How to Trade Forex Without Emotions

Emotions are the one of the greatest problems of being a Forex trader. Almost every beginning trader, who starts with the demo account, experiences a great success in his or her trading, but fails to carry this success to the real money account. The problem is letting emotions get in the way of rational judgments. When we lose, we feel frustration and sometimes even despair. Winning can cause us to lose control over our actions and turn trading into a gambling, or cause a serious over-trading problem. Calming greed and taming fear will help you to overcome trading Forex in an overly emotional way. Here are some suggestions to help you.

Steps

1. Recognize the emotions involved:
   
   • Greed – human beings often want more! When market goes as we expected, it is too easy to believe it will continue for very long time. We forgot that everything can change in an instant.
     
   • Fear – when you are afraid to miss a profitable move or of losing money, you can make irrational choices driven by fear.
     
   • Poor attitude toward money – if your money management is not the strongest point (usually for emotional traders this is the weakest point), you will soon will be out of money, before you even have a chance to establish yourself as a trader.
     
2. Remember that single loss is not your fault. It’s not even the market’s fault. And it’s not your system’s fault. It’s just a loss. No trader or system can guarantee 100% winning rate. So, losses should happen, and will happen.
   
3. Accept that there is no one to blame, because there is no guilt in losing.
   
4. Shore up your system. If the losses prevail over the winning positions, then check your risk-to-reward ratio first. If each of your losses is less than a third of your single winning position then maybe your system is intended to work with 65% of your positions in the red zone? If your risk-to-reward ratio doesn’t compensate your poor loss-to-win ratio, you still don’t have to blame yourself, the market or your system.
   
5. Remember that a single winning position is not an indicator of your success. The same goes for losses – don’t treat a single win as your accomplishment. It’s just a part of the routine process of trading Forex.
   
6. Use a good automated trading system.
   

Article provided by wikiHow, a wiki how-to manual.