DailyFX Forex Trading Course Walkthrough: Part Ten
Forex Trading Course Walkthrough Talking Points:
- This is the tenth of a ten-part series in which we walk through articles from DailyFX Education.
- The aim of this series is simplicity while walking through some of the more important aspects of the FX market along with traders’ strategies and approaches.
- If you would like to access the full suite of Educational articles offered by DailyFX Education, you can get started with the beginner section at this link: DailyFX Forex for Beginners
We are now in our final installment.
But, keep those graduation caps on because your trading career is just now getting started and there’s much more work to do before celebrations are in order.
Everything that we’ve learned up to this point is largely mechanical or physical, in some way. But the real challenge in trading, at least for most people, isn’t something that can be learned in a book, it’s what they have going on between the ears. It’s the psychology of the matter.
Point blank: Trading is one of the few venues in life where failure is absolutely guaranteed. You’re not going to win 100% of your trades, nor should you try. And as unfortunate as it is, many people in our society have a very difficult time dealing with failure, and perhaps an even more difficult time remaining motivated when they know that failure is not only possible but even probable. This is why trading psychology is so utterly important: Because you can quickly become your own worst enemy. To get started, check out our Guide to Trading Psychology below.
Greed and fear; they’re ever present in our society. But, most of the time most people can put these on the backburner without focusing on it too much. Others, however, aren’t so lucky. For traders, this will be a constant in their day-to-day because there’s a very frequent oscillation between the two emotions, and rarely does that perfect balance stick around for long without some work or effort on the behalf of the trader.
Next up, we look at how traders can move forward with what should be the primary goal of new traders: Consistency. You’re going to have a lot of time to work with greed and fear as you manage your own psychology.
These negative emotions can lead to a host of problems. Sometimes, traders will spend time tying to find or hone the ‘perfect’ strategy. This, of course, is a wasted quest as there is no such thing as perfection when it comes to projecting the future. Instead, this is more of a cop out that allows the prospective trader to waste time while feeling like they’re moving in the right direction.
This leads to something known as ‘paralysis by analysis,’ or, said otherwise, spending so much time analyzing the problem that you forget the best way to go about solving it. It’s a pure waste of time and emotional energy because the more time you spend thinking about the future doesn’t necessarily help you to navigate it when whatever happens, happens.
Instead, accept that perfection is not only impossible but misleading, and learn how to trade consistently without having the perfect strategy.
The last part of our series is, ironically, the point where many educational trading courses will begin and that’s setting up a trading plan. The reason we saved this for last is because finishing this material is not an end, in any way: It’s the beginning of your trading career. This is when you want to begin to set a trading plan, because you’ve learned many of the basics and you’ve been shown some of the most important aspects of market analysis. At this point, you’re ready to begin creation of your own unique trading plan.
But, by no means is the quest over and that will likely remain as the case for as long as you’re a trader. This is where the demo account can come in, helping you to get more and more comfortable with the mechanics of placing a trade, following a strategy and executing an approach – without having the emotional crux of losing money hanging over your head.
Real World Application
This is our last lesson in the course so this should also be your first step into your trading career. The application from this lesson is to create your trading plan. You can use the guide linked above to assist; and the details of what we’ve learned over the prior nine lessons to fill-in for each section. But this is your trading plan so build it based exactly on you and your preferences. Do expect that future changes may be needed, and that’s ok, traders often adapt their plans as they progress.
The demo account can be a key resource for your continued learning, as you further build your strategy and approach.
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.