How price action trading will cure emotional trading problems
Price action forex trading strategies provide much more than just high probability entry signals because they also work to influence the proper trading mindset. Many traders know that to find success in the forex market they need to be disciplined and remain calm yet confident in their interactions with the market. However, very few traders understand just how much the specific trading strategy they use can influence their mindset and emotions. Since not trading off of emotional impulses is a necessity for making consistent money in the market, it is of paramount importance to use a simple method like price action trading so that you do not unknowingly contribute to your own confusion and struggle in the forex market.
• Why Emotional Management is Critical to Trading Success.
Traders who do not pre-define their forex trading activity will inevitably fall into a cycle of emotional trading ups and downs. The problem with emotional trading is that it can be very hard to realize you are stuck in this rut until you get out of it, it’s sort of like the old saying “can’t see the forest for the trees”; it is hard to obtain the proper trading perspective when you are caught up in emotional impulse and feeling.
If you want to become a calm and calculating forex trader who never has to deal with emotional trading mistakes, you will really need to first understand why emotional management is so critical to trading success. The reason emotional management is so vitally important to forex trading success is because the market simply does not care about how you feel or what you think. To put it another way, you will not gain any upper hand in the market by acting on your feelings of fear, greed, anger, euphoria, or desperation. In all reality, there will be a positive correlation between how much you trade off of feeling or emotion and how much money you lose in the market. This means that the more you trade based on emotion, the more money you will lose. It may take a year or even 5 years for you to blow out your account, and you may have many winning trades in between, but one thing you can bet your house on is that if you do not learn to control your emotions while trading the market you will eventually drop into the 90% statistic of losing traders.
• Over complicating forex trading can easily induce emotional trading, leading to lost money and lost time.
If you are using a forex trading strategy that is too complicated for its own good or is just simply too confusing for you to understand, you are likely to end up entering trades out of desperation or frustration. Many traders use fancy sounding indicator trading systems or forex trading robots, these systems sound nice and might look sophisticated to the untrained eye, but in the end they are doing nothing more than inhibiting your view of the natural price dynamics underneath and the predictive power they contain. Traders often shoot themselves in the foot right out of the gate by using complicated trading strategies that require them to cloud up their charts with a million different bells and whistles. Many traders are not even aware of how much stress and complication they put on themselves by using overly-complicated trading strategies until they switch to a simple trading strategy like price action trading. The switch between lagging indicator based methods or trading software to raw price chart reading strategies is often described by forex traders as an “ah ha” moment, like turning on your headlights after trying to drive in the dark your whole life.