| Proper Trader Psychology in Forex Scalping |
 Placing a trade in any financial market requires the correct state of mind, but there are no higher stakes than in Forex scalping. Whimsical trades can quickly lead to bankrupt accounts, frustration and eventual failure by discouragement. Failure is not making an incorrect trade, nor is it having a month of a net loss. Failure is making unplanned trades. A trader fails when he/she trades on emotion. Failure is a state of mind that can't shake losing trades, and it cannot accept winners with grace. Success is having a plan, and sticking to it. Successful trading requires the ability to check emotions and fallback on analysis, no matter how well or poorly a trade is going. The outcome of Forex scalping hinges on that successful state of mind. Active trading requires a concrete plan, and the discipline to see it through.Losses are an acceptable part of the Forex scalping business. The secret to Forex success is to simply not allow losing trades to spiral out of control. Should this scenario happen, fear and desperation must be evicted from the trader's psyche. Will the trader close the trade, combat stress productively (no better cure for a losing trade than vigorous exercise) and live to fight another day? Or will the trader try to “make all that lost money back” by executing more undisciplined trades? A trader in the right mindset chooses the former. The Forex market is a 24 hour, 5 days a week operation. That does not mean that you as trader must be an active participant at all times. When mired in a trading slump, step back and focus on something else. Return to the market when you feel refreshed and refocused. Too many winning trades can be more toxic than losers. Unchecked success can lead to arrogance. Arrogance leads to letting winning scalps ride too long, only to see them reverse for a loss. Arrogance may lead to not seeing the need for stop losses, and absorbing an unacceptable amount of risk. It's the proverbial “pride before the fall.” The best tool to combat prideful and undisciplined trades is with a trade journal. The trade journal will make the Forex scalper justify each trade before it is placed. The trade plan is detailed in writing, complete with entry and exit levels. Any deviation from this plan must answer to a daily post mortem review of all trades. Nothing is more embarrassing than watching yourself make mistakes. This negative reinforcement keeps the trader disciplined, and ultimately, successful. |
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