An Emotional Cheat Sheet for a Forex Trader

When it comes to trading the Forex market, it’s no secret that you need to keep your emotions in check. Today, we’re going to take you through how you can identify the emotions that are effecting your trading decisions, so you can become better at Forex trading.

 

Trade Decision Emotion Tip
Deciding not to take a setup although it matches your criteria. Fear You might find it useful to use a physical checklist and tick off your criteria
Taking profits too early without any clear reason. Fear, Greed Set your predetermined TP and then close your chart after you’ve placed your trade. This will build trust in your system.
Widening your stop loss, or not cutting your trade when your strategy tells you to. Fear, Hope Close your chart after you’ve entered a trade and set your SL & TP. Don’t watch your P&L.
Not being aware of important news events or releases. Lack of Focus Check the news calendar before your trading day, as well as before placing a trade.
Pressing buy instead of sell. Typing in a wrong position size. Lack of Focus Don’t do things besides trading. Have a checklist with you and be clear about your approach.
Risking too much on a single trade. Greed Build a robust and consistent risk management approach.
Widening take profit orders because you think it will go further. Greed Close your chart after you’ve entered a trade. Don’t watch your P&L.
Entering trades prematurely without confirmation of your rules. Greed, Hope Use a physical checklist to emphasise discipline.
Entering a trade without it meeting your rules. Greed, Hope Use a physical checklist.
Risking too much because you want to make up for losses. Hope Build a robust and consistent risk management approach.
Using one of the following words when rationalising a trade:

Should, could, must, hopefully, I think, maybe.

Hope Use a physical checklist, build a robust and consistent trade management strategy to build trust in yourself & your system.

 

And that’s it, folks. By identifying where you’re making behavioural mistakes and then learning how to overcome them can have a huge impact on your success as a forex trader.

Source: Vantage FX Blog