Do you think Forex trading will bring you quick profits? If so, grab an eraser and get that thought out of your head. There is no instant profit in this world.
On the contrary, Forex trading is a very risky business, and we have to make a lot of efforts to control the element of risk.
To be able to trade forex independently, you need in-depth knowledge of the mechanics of forex trading and analysis. If these knowledges have been mastered, then we can decide to do forex trading.
Also read: 9 Types of Orders in Forex Trading that Traders Should Know
However, the success of a trader is not only supported by knowledge alone, but also determined by the mental and frame of mind during trading. This is an aspect of forex psychology that novice traders need to know.
1. Be Aware of Potential Losses
Before starting forex trading, you must understand that all forex traders must have lost. Yes, I mean ALL. The word is deliberately written in capital form so that we remember: losses are definitely unavoidable in life, including in forex trading which is famous for the lure of lucrative profits.
If you only listen to the broker’s marketing promos, then trading sounds very easy. Who isn’t interested in making money just sitting around watching the charts move? Moreover, here we are talking about money in the MILLIONS, sometimes even MORE.
Unfortunately, there is one thing that these promos don’t convey: before we get big profits, we have to taste the losses first.
Also read: 6 Times and Hours to Forex Trading: From Asian to American Session
In fact, according to various research results (one of them, the results of research by the French forex regulator, AMF), 90 percent of traders definitely lose and lose their capital. Also, if you ask any trader, no matter how successful he is today, he must have lost.
It’s so commonplace to lose, there are even traders who say, to be successful in trading, you must have experienced losses first.
Therefore, if you hate losing or are afraid of losing, it’s better not to trade forex. Because such people will find it difficult to adjust to the rhythm of forex trading, which sometimes moves unexpectedly.
2. Don’t Expect To Be Rich With Small Money
Also read: Hierarchy and Forex Market Structure that Traders Should Know
Did you know that there are people who shouldn’t trade? Although everyone is allowed and able to participate in Forex trading, but in practice, not everyone is advised to pursue this field. Especially those that belong to one of the following:
- Does not work
- Low income.
- Drowning in debt
- Unable to pay electricity bills, or make ends meet
The main reason why those with these characteristics are prohibited from entering forex trading is because the minimum capital to be able to trade successfully is US$500 (on a mini/micro account), and even that will not necessarily profit immediately.
Remember point one above. Don’t expect to get rich right away with small money.
Also read: History of Forex Trading: From Era of Gold to Online Trading Like Now
3. Forex Trading Takes A Lot Of Practice
Just because forex involves a lot of money, don’t think all forex traders around the world can make a profit with the click of a mouse.
As stated earlier, only about 10% of traders are able to make big profits. How can we be among the 10% of successful traders, not among the 90% of traders who fail? Practice nonstop and keep learning.
Many people misinterpret and think they will be able to make big profits overnight. Well…okay, we can indeed make big profits by trading Forex. However, large profits will always be accompanied by no less large risks.
Also read: Top 4 Forex Trading Risks You Must Understand, Don’t Lose!
There is one thing that novice traders or those new to forex do not understand: profits are not made in a short amount of time.
In order to make a profit, we must maintain a high level of discipline, like the Miss Universe candidates who are desperately trying to manage their bodies and dress up to look perfect. This kind of willpower is what we must have.
Also read: Simple Guide How to Make Money From Forex Trading Up To US$1000
In reality, often big losses are caused by these four things:
– No trading plan
Well, we definitely have a goal of getting big profits. But that’s not the plan. The trading plan here not only contains trading objectives, but also strategies and what steps we will take to make trading run smoothly.
– Lack of practice on demo account
Although trivial, but trading practice on a demo account is one of the most important things so that we become reliable traders. Remember the movies about heroes? Hercules, Superman, Spiderman…
Before becoming superheroes, they all trained hard. Practicing swords, martial arts, lifting weights, falling up and down sweating! As for us? All we need to do is practice on a demo account for a few months, before we are ready to take action in live trading.
Not only schoolchildren who need discipline, forex traders too. Discipline of following the strategy in the trading plan that has been made.
Discipline regulates the capital we have. Discipline is one of the absolute things in the world of trading. Without discipline, we will often experience losses. We certainly don’t want this to happen, right?
Also read: 6 Reasons and Advantages of Forex Trading that You Must Know
– Can’t Manage Capital
Just like other investments and investments, when trading Forex, we are required to have a fund management system (Money Management). By having good Money Management, we will be able to control the risk of trading Forex trading.
What kind of money management is good? Well, this is relative, depending on how much capital we have, whether we dare to take risks or not, and how our trading strategy is. However, don’t worry, we can try Money Management on a demo account.
4. Keep Mental Continuously
We cannot trade in a short time and then expect to immediately make a profit. So, if you still want to continue trading, we must be willing and able to continue to be patient, practice and learn.
“Then what about those who can make big profits by trading Forex?”
Usually, they are traders who are already pro with well-known trading strategies and have eaten a lot of salt in the Forex trading world, so they are used to facing big risks that can make our hearts swell just by looking at them.
They can still experience loss from time to time; It’s just that the profit he gets is much greater than the loss he suffers.
Well, for those of us who are just learning to trade, it’s better to do it slowly, because Forex trading is not a skill that we can master in an instant.
Also read: What is Forex Trading: Definition, Markets and Forex Basics
Stay tuned for various forex trading lessons at Forex.bacalagers.com while practicing trading on a demo account. Then, it’s also a good idea to remember the following things in order to maintain our forex psychology:
– Trade forex, only if you feel you can afford the loss
Forex trading is a type of investment that has a relatively large risk (high risk, high return).
Therefore, trade with idle funds that will not make you experience a financial crisis and cannot eat in the event of a loss.
– Don’t put all your money in one trading position
Putting all the money in one trading position is a very stupid and risky act, because it has the potential to make us lose all our money in an instant.
– Don’t trade on too many currencies
Concentrate and focus on a little or a few forex only. Too much forex being traded can make it difficult for us to monitor the development of price positions, because the more information we have to look for.
– Practice walking before running
Don’t trade until you really understand how to trade. Understanding and learning to trade through forex sites that provide a place for forex demos or games is an action that must be taken before actually trading.
– Accept the fact that ‘the market is always right’
A market is not a collection of ducks that one or several people can easily herd. ‘Market will go where it wants to go,’ the English said.
We are just small forex traders, who can’t dictate the market. So, don’t be too frustrated when it turns out that the opened trading position was wrong and forced to lose.
– Occasionally, there is nothing wrong with giving up
If you are in a position that continues to lose, get out of the market immediately. It may be that market conditions are not compatible with your trading strategy, or you are in a bad mood. Wait for another chance to win.
– Take care of your mental and physical health
Forex trading is an activity that takes a lot of energy and thought. Therefore, if the principle of ‘time is money’ is used as a guide, then maintaining health conditions is a must.
– Don’t be too greedy or greedy
If the profit target has been reached, pause for a while until there is another profitable opportunity to trade again. Avoid greed that will actually backfire for us, because the market is not always on our side.
Thus a brief review of forex psychology. Hopefully the above article can help you to achieve success in trading, especially by controlling the psychological aspects within yourself.
After knowing these things, the next step is to learn more about forex, including about the intermediary between you and the forex market, namely Forex Brokers.