As any professional traders will tell you, mental flexibility is key to have a successful trading career. An essential component of successful trading is psychology. By the term psychology i refer to the state of mind a trader should have while trading. More specifically, trader psychology deals with-
- Control of trader’s fear
- Control of trader’s greed
- Trader’s discipline
- Flexible mind
In terms of psychology, our goal is to be on an even in all situations, so to speak. our winning and losing trades should not affect us. Of course, we all trade to win, but we should strive to maintain an emotional balance regardless of any gains or losses.
Trading with a flexible mindset is a critical skill that all traders must learn. Let’s say that you considered yourself to be a “bull” for the USD, so does it mean that you think that the USD will rise forever? If you have a strong general opinion before you analyse the current situation, then you are viewing the information without the benefit of a rational mindset. This may seem quite strange to hear, but it is true. Do not misunderstand me, if you have a current opinion that a currency pair is likely to behave in a certain way due to your analysis, that is fine. But many traders form open- ended opinions on fx pairs and then try to find analysis that fits around that opinion.
Basically, I am saying that if you are going to trade successfully you must always evaluate and review facts yourself and be flexible. Researching and analysing your trade and picking the entry based upon trading strategy and assessing the risks involved are all vitally important aspects of trading. Let’s say if you are having strong bullish view onGBP/USD and due to the Brexit if there is sudden negative political news then also if you are not changing your entry or exit levels then you are breaking the risk management rules, its very important to be very flexible in trading and come out of that ego zone.
I like to think that I am NOT a trader but a RISK manager. I look at the RISKS and check them before I place the trade.
Trading Fx is about being able to assemble thoughts, analyse charts and implement a set of strategies and work within a TRADING PLAN with good MONEY and RISK MANAGEMENT disciplines.
Adjusting Lot Sizes according to market conditions
Being flexible in your approach is important to trading success. Don’t be afraid to adjust your lot sizes according to market conditions, I trade sometime huge lots but sometimes I need to adjust according to market conditions. I trade different risk models according to variable conditions, it’s complicated to begin with but the more you will practise then you get used to it.
DO NOT BE AFRAID TO TAKEING SMALL LOSSES:
Do not be afraid to take losses. Losses are a part of trading and everyone has them. Without taking loss it’s not possible to be a long term consistent and successful trader.
MAKE THE CHANGES ACCORIDNG TO THE MARKET CONDITIONS:
In today’s volatility, if you are in profit and you see your profits going down, start to be aggressive in removing part of your position size and moving stops to break even.
Move stops to break even to protect yourself quicker than maybe you used to. Take profits off the table. Remember, it’s better to bank some ££ than nothing at all. Put your ego aside and look at what is happening not what you believe should happen. Signals must replace opinions as your entry and exit signals.
Always realize the markets are bigger than you are, they are always right. Market trends can be a steam roller and your job is to ride that steam roller not be run over by it. Be flexible and willing to go with the flow of the markets !!
Wish you all a very good luck in trading and investing!
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