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    • Month: June 2017

    The Psychology Behind Forex Trading

    During online forex trading, it is all too easy to allow your emotions to take over, particularly in the midst of a difficult trade. When your money is on the line and your heartbeat begins to race faster, this is when emotional trading really kicks and is also when you are most likely to lose money.

    Your feelings will be closely tied to your forex trading account, and this is no surprise considering you are trading your hard-earned funds in the hope of generating a profit. However, the more emotional you are, the less money you are going to make from online forex trading, and this has been proven time and time again.

    Psychology and the Brain

    The brain is divided into two lobes: the left lobe is the analytical part of the brain that is objective, scientific, intellectual, rational and logical. It is also the scientific part of the brain.

    On the other hand, the right side of the brain is the imaginative side. It is subjective, intuitive, sensitive, introverted, unconscious and artistic. It is also the emotional side of the brain.

    How Psychology Influences your Trades

    Psychology plays a hugely influential role in forex trading. When we act logically we are using the left side of the brain to trade forex. When dealing with problem-solving we are using the left side of the brain to be logical in our decisions.

    However, every time we become emotional during forex trading we are using the right side of our brain. If we use the right side of our brains to solve our problems we will be basing our decisions on emotion rather than logic, which will eventually result in major market losses.

    To avoid FX trading from the right side of the brain it is important to develop a detailed trade plan – and stick to it. This will ensure that we trade consistently using the left lobe.

    In addition, it is recommended that you switch off the Profit and Loss button featured on your forex trading platform. Not only is this distracting but it is also incredibly variable throughout the trading day and is an emotional indicator for a trader.

    To Conclude

    Learning to lose in online forex trading is a tough lesson, but is also the single most important lesson a trader has to learn. No single investor’s forex trading account is 100% profitable at all times. A great deal of one’s success comes down to following a trading plan, avoiding trading on emotion and using logic and common sense.

    Smart Ways to Trade Forex: The Power of Patience

    Research suggests that the best way to become a long-term, successful trader is to trade with patience. This article provides tips on how to trade patiently.

    Many online traders approach the market with the intention of making a quick return on investment within a short period of time. Instead of planning their trades carefully and establishing a forex trading plan, they rush to make a huge return on investment, becoming greedy in the process.

    Research clearly demonstrates that slow and consistent gains are the best way to achieve long-term market success. And most traders will agree that they would prefer to make small profits over a long period of time than massive profits within a concentrated timeframe.

    Listed below are some top tips on how to trade forex with patience:

    Always put Quality over Quantity

    The most successful traders wait for days or even weeks without trading before executing a trade. Rather than trading continuously in an effort to make a return, wait for the perfect moment when you are 100% confident that this trade will be a successful one.

    Such trades must be executed with a complete lack of emotion. You need to be objectively ready to place the trade and not waver in your decision. You also need to be fully prepared to lose the money you have risked on this trade if it doesn’t go to plan.

    Avoid Over-Trading

    Trade with caution and never, ever rush a trade. To encourage this approach, learn currency trading on the daily chart time frames before using lower time frames. Use daily charts to access relevant market information that is also practical. Remember, making a return on investment does not need you have to trade every day.

    Develop a Positive Trading Mindset

    Patient traders learn to trade forex using positive FX trading habits, whilst emotional traders develop negative habits when trading forex. Having full control over your emotions simply means that you need to trade less to be profitable.

    Conclusion

    Over time your patience as a trader will pay off and you will be less inclined to execute unnecessary trades. As a result, you will spend less time on the trading platform overall. You will also be calmer and less stressed in your day to day life, instead of epitomizing the typically stressed-out, exhausted investor who spends hours staring at the trading platform in the hope of executing a positive trade.

    Setting Goals in Forex for a Successful Career

    In forex trading, as with any other endeavor in life, you should always set goals. By setting goals you will be far more likely to boost your FX trading confidence and establish yourself as a successful online trader over the course of time.

    Below are some tips on how what sort of currency trading goals you should set and how you should set them.

    Your FX trading goals should be

    Specific

    What is it that you wish to achieve from online forex trading? the more detailed and specific your currency trading goals are, the more likely you will be to achieve them.

    Measurable

    How can you measure your goals so that you know you’re making progress? One of the best steps is to set up a forex trading journal. You should record every action that you execute on the trading platform in your journal, so that you have a solid record of where you went right or wrong.

    Attainable

    Your goals in forex should always be attainable. Do you have the budget to accomplish your goals? What risk management strategies do you have in place to accomplish those goals?

    Realistic

    Another important aspect when setting goals is to always remain realistic. The forex market is fast-paced and very volatile but it is easy to become overly enthusiastic after a series of wins. Never set your standards too far above your physical, emotional and monetary abilities.

    Time-bound

    How much time have you allocated towards accomplishing your FX trading goals? Successful currency trading rarely comes overnight: it requires patience and a great deal of committed to achieve long-term success and notable funds in your forex trading account.

    Final Thoughts

    First of all, you need to keep one eye on the latest forex news whilst performing in-depth technical analysis of the market. You should continue to educate yourself about the market and should always practice new trading strategies on a demo trading account.

    Never become complacent – the market is more powerful than any trading strategy and losses are an inevitable part of the trading game. Learn to accept losses with grace. If you devise a trading strategy and stick to your trading plan you will be one step closer to achieving your goals.

    Becoming a Forex Trading Specialist

    To become a forex trading specialist, you need to refine the number of markets you follow and learn about those markets in absolute depth.

    To become a successful forex trading specialist, it is essential that you specialize in your chosen markets. This is a key factor to success on the foreign exchange market. This article outlines how you can become a forex trading specialist and tackle the market in no time.

    The first step in becoming an FX trading specialist is to master a trading strategy and specialize in it. It is also essential that you become a specialist in a small number of markets.

    It’s not necessary to closely follow the latest forex news to learn what is happening in all the markets: just focus on the markets that you are most comfortable with and learn to specialize in those markets. Over time, you will develop a close affiliation with those markets and you will also learn about them in great detail. You will therefore become more confident and less stressed when you enter the trading platform.

    Why should we Develop Close Relationships with a Handful of Markets?

    Developing a close relationship with a small number of major markets is important because:

    • It improves your trading
    • It encourages a disciplined mind set during FX trading
    • It keeps you focused because you are only concentrating on a handful of markets
    • It eliminates any distracting elements from your trading platform, such as unnecessary forex news
    • It avoids the temptation of entering a number of trades simultaneously after seeing good trading signals on many currency pairs
    • It eliminates the amount of time you spend on the trading platform
    • It reduces the chances of risk trading and therefore trading on emotion
    • It encourages traders to trade solely through their trading strategy and by following a trading plan

    By following the above steps, you will be more likely to establish yourself as a professional trader on the foreign exchange market who trades objectively and with little emotion. Over time you will come to learn your chosen markets in great detail and will become a forex trading specialist in those markets, enabling you to fine-tune your FX trading skills and generate notable returns on investment over a longer period of time.

    Advantages of Gold Trading Online

    Gold Trading Online is an extremely lucrative investment opportunity for any aspiring investor. It offers countless opportunities to make a big return on investment, d differs in many ways from other forms of trading, such as forex trading or trading CFDs.

    A Gold Investment is a Safe Investment

    Gold Trading Online is an ideal solution for a trader with a low-risk threshold as it is often regarded as one of the safest investment options during a turbulent economic climate. Traditionally described as the ‘safe haven’ of financial instruments, gold trading has gradually played a more prominent role in many investors’ portfolios.

    Throughout the global financial crisis, many investors chose to invest in gold as a hedge against economic turbulence. Although both gold and currency prices are largely determined by the market and economic events, the specific events influencing those values differ significantly. In most cases, the price of gold actually moves in the opposite direction from other financial assets, such as stocks or bonds. This works well towards successfully reducing portfolio risk.

    High Profit-Making Potential

    When you trade gold, you will be able to take advantage of high liquidity. Gold trading can be executed 24 hours a day, 5 days a week, and as gold is an extremely liquid asset, its potential to be bought and sold is virtually relentless, meaning that it is very easy to achieve high returns on invested income.

    In addition, bid/offer spreads are tight, while leverage is available as high as 200:1, meaning that although you can trade on a smaller amount of your initial deposit, the leverage will enable you to potentially make a sizeable profit.

    Diversification is Key

    Since the ultimate way to augment revenue and protect your portfolio is to diversify, spot gold trading has paved the way towards profitability and portfolio diversification. Many traders perform forex trading and gold trading, along with many other types of trading, to enhance their opportunities for profit.

    When trading spot gold, you can buy or sell gold against the US dollar (represented as ‘XAU/USD’), and speculate on whether different future prices will rise or fall in value. You can also make money in either direction, so, even if the rise of gold is dropping, if you have correctly analyzed that plummet, you will still make a profit.

    The Importance of Educational Resources

    Since forex brokers are aware of the popularity of spot gold trading, educational materials are rife. Your favorite IMMFX broker provides a full range of educational tools, including tutorials, walkthroughs and more. The availability of all of these resources helps investors to achieve big financial gains when investing in gold.

    Trading Psychology – Why Traders Lose?

    Successful trading requires the trader to deal with many conflicting ideas and information while maintaining a consistent attitude towards winning and losing. Traders must possess several contradictory traits. For example, traders must have an ability to take risks and let trades run, combined with the ability to cut risk quickly. They must also have conviction regarding their strategies and trades usually while the market is providing mixed signals or incomplete information and the ability to live with their decisions.

    Traders must possess seemingly incoherent and diametrically opposed blend of intellectual and psychological abilities, especially a strong desire to win, coupled with the ability to accept failure.

    Here are a few observations:

    Imagine an emotional airline pilot?

    You cannot imagine one, and for good reason. Traders who are emotional will crash their accounts just as a pilot would a plane. Traders must suppress their emotional urges to be able to focus on chaotic-sometimes terrifying situations. While losing money cannot be compared with the prospect of losing a life, it can create similar emotional stress, and some traders can have suicidal thoughts after a big loss.

    Greed

    The desire for more can propel traders to earn incredible sums, but it can destroy as well. Indeed, more accounts have been blown by traders who took too much risk, overtraded, or looked for “revenge” in the marketplace after suffering losses. Excessive anger after a losing trade, or extreme happiness after a winning trade, is a sign of the need to feel in control.

    Churn and burn

    A day trader might sit for many hours in front of a monitor waiting for a trading opportunity, only to find none. Invariably, the temptation to enter a trade ‘any-trade’can contribute to trader’s losses. The desire to feel that one has achieved or earned each day can make for mistakes. Traders also risk burnout from the emotional strain, which can peak, especially if one or two days of losses wipe out winnings earned over many days.

    Unrealistic goals

    Traders can be delusional about what they expect to achieve, and about the time it takes to do it.  This can keep traders from taking progressive steps towards realizing their goals. However, the power of belief, faith, hope and even delusion, can have a positive impact. Steve Jobs the founder of Apple was known for having an alternative view of technology and business, which many thought delusional.  However, he worked out the seemingly impossible through work, sharing a trait with McDonald’s founder Ray Kroc-whom often said, “Hard work is the meat in the hamburger.” Hard work has another advantage. It tends to instill a greater appreciation of what can be achieved and show the way towards solutions.

    Maintaining discipline

    Losing can have an emotionally disruptive effect on our lives.  Winning can have the same effect. We can become overconfident which can lead to losses. Successful traders learn to treat both winning and losing as non-events, and just part of the process. Indeed, forex trading can become compulsive and many traders develop an addiction similar to those found in gamblers. These types of traders need to be “in the game” all the time.

    Fear of success

    Some traders will cut their profits short repeatedly, even after they have seen similar trades that continued towards substantially larger profits. This can be a sign the trader does not feel they deserve to win or believe they can. Subconscious thoughts often undermine traders in ways they might not be fully aware of.  A trader needs a huge helping of self-esteem, which should not be dependent on how they trade. Ironically, many traders tie the way they feel about themselves to other aspects of their lives, based upon their performance as traders.

    Fear of failure

    For many traders, particularly male traders, their ego is on the line when they trade. If they suffer a loss, they view it as a personal affront to their self-respect and sense of masculinity. This usually leads to greater losses from “revenge” trading.  Also, some will get out of trades too early, earning a few pips when they could earn much more. This can reflect a fear of loss as well as a need for instant gratification.

    Lack of Training

    Think of any endeavor-sports, music, business…and recall how many years of training and dedication it takes for individuals to achieve success. Trading is no different. Though it can seem Sisyphean, with our trading losses akin to the boulder that pushed the King of Greek mythology back down the hill time after time, we can get to the top with sustained effort.

    Defining Success

    Traders must define for themselves, what it means to be successful. This refers not only to how much money they hope to earn or pips they plan to win, but what trading can offer beyond that. What are the mental rewards? Often, traders have unrealistic expectations of what they can achieve, particularly in the short to intermediate term. The best traders learn to overcome their own limitations by focusing on “peak performance.” This means they don’t compare themselves with others or with how they performed the day before yesterday.  They only look for ways to improve their own skill level, concentrate on the game, and especially the process.

    Finding your Forex Trading Style

    Successful online forex trading starts with finding your trading style. This can go a long way in helping you to define your trading strategy and develop your trading plan.

    With forex trading, it is important to remember that one size definitely does not fit all. Your success comes down to a number of factors including your psychology and your forex trading account size. FX trading expectations also play a huge role in your success. For this reason, it is fundamental that you find your trading style before developing your plan and strategy.

    There are four main types of online trader

    Scalper

    A scalper keeps a position open on a trading platform for just a number of seconds or minutes. Scalpers are short-term traders with a great deal of stamina. They are quick thinkers, risk-takers and have incredible concentration spans. They do not care about the bigger picture and simply want to make a quick profit before exiting the trading platform.

    Day trader

    With day trading a position never stays open overnight. The typical timespan of a day trade is from minutes to hours. Day traders use technical analysis to execute their trades and tend to avoid fundamental analysis. They usually arrive at their trading decisions from a bigger timeframe, while executing their trades from a smaller timeframe.

    Day traders characteristically aim to start and finish a project within the same day. They are also willing to sit at the trading platform for long periods of time. As with scalpers, they do not care about the bigger market picture but instead want to take advantage of low margin and high leverage.

    Swing trader

    A swing trader keeps a position open for a number of days to weeks. Swing trading involves using a combination of technical and fundamental analysis, so the ability to follow forex news and analyze charts is essential. Patience is a virtue as the online trader will need to sit and wait for long periods of time before a suitable setup presents itself.

    Position trader

    This is the longest duration style of FX trading and requires a deep capital to be successful. Position traders need to be incredibly patient as they keep their positions open for weeks, months or even years. Fundamental and technical analysis is essential for successful position trading. Further still, position traders need to be able to walk away from the trading platform without experiencing continued nervousness, stress or worry.

    Conclusion

    Now matter what kind of trader you are, IMMFX has the best trading tools and features to ease your trading career and help you winning forex market.