Forex Psyche Rule #5: Keep Focus

I've noticed I have a sweet spot in the middle of the day when I make my best decisions. It starts about an hour after I've been up and around, somewhere around the half way mark on my second cup of coffee. And on a good day this sweet spot lasts five or six hours. On a bad day, maybe an hour or two before I'm exhausted, restless and distracted.

One thing I've begun to do is an adaptation of an old studying trick from college. I work for 50 minutes - researching, trading, watching the markets, and then take a 10 minute break. I walk around, get some air, take a quick jog, anything to clear my head so that when I return, it's with new focus. It's been helping keep me from making rash decisions and from feeling so burnt out at the end of the day.

The reason for this blog

I am a new forex blogger, with a practice account for about a year, and a real money account for about three months. I have found amazing resources both online and in books that have proved invaluable for technical analysis, and I'd like to share some of these resources over time. However, far and away the harder part of forex trading to master, for me, has been the emotional discipline and patience necessary to wait for the right entry points and to get out of positions at the right time. The purpose of this blog will be to explore the psychological methods that have helped me to grow into a better trader over the last year. Obviously, I don't imagine it will be useful to experienced and professional traders, but I know there are many people in my shoes who trade as amateurs or in our spare time. Hopefully we can start a conversation and form a supportive community.

Good Luck!

Forex Psyche Rule #4: Everyone Loses

Even the best financial analysts are not pychic. Everyone loses in Forex. The successful traders know when to cut their losses and when to protect their gains. If you get too proud of your entry points, you'll stay in positions too long. If every signal is working against you except "your gut", GET OUT and minimize your losses before you lose everything.

Rule #3: Education = Confidence

Before you make a trade, take an extra five minutes, check the technical analysis. Do the experts agree with your analysis? I'm not saying they're always right, but I tend to assume they know more than I do. I'm not saying I've never made a lucrative trade against expert advice, but I make it knowing that it's perhaps a little riskier than my other positions and I watch it more closely. Educating yourself with earn you an extra bit of confidence in your position, and allow you to both enter and exit trades at stronger positions.