These days, you don’t have to work in a financial field to become a Forex and CFD trader. You could do so part-time while growing your landscaping business or practicing law. Forex trading is accessible to everyone with an internet connection, and anyone can succeed at it.
However, there is one caveat. No matter how much you know about the Forex market and CFDs, you can’t be 100% sure about how you will perform. Trading psychology has become a hugely popular point of interest lately, as it’s become obvious to traders that they themselves are what makes or breaks their trading career.
The subject has spawned masses of information, which you can use to ensure you’re fully prepared for success. Here are 5 trading psychology tips to ensure you succeed in the Forex market and CFD trading.
- Start with a Forex demo account
You won’t know how your mind works until you’ve actually started trading, which is why Forex demo accounts are so useful. Forex demo accounts allow you to enter the markets with virtual money, rather than risking real money from the get-go. The most important point to remember here is to take it seriously. Put your Forex career at stake – if I succeed, I’ll start trading for real, otherwise, I’ll postpone it. That way, you can actually care about the outcome even though no money is at risk.
A problem many traders have is that they can’t stop thinking about trading during their day job. Trading psychology shows how important it is to compartmentalise your trading activity. Set particular periods of the day in which to do it. Don’t leave it for whenever you have a moment. That will make you always anxious to get back to it, and leave you fretting about it when you can’t.
- Set aside risk capital
It is absolutely crucial that you have set aside risk capital before you start trading. This is money that you can afford to lose. If you’re using the money that puts food on your table, there is far too much at stake, and you will make bad, fear-based decisions.
- Make a plan and stick to it
Making a trading plan is easy enough. Sticking to it is the hard part. You might see a trade that is just really appealing, but if your plan has no place for it, let that trade go. Rather have another look at your plan and how you can adapt it than make decisions based on the moment. If you don’t treat your plan as sacred, you’ll start making mistakes based on emotion.
- Recognise when you’re being greedy
Greed is one of the biggest stumbling blocks for traders. When you see that you can make just a little bit more, you will be tempted into making bad decisions. It’s a tough one to deal with, but the first step is recognising when you’re being greedy. With every new idea, decide whether you want to try it because of the money, or whether you legitimately think it’s the best move to make.
Trading psychology has become recognised as one of the most important factors in whether you’ll be successful. It is highly advised that you take heed of all the info available on the subject. Start with a Forex demo account, set aside some good time for it, and trade responsibly.