Secrets of Trading Psychology – How to Develop Self-Discipline and Get Rid of Your Fears

Do you know the feeling when a time-tested strategy not only does not bring profit, but also leads to the loss of your deposit? Why do most traders trade with it successfully, but it brings you nothing but losses? It’s all about self-discipline and control over your emotions. If you are sure that you have a really profitable trading system in front of you, you developed it yourself or took it from our Forex portal , having previously tested it on a demo account, then you must clearly follow its rules. Instead, many novice traders, after a series of unsuccessful trades, are afraid to open the next position and miss a good signal that would cover all losses and bring a good profit. Other traders start to open trades where there are none, and naturally suffer losses. The third group of traders enters strictly according to the rules of the trading system, but exits too early, missing out on large profits. As a result, the subsequent series of losing trades will nullify all efforts. What are the reasons for these failures? In the absence of self-discipline and psychological stability! For a stable income on Forex, it is not enough to have a profitable strategy, you also need to be able to apply it in practice. About what psychology istrading, how to develop self-discipline, as well as overcome all your fears, we will talk in today’s article. 

What is self-discipline?

The well-known trader Alexander Elder said in one of his books that there is no need to make hasty conclusions about the profitability of a strategy within a short period of time. If you follow the money management and the rules of your strategy, you will not be afraid of a series of losses of ten or more trades. Sometimes even one winning trade is enough to cover all losses. The profitability of the strategy can only be judged after a long period of time. It should be remembered that in some months the statistics may be negative or zero, but in general, for six months or a year, you should receive a cumulative increase in the deposit. Therefore, do not worry about several triggered stop losses.… Treat them as an integral part of trading. Just as day cannot exist without night, so Forex trading cannot be without stop-loss. But what to do with the unpleasant sediment feeling that appears every time the next stop loss is triggered? You need to learn to control your emotions. Only constant work on yourself will help you overcome all fears and become successful.

How do you learn to control your emotions?

There are several effective methods that should help you learn to control your emotions. We’ll look at three of the most effective methods:

1. Deep breathing. Take a deep breath in with your stomach, filling your lungs with air as much as possible, hold your breath for a couple of seconds, and then exhale slowly. Repeat the exercise 3-5 times depending on your condition. This exercise fills the brain with oxygen, so you can quickly relieve stress after suffering a loss in a matter of minutes. Do this exercise before trading and during the day at least 20-30 times, and you can get rid of stress and learn to control your emotions;
2. Concentrating on breathing. Before you start trading, get into a comfortable position and concentrate on your breathing. Try to take your mind off your thoughts and focus on how you breathe in and out. Breathing should be calm and measured, as if you were sleeping. This exercise helps you develop a sense of self-discipline and focus on the little things. Do the exercise for 10 minutes every day before trading;
3. Visualization. If you are very worried about the triggering of the next stop-loss, you need to learn to abstract from this negative event and take it for granted. Artificially imagine that this trouble happened to you. Listen to yourself, how do you react to this situation? Imagine how you confidently deal with it, adequately and positively, without unnecessary emotions and worries. This is just another step to your success and you should be grateful to it. With the help of visualization, you can solve all difficult situations on Forex , get rid of bad habits and cultivate new useful qualities in yourself. Do this exercise every day for 10 minutes, taking some time to relax beforehand.

10 rules for successful Forex trading

To succeed in Forex, it is necessary not so much to spend time on trading, but to create an appropriate emotional state. Forex psychology is far from the last place and is an integral part of any trading system. Even the most profitable strategy can become unprofitable if approached incorrectly. What mistake do almost all novice traders make ? They begin to devote all their free time to trading, spend less time on food and sleep, become irritable, and as a result, all their efforts are reduced to zero. In order not to make these mistakes, we recommend that you familiarize yourself with the following rules that will help make Forex trading interesting and profitable:

1. Plan your time wisely. If you are trading intraday, then start trading with the opening of the London session and end in the first half of the American session. The rest of the time the market is rather sluggish and it will bring you nothing but losses;
2. Take lunch and rest breaks. Take time when the market dies down to chill out a bit or grab a bite to eat, such as lunchtime in the London session. Even 5-10 minutes of rest will restore strength and psychological balance;
3. Do not trade ahead of important economic news. It is almost impossible to predict where the price will go during the publication of economic reports or the speeches of politicians, and Forex trading turns into roulette. It is at this time that stop losses are most often triggered, so look at the calendar of economic events to be aware of when the next important news comes out;
4. Treat losses as mundane. Forex is just a job, so you shouldn’t take losses personally. No strategy is complete without losses, this must be remembered during trading;
5. Don’t spend too much time on technical analysis and charting. Analysis of charts should not take more than 30-40 minutes a day. Also use pending orders and price alerts to save your time;
6. Withdraw earned profit on a regular basis. To increase your motivation, you should pamper yourself once a month – give a gift for the money you earned on Forex. Do yourself something nice, even if you are just starting to make a little money – buy a movie ticket or treat yourself to some trinket. You should feel that Forex brings some kind of return, reward yourself for the effort and time spent. When you earn decent amounts, you can withdraw 50% of the profit for your needs, and leave the rest on the account for capitalization of interest;
7. Use modern communication devices (smartphones or tablets). This will allow you to monitor the state of financial markets while away from your computer;
8. Go in for sports. Do not forget about your health: go to the gym or the pool, play football, do yoga or fitness – do everything that will help you distract yourself from thinking about Forex;
9. Relax on weekends. Try not to think about Forex on weekends. No need to read forums, study strategies or test advisors . While the market is closed, go about your business, take a walk, chat with friends. This will help you relieve the fatigue that has accumulated over the week and gain strength before trading on Monday;
10. Constantly strive for new knowledge. Read books, participate in thematic forums and webinars, watch training videos – this will help you improve your trading system and fill knowledge gaps.

Trading psychology books

If you want to become a successful trader , you need to constantly improve not only in trading in the foreign exchange markets, but also in psychology, since these two aspects are very closely related. We have prepared a selection of books on the psychology of trading, which will be of interest not only to novice traders, but also to professional players.

Mark Douglas “The Disciplined Trader”

This book was written by renowned trader and trade discipline specialist Mark Douglas. In it, the author talks about the first attempts to make money on the stock exchange and the failures that befell him, which at first led him to depression, but then he was able to learn from them and learned to turn the fear of failure into a positive attitude towards success. You will not find specific guides to Forex trading in the book, but you will be able to understand how to behave in difficult situations and learn how to cope with your fears.

Free download the book: M. Douglas. Disciplined trader.rar

John Piper “The Road to Trading”

The author of the book is a practicing trader and professional analyst. He acquaints the reader with the inner world of the exchange, talks in detail about all aspects of trading and shares his personal experience. After reading this book, you will be able to understand what a professional trader is guided by when making decisions, what you need to pay attention to and what can be neglected.

Free download the book: D. Piper. Road to Trading.zip

David Cohen “The Psychology of the Stock Market: Fear, Greed, Panic”

In this book, the author tries to prove to the reader that in order to understand the mechanisms of the market and receive returns from trading in financial markets, you need to learn to understand the psychology of trading. Most analysts do not recognize such important psychological factors in forecasting as fear, greed, and overconfidence. After reading the book, you will learn how, under certain circumstances, fear and greed can lead to enrichment, and in another situation, to complete ruin.

And finally, we would like to add that you should not treat the psychology of trading as something superficial. This is an important component of trading in the foreign exchange markets, without which no strategy can be considered profitable, so you should approach the study of this aspect with special care. We hope that our tips will help you master this challenging but highly rewarding activity.