that we are not trading from emotion. The following points will provide you with some insight and solid tips so that you more clearly understand why you need to trade what you see and NOT what you think and how to make sure you follow through with it.
• Stop trying to out-smart or predict what the market will do next.
Trying to guess what the market will do next with no real rational or trade setup
is exactly the same as gambling your money away in a slot machine or on the
roulette wheel. Yet, every day beginning traders as well as unsuccessful
experienced traders commit this exact emotional trading error. Rather than
looking at the price chart and checking it against their forex trading plan to see if
any price action setups are present, many traders simply “manifest” some idea
about what price “should” do.
When you trade off anything other than an obvious and visible price action
setup, or in accordance with whatever your pre-defined trading strategy says,
you are simply operating on emotion and feeling rather than objective analysis
of price movement. Many traders trade emotionally after a losing trade or after a
winning trade because they give into the revenge feeling that a losing trade
elicits or the greed that a winning trade often elicits. It is at these exact moments
when traders stop trading off what they see on the chart and begin trading off
what they “think” or feel, and it is also these moments that separate consistently
profitable traders from unsuccessful amateurs.
• Don’t get attached to any one trade.
It is important to understand that just because you “think” something will
happen in the market does not mean it will. Similarly, even if you do find a very
obvious and “perfect” looking setup, you should always remember that the forex
market is a dynamic and constantly ebbing and flowing arena where anything
can happen at any time, so don‟t bet the farm just because you think you have
spotted a “sure-thing”, there is no such thing in the forex market.
Rather than allowing yourself to become emotionally attached to any trade or
any idea about what the market might do, you need to learn to trade detached
from your trades. Allow the price action to light your way through the noise and
confusion of the market, all the while keeping in mind that you must constantly
manage your risk even on trade setups that look “perfect”. Always make sure
you are trading according to the concepts of your forex trading strategy, and not
just on a “whim”, if you are a price action trader then follow the trail left by
price instead of getting off track and giving into what you think the market
“should” do or “might” do.
• Learn to control yourself if you want to make money in forex.
One obvious yet often over-looked fact of forex trading is that the market simply
does not care at all about you or if you win or lose money, the market does not
know you exist, and it doesn‟t get emotional about you. Yet, most traders get
emotional about their trades and about the market, thus they are letting a nonliving
entity control their behavior instead of controlling it themselves. You will
not make consistent money in the market until you learn to control your
emotions and reactions to the market.
Once you learn to trade only what you see on the price chart instead of what you
think, you will be well on your way to becoming a consistently profitable trader,
because trading what you see and not just what you think means you are
controlling yourself instead of being controlled by the market. The key is to
consistently trade only what you see and not what you think or feel, this will
help to keep you from giving into the emotions of revenge or greed after a losing
or winning trade. Traders who consistently trade only what they see on the price
chart and not what they think “might” happen, along with managing their risk
effectively, are the traders who make money in forex. When you learn to trade
with high-probability price action setups while simultaneously controlling your
emotion and risk, you will be in an even better position to make money in the
forex market.
• Tips to make sure you only trade what you see and not what you think.
It is one thing to fully understand exactly why you need to only trade what you
see instead of what you think, and it is another thing to actually make sure you
do it. Here are some concrete tips that you can use to make sure you only trade
what you see and instead of giving into emotion:
• Stop and ask yourself before each trade “what I am doing?”, “what is the
setup?”, “does it meet my trading plan criteria?”, “am I acting logically or
emotionally?”, “am I controlling myself or is the market controlling me?”, “is
there a setup or am I am just making one up”? These are all good questions to
ask yourself before you enter any trade, doing this will make you think deeper
about what you are doing and if a trade is warranted or if you are simply acting
on emotion.
• If you are trading a specific forex trading strategy, like price action, make sure
each trade you take is in accordance with the concepts that you learned in the
trading course or educational material. Ask yourself any or all of the above
questions before every trade that you take, until it becomes second nature to
only trade what you see. Eventually you will develop a refined discretionary
trading perspective that will allow you to almost instantly look at a price chart
and spot price action setups.
If you are interested in learning to trade with price action and in developing your
“pure” price dynamics trading skills, then please check out my forex trading
course, in it you will learn how to trade with the same simple price action setups
that I have mastered during my trading career. When you combine the concepts
that I teach with a consistent ability to only trade what you see and not what you
think, you will be headed towards achieving your goals as a consistently
profitable forex trader.
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