3 hacks to making better decisions when trading

Our psychology could be an ally or a difficult obstacle depending on which one we’ve trained it to be overtime, and some of us do not even try to understand how the little things we do affect our mind and how that in turn affects the decisions we make as traders, you know… it’s like a double-edged sword, it can help you in attacking but if you don’t pay attention to it… it might come back to hurt you, I’m sure no one wants that so I’ll be sharing some tips that should help you cultivate a healthy psychology as forex traders, let’s go.

I’ll be focusing on areas where we tend to rely on our psychology a lot.

BEFORE THE ENTRY

You see, it’s very easy for our reasoning to be influenced by our current emotion, take a heart-broken guy for example… he just went through a break-up and he’s feeling sad… the logical thing to do is engage in activities that’ll neutralize that feeling so he can start thinking straight again… but an average guy would rather listen to sad songs and other things that’s likely to worsen his state, or a drunk guy who clearly realizes he’s drunk but for some reason he’s still consuming more alcohol… the list goes on, it’s almost as if we are attracted to things that are likely to give us more of the same emotion as we’re currently experiencing, and this could be very bad if we’re making important decisions.

So we should be aware of this and try to neutralize our emotions simply by thinking about our state of mind and analyzing what we feel from the last trade we just took, chances are that if you’re coming from a losing trade you’d be looking to get some profits even if it means breaking some of your rules, we become more desperate in situations like this.

Where as if it is a winning trade you’re coming from and you’re looking for positions immediately after… you could very easily feel over confident as you’re most likely expecting a bunch of wins to continue the streak… this could tamper with your judgement and you’ll come out of trades wondering how and why you took it in the first place.

Taking a deep breath for a few seconds to calm your nerves before placing trades can go a long way in clearing all the anxiety and excitements from previous trades… give it a try.

SECURING THE CAPITAL CAN GO WRONG SOMETIMES

It’s common knowledge that securing the Capital is the first objective of a trader, let’s break this down a bit and see just how good of an ideology it is.

So what do we mean by securing the Capital? taking necessary actions to ascertain that whatever happens your capital remains as it is, while this is good it could also come back to bite you.

Here’s a scenario, you got in a position and price starts making a rejection off of your entry point and you then move your stoploss to the entry point with the hopes that price will continue moving into profits but then price retraces back and hit the level taking you out but still continues into profit, sometimes it may not even hit your entry but the spreads take you out either ways, this might not be the case every time, I mean its forex right, but personally I have experienced this a lot, trying to secure the Capital by setting stops to Break-even might not be the best choice unless you’re trading at a time you shouldn’t be trading at or you’re just skeptical of the setup, then that’s fine, but there’s an alternative.

You could easily close a percentage of the open Positions to cover for the part of your Capital at Risk this way you can leave your stops where they should be until price moves to a reasonable distance. Then again you can wait for the previous highs/lows to be broken before setting your stops to break-even either ways don’t be pressured to secure the capital just as you get in on the trade.

Don’t sacrifice what could be for what is, do the necessary calculations and know what is at risk, and be fine with letting it go, if you can’t bear losing it don’t risk it.

And lastly …

MULTIPLE ACCOUNTS

This is a great way to test a new trading/psychological strategy.

Creating new accounts is a good way to ease the mind of major emotions when making trading decisions, I recommend doing this when trying out something new or different from what you’ve been doing.

I hope this was helpful in some way, to get more valuable contents as they drop follow my Instagram @seda_capital

2 Likes

Great post. It can be very helpful to a trader especially for a new trader who are thinking to start trading and want to make good profit.

Trading is an art. You have to make a good plan to make money from this market.

Very useful post for every trader. It will help many trader to make their decisions easily.

Well, when trading, you need to maintain the decision first. Wrong decisions can ruin trading profits. I always like to trade by maintaining discipline and plan.

Building trading algorithm that makes decision for you is the only efficient solution to this problem, however it is mentally challenging task, requires talent and patience that’s why most people fail to do that.

Trading is an art and you only can succeed in it if you have understand it completely and have full knowledge about it.

I also believe that creating multiple accounts can be very helpful for a trader. And they can very well test a new strategy before going live with it. I also do that for most of the strategies I apply on my system. So far I’ve tested the price action and scalping on a few accounts I have with different brokers. Looking forward to more.

The best decisions can be made if we maintain discipline and keep a nice track of our trading activity and results via a trading journal. Apart from that, practice is what can make you better.

Organized trading is the best practice to have a successful portfolio in forex trading. Knowing what we are doing and knowing where we are investing the money is the base point of a good investment plan. This kind of planned trading will also help to make logical decisions in trading.

Very Informational post!!
It can be very helpful to a trader, especially for a fresh trader who is expecting to trade and want to create a good profit. And few points from my side- “Apply your intuition properly”. Your intuition is a powerful tool when used correctly. When persecuted, it can actually provoke you to fail. Gut instinct may be a signal from your brain telling you something conditioned to making an active decision—or it might just be a magical feeling in your gut with no basis in reality. Ironically enough, learning to tell the conflict is in part the work of intuition as well, but also of experience.

hey kathlyn!...
i am a new comer on FX. i’m still in learning stage. last three months i’m practicing forex on demo account. you are an experience forex trader. so if you share some strategies it might be beneficial for us.

chears

Of course, you can work with market context, support/resistance, and market flow. This is a very profitable strategy. If you don’t know about these things, you can create knowledge by watching videos from YouTube.

Agreed! Youtube is filled with very useful content for forex, just note down the topic you want to have hands upon, then learn and implement on demo.

manaaaa hehe what ur view on BTC

I Agree with your points. It was worth reading and helpful.

I think discipline is really that thing which matters a lot in trading activity. But of course every trader must try hard to reach discipline. There must be all key features of trading activity included such as risk management and money management (it teaches us how to manage our accumulations and risks wisely), emotions control (it’s the biggest part of our discipline, because it’s very difficult to setup our conscious on a positive way), patience and calmness. I’m convinced that every trader who want to reach heights in trading has to set such goal as elaborating discipline. Until we will continue to trade without any discipline we will lose more and more money.