MANAGING YOUR EMOTIONAL EQUITY & TRADING CAPITAL

[FX4Newbies]

So... when you are getting into a trade, are you paying attention to your state of mind and your emotions?

Just before you click...

1. Are you entering the trade by following your trading method to the letter?

2. Are you entering impulsively hoping that you can grab a few pips?

3. Are you entering trying to recover previous losses: revenge trading?

4. Are you entering because of a hot tip from a trading buddy or some online service?

5. Are you entering out of boredom, because you have been waiting too long for a trade and your time is running out?

Be very clear as to your WHY for entering the trade. Any other reason other than #1 will often trigger an emotional state of mind as the price begins its "song and dance". Fear would likely begin to surface and would, with it, bring other negative emotions.

Learn to guard your emotional equity as much as your trading capital.


FX4Newbies

In response to this and other posts...

Let me just throw out here some of the popular trading methods/edges out there:

1. Price Action Trading (Naked/Clean Charts): heavy reliance on reading candlesticks and their formations etc.
2. Harmonic Patterns/Fibonacci Levels.
3. Mean Reversion Methods.
4. Andrews' Pitchforks.
5. Zone Trading. (Trading breakouts and trading from one price level (S/R) to the next...S/R meaning Support/Resistance.
6. Pivot Levels.
7. Elliott Waves.
8. Ichimoku Kinko Hyo ...decided to add this as well.
9. Methods that include trend or momentum indicators...and the like.

There are more but, we'll stop here for now. By the way, these are not listed in order of preference...just randomly listed.

All of these methods have specific triggers to provide the trader with clues or "signals" to get into a trade. Honestly, Mr. Market does not care what you use, as long as you get in! Once in, the mental-emotional war can begin. So how should a trader decide which one to choose? More on that to come...

Regardless of the method you choose, it should generate trade ideas that provide these two opportunities:

1. A LOW-RISK entry.
2. A HIGH-PROBABILITY profit target.

Your trading method should be as sharp as possible in giving you trades that meet both of those criteria.

That's it for now....enjoy your weekend.


FX4Newbies