Trading Psychology - Forex Trading Tips

Forex markets in India are very emerging and are taking pace . Right now the markets are in their nascent or the initial stage. There is a lot of potential in the forex market in India. Forex trading in India is not as common as commodities trading or stock trading . The later are very old and established since a very long time where as the FOREX has started very recently with very less participation as of now.

People can always relate FEAR to forex trading.
The fear of losing money.

Eg.
When you can afford to lose that trade, (which you still do feel fear)
you are still able to think rationally and life goes on.
(ALTHOUGH YOU STILL DO NOT WANT TO LOSE THAT TRADE)
In the example above, fear is definitely in our emotions.
But because the level of fear is low, we are able to handle the fear and still think rationally.
HOWEVER,
Eg. your forex trading capital is $10k.
Your current open trade is now losing -$5000.
And that’s half of your capital.
Or worst to say, that’s half of your life asset. (Money you can’t afford to lose)

Forex Trading Psychology – Fear kicks in. (This time in higher dosage)
Then you start seeing your open trade grows to negative -$6000.
Your Fear level increases, you can feel your heart beat racing.
And sure enough, your worst fear arrived,
The trade increases to negative -$7000.
Forex Trading Psychology: Levels of FEAR
Always use Stop Loss Orders. If you don't use them, it will kill you financially. We recommend stops 30 pips above or below your entry price.

Don't loose more than 5%-10% of your total capital in each trade. Adjust your stop orders and leverage if needed.

Let the profits run, cut the losses. Instead of using Take Profit orders, it's better to use a "Trailing Stop". If your broker doesn't support it, you can do it manually. Set the stop price at 30 pips (or the amount that you have chosen) above/below the maximum/minimum price since your entry. You will have to adjust the stop level continuously, but you will get much better results.

Don't go against the trend. Go with the trend.

Capitalize well. Fund your account with enough money. For standard accounts, at least $5000 (for mini accounts $500).

It's less risky to don't let trades opened overnight.
Remember, forex is a journey and not a one time success.
Most traders want to make big bucks in a few trade. But eventually lose it all.
Professional full time traders are ones who trade consistently and happy with reasonable profits.
Let me know if you had experience the above before and what you did, or what happen?

Any kind of analysis made using technical analysis software is exceptionally accurate. This makes the application a great tool for active and professional traders. i have recently done with the technical analysis tool of Dynamics levels any ways but does it give short term trading ideas with forex trading guide lines correctly but i must agree there must be wide of such tools. You don’t need to have any mathematical or artificial intelligence background to effectively understand what is working behind any technical analysis tools, it is better for booking profit.

Sure i will regularly update the post, thanks for your participation, wish u all the best and i wish you to make lots of money form stock market, for that you have take risk as well as keeping u updated with stock market news reading the ebooks and obviously last but not the least u have select the good company while investing after all its your money.

Book the quick profit from forex trading.

I might not be a greatest analyst but as i feel after alalysing the stocks from technical analysis tool of dynamics level, i feel Sector-wise, I think penny stock will still be in play until the music stops. The maritime and basic material sector remain the weaker sectors and the property and small cap remain the stronger sectors.

Sometimes, I don't understand why a trader could be convinced of not having a Stop Loss while we see almost every month an unexpected uncounted impulse (I would call it Best of the Test for whom with less of the rest) in the market.

There is no specific rule as to where you should place the stop loss, so consider the below mentioned tips as the general rules and ask your mentor to fit reliable Stop loss rules just for you and your trading system(If you have one?).


Trading is speculative no matter what technique you use to predict the market direction and take trading decisions: technical analysis, fundamental analysis, math, a dice, a crystal ball, stars or anything else – it is all about probability.

Since there is no single known technique to predict the markets by an accuracy of 100%, never use “sure”. Be prepared to face the opposite direction. While being “sure” of something, the impact of the contrary action will be a surprise and people usually fail to take the most rational decisions when facing surprises. Always assume risk and think about the different possibility so you won’t be surprised when a trade turns bad, you will be ready to take the appropriate decision as you already knew about the risk.

# Sometimes a trading system does not work if you risk less than recommended %7 to %10 of your total account balance. It means you trade oversize or you just entered the market when everyone else getting out of the market. In this case this is not your fault as it has a clear message for you "don't trade this way anymore and ask an expert to solve the problem".
# If you are convinced enough that you can make up 1 million dollar out of your 10000 dollars account by not using stop losses as you may think you are the one who knows the price will be back on its way to you instead of hitting new highs, well, simply you are wrong.
# Remember, there are no sky limits for the price of any of currencies in FOREX market.
# If you don't like to place a pre defined Stop Loss on your trades, please ask someone to show you how to follow a wining trade by using "Trailing Stop".
# Be sure it is better to have one or two losing trades with 100 points of lose, instead of being desperate with sinking into -1000 pips of dizziness.

Trading in the forex market tends to be a little confusing when you're first starting, which is why it's vital to your success as a trader to understand technical indicators and use them within the framework of your forex trading strategy. Forex indicators assist traders in predicting the direction in which the currency market will travel. Following the indicators will give any forex trader the information they need to work their forex trading strategy.



You see technical analysis is just the study of the short term price action in the market. Now, this short term price action is determined by the buyers and sellers in the market. Markets are just buyers and sellers trying to buy or sell. Their emotions rule the markets. When these buyers and sellers all start behaving in the same manner, you can well imagine market can become highly predictable. When things become predictable, they lose their value. This is the exact reason why when majority of the traders use the same indicators they become useless.

The different types of Forex trading indicators depend upon the need of an individual. For just a technical support, a trader needs to set up the whole scenario of deriving the very least of information from the indicators. This can be a set up of two or more kinds of indicators which are combined in order to obtain very helpful results.

In a layman language, indicators are something which alarms you to trade. It sets up informative surrounding and makes work much easier. It is supported by trend, cycle, volume and momentum in trading. The indicator uses trend to show the ongoing setup of the market. It makes the trader aware of the uprising or downfall in the market which can be used as a piece of information.

The Bollinger Bands
They give very good signals and can be used as support\resistance indicators, telling us - before the move occurs - that a reversal is prone to happen. When price touches the lower band it is oversold, and when price touches the upper band it is overbought.

The trading method for the Bollinger Bands is basically to look for price-action support and resistance levels, and confirm them with bounces on the Bollinger Bands themselves. This results in very high win rate and consistent profits.

The Simple Moving Average, or the SMA, is an interesting indicator that most traders do not use in the right way. Most traders use it as a trend-following indicator to enter trades after a trend has been established, however we use it in an entirely different way.
For example:

The last five closing prices for MSFT are:

28.93+28.48+28.44+28.91+28.48 = 143.24

To calculate the simple moving average formula you divide the total of the closing prices and divide it by the number of periods.

5-day SMA = 143.24/5 = 28.65


The most accurate and predictive way to use the SMA is in the bounce method: we wait for trend to establish, but instead of randomly entering, we wait for price to retrace to the moving average and bounce off it.

Relative Strength Index
The RSI is the abbreviation of the Relative Strength Index, which is introduced by Mr. Welles Wilder in 1978. The RSI method is one of the Oscillator analysis, which indicates the gapping in the forex market using figures, 0 to 100.

RSI = 100 - ( 100 / ( 1 + RS ) )
RS = Average of inclining prices for X days / average of declining prices for X days

Now you have to choose which one is best for your trading