How to Trade Forex without Emotions

How to Trade Forex without Emotions

The effects of emotions on trading, and a guide for how to trade without emotional impact.

The forex trading world is one that is an emotional roller coaster experience for the newly initiated. It is a business known for its numerous ups and downs; but for the newbies, the biggest killers of their trading account is emotions, and this is why it is important to learn how to trade forex while keeping emotions in check.

How Emotions Affect your Trading Account

Entering ‘home banker’ trades

Quite often, traders take positions that they feel will never end in a loss, probably because they are coming off the back of 3 consecutive wins or because a very big and renowned analyst who rarely fails made the trading call. In doing this, they enter the trades with very huge lot sizes. With Forex trading, however, you can be sure that these so-called “home banker” trades will end up in a loss, taking with them all the profits made by the trader before then – and even crashing the account in most cases.

Moving stop loss levels

After getting a trade entry and getting in with all the stops in the right places, traders who are yet to learn how to trade forex emotion free end up moving these stops. When the market goes near the stop loss level and looks like it will hit, the trader will quickly move the stop by some pips. After doing this for a while, the trader will find out that instead of taking a 30-pip loss, he ends up taking a 70-pip loss. In the same way, after setting profit targets, some traders keep moving this target as the market advances towards it, in the belief that since the market is surging, they can make double the initial profit target.

Normally this doesn’t work out, as the market ends up reversing after overshooting that first initial target by a few pips, leaving the trader to manage with less than what he could have achieved if the profit target wasn’t moved.

Entering trades before entry signal is completely lined up

This is common with traders that trade breakout strategies. For most break out strategies to give a valid signal, the period the trader is watching must close. For example, when a break is seen on a one hour candle, the right thing to do is to wait for the close of that candle before taking the trade; but, most traders will quickly jump on it in a bid to not miss the trading opportunity. When the market fails to sustain the break out, they will be left nursing a losing/lost trade.

How to Trade Forex without Emotions

Trading forex without emotions is as simple as having a clear trading strategy and laid-down money management rules. When you have these and you are able to stick with it come hell or high water, you have successfully caged your emotions. Secondly, if you do not have an alternative source of income and you are still trying to grow your account balance, stay away from trading. This way you will not be forced into using big trade sizes or seeing trading opportunities that are not there. If you cannot sleep with your two eyes closed because you have an open position, then you obviously entered a trade that is against your money management rules, and this suggests that you are still struggling with your emotions.


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