Critical Thinking Removes Emotions During Forex Trading

3 min read

To trade or not to trade?

As the question echoes in our mind, we search for clues to make a decision whether or not to take a trade setup or not. Our nerves can’t stomach the indecision and sooner or later we collapse under the pressure. We take the trade and hope for the best. Have we chosen wisely? Probably not.

Our human brains are wired to search for evidence that confirms our opinions, which is called the confirmation bias. Once that happens, we have emotions tied into the outcome and that is not good. Then when the trade ends up for a loss or the trade goes against our position, we realize that the trade does not look as great as it once did.

How many times did it happen to you? You take a trade and it looks awesome. But not so much later, the trade all of sudden looks horrible. Do you recognize it? We just had a rough awakening to reality.

So the big the question is: HOW DO WE REMOVE THIS?

My advice is straightforward: remove your opinion and bias from trading! Do not let your ego get in the way:
• We traders can remove opinion based trading by following our trading plan.
• We want to react to price; not predict where the market will go.
• We can do that by identifying key points on the charts and waiting for price to reach those decisive moments. Once price gets there we can take a reversal or a breakout, depending on how price action unfolds.

Whatever solution we find, we must make sure that trades have no emotional impact on our trading psychology – and winning and losing streaks should be expected. Expect also the unexpected during each trade and realize that there is no sure winner. Always think critically and don’t get emotionally attached to whether one trade wins or not. Never ever see trading as a battle with the market, but rather a battle with yourself. With those last words I conclude my post.

Many green pips, Tarantula FX