Thursday, January 1, 2009

A Forex Trading Tutorial - How to Avoid the Mistakes I Made - Emotional Trading Loses Money

This article is a Forex trading tutorial and one of five that address the critical mistakes that traders often make.

Another big mistake that traders make is trading emotionally. Emotional trading leads to mistakes and mistakes lead to losing money. People always seem to remember losing money more than the thrill of making money. After losing money people become nervous and that nervousness always results in poor decisions.

Losing money in the markets is inherent to trading. Your goal is always to minimize losing and live to trade another day.

To be honest, you will never completely rid yourself of trading emotionally. It is near impossible to do. What is possible is to trade with self control. We see examples of self control everyday when people delay gratification in order to achieve a goal. College students sit through boring classes to get a degree or dieters eat cottage cheese (ugh!) to lose weight.

The same self control must be applied to trading in order to be profitable. We must have a set of rules that guide the entry and exit from the markets. Management of these rules will help the trader manage risk exposure and avoid exhausting the trading account.

The set of rules or automated trading system that you develop is defined by your plan. If you have a well thought out and detailed plan for trading the markets you will certainly minimize the emotion in your trading because you have thought of all the movement contingencies and you have an action for any direction the market takes.

What are these actions in the plan that minimize losing. The actions are having trailing stops and stop loss orders included in the plan in case the market moves against the anticipated direction.

Did you know that there is a easy way to alleviate all of the mistakes above? Can your trading afford to try and stay in business and continue to make these same monumental errors? I think expert advisor trading system can strengthen and amplify your trading results. Click here and find out how you can improve your trading results tenfold with the right strategy.

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