Psychological Ruts In Forex Trading
Ever been so disappointed with an outcome even after you had planned what you were going to do, what you were going to say, and how you were going to do what you wanted but it still didn’t play out the way you imagined??
It’s like when a child asks his or her parents if he can go for a sleepover at a friend’s house and over and over, but they keep saying no. What does the child do next? It’s simple. The child finds new ways of asking or becomes innovative in their approach. Even then, parents can still say NO!
You’re probably wondering what on earth I am going on about and what this has to do with trading the Forex markets at all? How this is even related to psychology at all? Well, let me explain. You see when we have bad days, weeks, months or even quarters; how do we come back or react?
Because no matter how much we lose as Forex traders in the market, our psychological toughness needs to remain sharp for us to continue moving forward. I do however understand that losses play a part in our emotional state too – however if we think about it, it wouldn’t if we didn’t have an element of greed.
Have you found yourself questioning whether trading is for you, or if you have enough skill, and if you will ever make it in the Forex markets whenever you lose a trade, big or small, or lose a series of trades? Don’t you find it interesting that we don’t question ourselves the same way when we’re massively successful or at least winning here and there?
Here is what I’m getting at – with every loss there is a lesson. Someone once said that often in life you’ll learn more from the losses than you ever will from the wins. Simply because with the losses you can look for the details and in those details we find a wealth of knowledge that we can apply when the opportunity represents itself again.
This is easier said than done though! Our psychology in the Forex markets can either liberate us as Forex traders to conquer or it can paralyze us with fear for a lifetime. It could get overwhelming to the point where you don’t place another trade for a very long time.
Sometimes, it will take just moving forward. But even that statement has no real direction or actionable instructions right? – That’s very true!! I believe it is important to have a plan as to how you will deal with your losses in the Forex markets and how you plan to get out of the psychological rut you may find yourself stuck in as a trader trying to achieve their dreams through an acquired skill.
Psychological ruts aren’t always easy to get out of and they may even take a while to detach from. That is okay. What matters is that we get back up as Forex traders and we place another trade objectively and according to our trading plans. When we focus on the moment and don’t look back on past failures we are about to take steps forward that will help us keep mentally balanced.
One trader once said to me the way he gets himself out of psychological ruts is by meditating and visualizing what he wants the future to look like. If that doesn’t work he said he would focus on trying to remember all the good times and good things that Forex trading brought to his life over the years and the good that did for him and his family.
We must remember that emotions serve us nothing within the Forex markets. Price may move due to emotions in the short term but in the long-term, the economic dynamics will play their role and the markets will do what the markets want to do in that given moment. All we can do is view the markets with a clear mind and logic because that is a fundamental tool that we possess as human beings.
When used correctly it can be a powerful weapon. Imagine a psychological framework that sees numbers for numbers and with no attachment to the money itself. We would not be so joyful and excited for profits and not so sorrowful for the losses, because internally we understand that it is all a part of the process and it a battle we fight 5 days a week, for a lifetime.
How are you going to get out of the psychological ruts you might find yourself in?
1. Affirmation – affirm yourself as a successful Forex trader
2. Remember – remember the good that has happened, the things you’ve enjoyed, and why you started trading the Forex market.
3. Surrounding – surround yourself with like-minded traders who are focused and who understand the importance of psychological toughness too.
4. Plan – have a plan as to the things that you could focus on as an outlet to avoid the psychological rut to begin with.
5. Self-discipline and consistency – focus on your plan, understand yourself as a trader, and the conditions you don’t enjoy trading in.
I hope you find this helpful and that you continue to grow.
Remember, euphoria and overconfidence are sufficient to cripple a rebel!
Happy trading Traders