A big problem with trading forex is that your emotions are affected with the profits and losses that you incur, but what if you fixed the profits in an attempt to fix your emotions.
Fixed Forex Psychology
You have a good day in forex and your emotions run high, you feel good, and no reason why you shouldn’t, you’ve done a good day’s work, you’ve made some nice profits, you deserve to feel good, you’ve cracked it, you’ve been here before, but this time you’ve really cracked it. EXCEPT, tomorrow you will expect the same again, hard day’s work, nice profits, relax and enjoy, but tomorrow will be completely different, just like a game of snooker, the balls never turn out the same with each frame. But what if you were to expect the same from every trade, a fixed stop loss and a fixed profit, the market so often moves 30 – 50 pip and comes back again, so in itself it’s a valid strategy to be looking at. If your profits and losses are always the same, it may lead you to a more stable and consistent trading mentality which is so essential for forex trading.
Keeping it Under Control For Forex Trading.
Your prime directive for forex trading is to preserve your capital, by not taking risky trades, and if your emotions are all over the place, you will be prone to taking risky trades, you’ve got too many variables. By taking fixed profits and losses you have less variables to contend with, keeping things the same will provide you with easier analysis, stick to the same setup, define your setup and wait for it to turn up in the market, rather than look at the market and try and work out what it’s doing, again you have many more variables.
Consistent profits is the holy grail to forex trading, if you can consistently make profits and compound them, then you are going to see an exponential growth in your capital, and the best way to be consistent is to do the same thing over and over again. Repeating the same process refines the process, it is easier to identify differences when you do the same thing, if your profits and losses vary widely, it is much harder to work out when you make a profit, more profit, loss or more losses when you are changing things all the time.
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