Mental health is important for consistent winning in forex.
This is because if your mentality collapses due to emotional turbulence, you will not be able to make calm decisions in trading.
In this article, we explain how to train your mentality to win in forex through seven symptoms of weak mentality and remedial measures.
If you feel that your mentality is a challenge to win in forex, please refer to this article.
Is mental control important for winning on forex?
Have you ever lost in forex and experienced a mental breakdown?
If your mentality is weak, you will not be able to make trading decisions calmly and you will lose more easily.
Control your mentality well and you will be able to win consistently.
7 symptoms of mental weakness and remedial measures
The following are symptoms that appear due to mental health and remedial measures.
Symptom 1: Potty-potty disease.
In every trade, it is important to follow the strategies and rules you set yourself.
However, if you suffer from the Potty-Potty Disease, you will be tempted to enter trades even where the rules do not apply.
This is because you feel strongly that you could have made a profit if you had traded, and you always want to hold a position to avoid opportunity losses.
What you want to realise here is that while you have the possibility of winning while holding a position, you are "exposed to risk".
The market can move suddenly and significantly.
If you take an easy position and the next moment it moves significantly in the opposite direction to where you think it will go .......
Not only will you lose your money, but you may also be forced to exit the market with a loss cut.
There are two ways to remedy the Potipochi Disease.
(1) Make time to get away from the market.
If you are constantly watching the market, you will be tempted to enter the market, so it is effective to take time away from the market.
If you use the alert function, you can specify a currency pair and value, and it will alert you when you come to that value.
Do not stay in the market, but go to watch the market when you receive an alert notification.
(The image above shows the alert settings screen from the Gaika ex application.)
2.2 Be able to explain the basis for your entry
Get into the habit of explaining the rationale for your trades by keeping in touch with fellow forex traders and disseminating information on social networking sites.
For example, the following.
The price is in an uptrend on the long-term leg, but a double-top shape appeared near the previous high, so I entered the market as a sell for a reversal.
The price had hit the 20MA (moving average) twice before and bounced back, so you took profits when the price returned to the 20MA.
Symptom 2: Chicken profit-taking
When you enter and make an unrealised profit, you want to take profits immediately.
Especially if the unrealised loss period was long and then turned to unrealised profit, you may feel a strong desire to take profit as soon as it becomes unrealised profit.
This can be explained by the famous decision-making model, Prospect Theory.
Prospect theory can be broadly divided into the following two types
The tendency to prioritise profits that can be obtained now over those that can be expected in the future (i.e. avoiding the risk of not being able to make a profit in the future).
When there is a loss, there is a tendency to try to recover it even if it is risky (i.e. to avoid a situation in which a loss is certain).
When acting in accordance with prospect theory, they tend not to extend profits and, conversely, pull out of losses.
The result is a steady pounding.
Even if profits accumulate, they are ruined by a single loss.
The remedy for chicken profit-taking is to "believe in your trading rules and follow them".
If you are not confident in your trading rules, it is easy to let your emotions get the better of you.
To believe in your trading rules, you need to be supported by successful experiences from past trades.
It is important to verify the past and demo trade and convince yourself that you can win if you trade according to the rules.
Successful experience in real trading is also effective.
Once you have achieved some success with past verification and demo trading, it is a good idea to move on to real trading and gain success experience with small lots.
If you still get carried away by emotions, one option is to use limit orders for all your trades.
In a method called IFO orders, you place an order specifying the entry price, stop-loss price and take-profit price all at once.
As everything from entry to settlement is done automatically, you can trade according to the rules as long as you are careful not to shift the price you have ordered.
Symptom 3: Unable to cut losses.
As explained in the previous section on chicken profit-taking, if you trade with your emotions, you will not be able to defy prospect theory and pull out of a loss.
As with chicken profit-taking, the remedy is to believe in your trading rules and follow them.
Be aware of the following points.
Set a stop-loss line at the time of entry and do not shift it.
Accept losing honestly.
Understand that not all losses are bad, but some losses are necessary.
There is no method that can win 100% of the time, and no matter what method you use, there will always be times when you lose.
Consider that it is only good if you win in total.
This may also be due to the size of your funds.
If you trade with enough money to affect your livelihood, it will be difficult to accept losses because your livelihood depends on it.
If the money is money that could be lost in the worst case scenario, it will be easier to maintain a sense of normalcy.
It is important to trade with surplus funds.
You should keep your leverage and lot size small and trade as if you were taking data by repeatedly winning and losing.
Symptom 4: You trade according to your mood.
In an attempt to make up for a previous loss, you may impulsively enter a trade even though you have little reason to do so.
Conversely, if you are afraid to trade because of a losing streak, you may forgo entry at a point according to the rules.
In forex, by repeatedly trading in statistically superior situations, the variation in results will converge and positive results can be achieved.
Conversely, if you trade on weakly-founded situations or do not trade on strongly-founded situations, you will not win in total.
The key to improvement measures is past verification.
It is a good idea to look at the results of past verifications to see how many times you have lost (or won) in a row at most.
You will notice that you do not keep losing (or winning) all the time.
If you still keep losing and feel depressed, one option is to take the plunge and leave forex for a period of time.
When you feel calm and reaffirm your purpose for starting forex, you will be more willing to try again.
Do not give up and work at your own pace.
Symptom 5: Excessive lot size
This is a symptom that appears when you have started to win a little and are feeling more confident.
Gradually increasing the lot size after you start winning consistently is fine, but it is unwise to increase the lot size immediately after winning a little.
However, it is unwise to increase the lot size as soon as you start winning a little.
You should be cautious when trading and remember that there are no absolutes in the market.
Keep a record of every trade you make and look at your losing trades to remind yourself.
It is also a good idea to withdraw money from your account when you win big.
The amount in your account will be restored and you can start trading again from scratch.
Symptom 6: You enjoy the thrill of forex.
Trading is a joyful experience when you win and a frustrating one when you lose.
However, be careful if you start to enjoy the emotional turmoil of day trading or swing trading, but are happy or sad at the price movements of shorter time frames, such as one-minute or five-minute trades.
Your brain is in a state of excitement.
Repeatedly trading in this way will lead you to pursue gambling trades for fun, rather than calm and rational trades for winning.
<Measures for improvement
Take a break from trading when you feel emotional, or switch from real trading to demo trading.
It is also a good idea to focus on your earnings over a period of time, rather than on your wins and losses.
It is effective to look back on the results of your trades by tallying them up for a week or a month.
(Below is an example of a trading tally)
Symptom 7: Delusional trading
This is a type of trading in which traders are paranoid about information from professional traders or social networking sites and copy other people's trades, thinking that "that person made an entry, so I will do the same".
The problem is that whether you win or lose, your trading skills have not improved and you do not know how to improve when you lose.
Also, it is impossible to trade at exactly the same time, and the imitator does not always win.
It is important to trade according to your own strategies and rules.
Repeat hypotheses and verifications by examining the past and create your own winning patterns.
Summary: Train your mentality and become a consistent winner in forex trading.
The above explains how to train your mentality to win on forex through seven symptoms of a weak mentality and remedial measures.
To become a stable winner in forex, it is important to be aware of "winning in total" by playing where you have a statistical advantage.
Control your mentality and achieve stable results over the long term.