Trading psychology refers to the emotions and mental state of a trader. It determines a trader’s success or failure. In my simplest explanation, trading psychology is how you behave in the markets. If you can fix your behaviour and how you handle yourself in the markets, you can see great improvement. Most traders lose money because of their behaviour and not their strategies.
I have published an episode on my podcast titled “the importance of personal development” because working on yourself is crucial. You have to keep your trading psychology in check at all times and working on yourself should be an ongoing thing. In this post, I will be tackling 5 ways to help you to master your trading psychology. Without further ado, let me get straight to it.
1.Greed
Most traders struggle with greed, I struggled with greed a lot as well. A trader who is controlled by greed tends to make risky and uncalculated decisions and as a result take huge losses. On a very good trading day, a greedy trader makes a lot of profits but gives it all back to the markets and has nothing to show for it at the end of the day. Profits go as far as account history but they are never kept. If this is you currently, you need to focus on working on this.
2.Fear
Fear is not bad and it is an emotion that alerts us of danger. Fear is bad if you allow it to control you. As a beginner trader, you will definitely feel fearful. Just like a new driver feels scared to drive on the road alone, a beginner trader feels the same. If you buy a car after obtaining a driver’s license and just park in nicely in your garage because you are scared, you’ll never master driving.
You can only master driving if you drive alone on the road and even if you can scratch your new car, you continue driving it and eventually you will stop scratching it as the fear subsides and you get used to driving it. It is the same with trading, you have to be actively doing it and that’s how you get rid of fear and gain the necessary experience.
Traders who are fearful are likely to close good trades prematurely and try by all means to avoid risk. You cannot avoid risk but you can manage it. If you want to completely avoid risk, you should not even think about being a trader. You may like to listen to this podcast episode on how to manage your money.
3.Detach From The Money
Detaching from the money may sound like I am saying do not care for your money. That is not what I am saying, what I mean by detaching is that do not stress much about making huge profits right away but rather focus on getting it right even if you break even. When you are too attached to your money, this becomes impossible to do.
I also do not encourage traders to trade with the money that they need for rent, school fees etc. or even trading with borrowed money. All these add unnecessary pressure which may lead to making countless mistakes. As a trader, you want to be as relaxed as possible. If let’s say you have R10 000 and it’s you last money, do not fund your account with all of it. Split it into half and use the other half to create an income while you trade with the the other half. You stress less when you have cashflow and you can then nurture your account and allow it to grow. You attract more money when you don’t stress about it.
4.Keep A Trading Journal
A trader who keeps a trading journal is an organized trader. A trading journal allows you to “take stock” of your trades, plan your trades, stick to your trading plan and also to keep track of your progress. It helps you create a roadmap that you can review and see where you need to improve. I have published a digital trading journal and is currently on special, you can WhatsApp +27 78 144 6851 to purchase (DO NOT PURCHASE ONLINE, The price is NOT YET UPDATED)
5. Regret
Regret keeps you unhappy. You always regret missing an opportunity, you regret placing a trade, and you regret closing it. I always tell my mentees that remaining happy is very important. Be happy when you make a lot of money, be happy when you are not making much, also be happy even when your trade goes against you because even though you may not control what happens in the markets, you can always control yourself and manage your funds and operate your account like a business and apply basic business principles.
Check out my money management course that will teach you how to manage your trading account like a business and never experience a margin call. Enrol and start learning right away. You can listen to the audio version of this post HERE.
Thank you for stopping by. Kindly share this post and help me reach as many traders as possible. Don’t forget to subscribe for notifications on future publications. Download the APP for your weekly economic news updates and the mindset of the week to help you keep your trading psychology in check. These are EXCLUSIVELY posted on the app.
Hello subscribers and readers. It’s a new year and I hope you are all in good spirits and have landed safely in 2023. This is the first blog post of many. Please subscribe for future publications and if you wish to read on the go, download my APP. This post is all about preparing for your trading year. I will share only 3 things that you can do to prepare for your 2023 trading year. Without further ado, let’s get straight to it.
Set Your 2023 Trading Goals.
The possibilities of making money in the markets are endless. There’s a lot that you can achieve with trading. There are NO guarantees that you’ll make a certain percentage every month because the markets conditions are not the same. Sometimes there’s more trading opportunities, sometimes there’s less trading opportunities and sometimes there’s none. The word “guarantee” does not exist in a trader’s vocabulary.
Some months you can reach your monthly target, you can make less than your monthly target and some months you can even exceed your monthly target, that’s the nature of the markets. Understanding this is crucial. You may love to read the post on HOW TO SET TARGETS.
Before you can start trading again in 2023, ensure that you have determined your short term and long term goals. Setting goals gives you a strong “WHY”. If you have no idea why you are trading, maybe you shouldn’t even trade. I have published an episode on my podcast on goal setting. You can LISTEN HERE and use those tips to set your own short and long term trading goals.
Create Your Trading Plan.
Failing to plan is planning to fail. Always plan your work and work your plan. There is so much power in planning. If you don’t plan for your trading sessions, you’ll end up spending long hours in the markets unnecessarily so. When you don’t have a trading plan, you are not different from someone who is driving around with a map but no destination of where they are going.
A trading plan should outline your trading rules and it has to be adjustable to accommodate market conditions. It must also outline how much time are you planning to allocate to your trading. Creating a trading plan is easy, but the biggest challenge is following and sticking to it. That requires a lot of discipline. It may not be the easiest thing to do, but with the right mindset, it is doable. You just have to change your mindset.
Keep A Trading Journal.
There is power in journaling. Whether you are journaling your fitness journey or eating habits, journaling helps you keep track of your progress and identify anything causing issues in your journey. I kept a food journal and it assisted me in tracking what I was eating, the foods that contributed to my weight gain and also the foods that made me sluggish and caused “illnesses”. I also keep a self love journal which helps me take better care of myself.
Keeping a trading journal serves the same purpose. It helps you keep track of your trades, and your progress and It helps you identify the currencies/financial instruments that work the best for you. A trading journal helps you keep records of your overall trading activities, you become organized and when you are more organized, you perform better.
When you have a trading journal, you can easily stick to your trading plan, and revisit it to find areas of your trading that need improvements or attention. It makes it easier to work on fixing problems and solving your challenges. If you published a digital trading journal to help you keep track of your progress and create a roadmap for your trading success. You can get a copy HERE. and start recording your trades right away and get organized.
Thank you so much for stopping by and reading this post, I hope this helps. If you find any value in this post, kindly share it with your peers and help me reach as many traders as possible. Feel free to leave a comment in the comments section. Happy trading.
Gross Domestic Products (GDP) is one leading economic indicator that gauges the country’s overall economic performance. It measures the country’s economic health. The stats are released quarterly and some are released monthly. What it measures is the market value of all financial goods and services produced within the country.
What Is The Importance Of GDP?
It tracks the economic health of the country.
It measures the value of all goods produced within country’s borders.
Economists uses GDP to determine whether the economy is growing or experiencing recession.
Investors uses GDP to make investments decisions. Good economy leads to higher earnings and higher stock prices, while bad economy leads to lower earnings and stock prices.
Which GDP Stats Do I Trade?
United States GDP
United Kingdom GDP
Canada GDP
Australia GDP
New Zealand GDP
Why Do We (traders) Care?
Since GDP measures the economic health of the country, it has a direct impact on currencies and stocks. As traders, we can benefit from the short term moves of stocks and currencies whether GDP is higher or lower. I published an episode on my podcast about why you shouldn’t ignore fundamentals in your trading. You can listen to this episode HERE. Understanding what moves the markets allows you to plan for your trades and also spend less time in the markets. It also makes sense to understand the markets where you have invested your money.
Thank you for stopping by. Please kindly share this post with your peers who may benefit from this content. To have my blogs at your fingertips and read on the go, download my App on Google PlayStore. To learn how to incorporate fundamentals into your trading, WhatsApp+27 78 144 6851 for a quotation.
The year is almost over and most countries have released their GDP stats. Below are the remaining dates for GDP stats for the year 2022.
Central bank is a national bank that provides financial and banking services for its country’s government and commercial banking system. Central banks play a major role in the markets. Interest rates are the most important event of the Forexmarkets and any discussions that take place in the central banks can cause huge volatility in the markets within seconds.
What is the role and function of a Central Bank?
To set official bank rates used to manage inflation and exchange rates
To issue a country’s currency
To set targets and monitor economic data while they implement special tools.
One of the special tools that is used by the central bank is Interest/bank rates adjustments. When the Central Bank sees a need to hike or cut their rates, they simply do so.
Why Do Central Banks Cut Interest Rates?
To encourage borrowing : When the Interest Rates of a country are cut, it also means that the people who are borrowing from the banks will be paying less Interest on their loans. That will then encourage consumers and even big companies to borrow for spending and bigger investments.
To make saving less attractive: When the return on savings are lower, most people would opt for spending money than holding on to it.
To weaken the currency: When the currency is weak, the country’s exports become more competitive and their imports more expensive which also encourages consumers to buy local because of the exchange rates.
To lower Mortgage loans: When mortgage loan holders pay less interest on their existing loans, they may be left with more money and that should increase consumer spending in the country.
Why Do Central Banks Hike Their Interest Rates?
When the economy is growing at a rate that may lead to hyperinflation (monetary inflation occurring at a very high rate) that is when the Central Bank hikes the county’s interest rate.
To make saving and investing more attractive: When the returns on savings and investments are higher, it encourages more people to save or invest.
To increase the value of the country’s currency: When the country’s currency value is higher, it attracts foreign investors to invest in the country.
When the pandemic (Covid 19) hit global economies, all Central Banks embarked on a rate cutting spree. Now that all economies are recovering, Central Banks are on a rate hiking spree. Every country is trying to secure investors. The sad thing about all these rate hikes is that whose who qualified and took loans during rate cuts are now paying more interest due to current higher Interest Rates.
Why Do We (Traders) Care?
The biggest factor that shifts the price in the Forex markets is the Interest Rate changes set by the Central Banks. The changes made by the Central Banks in their rates are the indirect response to other indicators/economic data released right throughout the month. As a trader, it is very important to understand what moves the markets and how to take advantage of that.
How To Subscribe To This Blog:
Enter your email address on the sidebar where it says “SUBSCRIBE TO MY BLOG” and click “SUBSCRIBE”
Go to your email to look for a confirmation email (check in your spam folder if you do not find it in your inbox)
Click on that link from the email to confirm your subscription and you should start receiving notifications whenever there’s a new publication.
Check out the latest episode on my Podcast titled “Why you should not ignore fundamentals in trading“. To read this content on the GO, download the App on Google PlayStore. Below is the table of 8 major central bank’s current Interest Rates. There’s still more rate hikes expected and these figures will change soon. These are the ones that I personally trade. I have excluded emerging markets.
Should you wish to learn how to trade interest rates, read a monetary policy statement and understand what it means to the economy and how it affects currencies and stocks, send me a WhatsApp on +27 78 144 6851 to request a quote on this course. Thank you for stopping by, I hope you found value in this post. If you did, please kindly share with as many people as possible.
Hello readers and subscribers, welcome to today’s post. Choosing a lot size should be based on the size of the account which is the trading capital. When you have decided on the lot size/volume, your next step is to ensure that you stick to it as long as your trading capital is still the same. It is much easier to implement these principles when you view your trading account as a business and not just a cash cow. I have published an episode on my podcast on this topic, you can listen to it HERE. Below are the 3 reasons why you should not increase your lot size.
1. You Are Too Confident.
I used to do this one a lot. I would increase my lot size when I felt more confident about a particular trade. A lot of traders do this as well. One would increase the lot size when they feel that they are sure that the market would go a certain way. That is a very dangerous way of thinking because when it comes to the markets, we are never sure and we cannot control what happens in the markets. The good thing though is that we can always control ourselves. By all means, never increase your lot size based on how you feel.
2. Your Account Has A Draw-Down.
A Draw-Down means you have lost some money in your account. Say you started your account with $1 000 and you have lost $100 and you are now left with $900, you account has a 10% draw-down. You have no business increasing your lot size when you have lost some money. Revenge trading is very dangerous. Never trade with the aim of regaining your lost money.
If your increase your lot size after a draw-down, you are not different from someone who just lost an income but instead of moving to a smaller house while they find ways to make an income, they instead plan to move to a bigger house where they will be required to pay more, it really doesn’t make sense. You do not upgrade until your finances are upgraded. By all means, never increase your lot size after a draw-down.
3. You Have Reached Your Daily Target.
Reaching daily targets is very nice but should not be a reason to increase your lot size. As much as minding your daily target is good, try not to focus more on what you can achieve daily but rather pay more attention on closing your books on a monthly basis because days are not the same and sometimes there are days when there won’t be any trading opportunities, you don’t want to be discouraged because of that. It also doesn’t mean that you will never reach your monthly target if you don’t reach your daily targets. The best way to measure your progress is at the end of the month. By all means, never increase your lot size just because you have reached your daily target.
When Exactly Should You Increase Your Lot Size?
You can only increase your lot size when your trading account has grown. Only then, does it make sense to adjust your lot size. Even when you do, try not to increase by a lot but just a little bit. I have published a more detailed audio version of this post on my podcast and you can listen to it HERE.
Thank you so much for stopping by and reading this post. For notifications on new publications, you can subscribe. Please kindly share it with your peers and help me reach as many people as possible who may benefit from this information. If you want to read my blog posts on the go, you can download my App on Google Play Store and have these articles at your fingertips.
The Dax40/Ger40 formerly known as Dax30/Ger30 is an index that consists of the 40 major German blue chip companies that are listed on the Frankfurt Stock Exchange and it measures their performances. The Dax was founded on the 1st of July 1988. It had 30 companies hence it was called Dax30/Ger30. It has since expanded to 40 companies in 2021 and now called the Dax40/Ger40. The addition will give traders and investors an opportunity to gain more exposure to the German financial markets. The Dax40 is considered astrong measure of German and European economic health.
What Is Stock Index Trading?
Stock index trading is when you are trading a basket of stocks which makes up an Index. Stock Index trading is less time consuming as you are not required to study each company. You can trade the Index on your Forex trading platform and do it through an instrument such as the Dax40. I have published blogposts on how to trade Ftse100 and Nasdaq.
Some Of The Companies On Dax40
BMW.
Adidas.
Porsche.
Puma.
Airbus.
Deutsche Bank.
Siemens.
Volkswagen.
Continental.
Mercedes-Benz Group.
What Economic Factors Influence Dax40?
Monetary Policy, performance of the companies on the index and geopolitics.
The change in Interest Rates plays a big role in currency valuation. The Release of Interest Rates and Monetary Policy statement by the European Central Bank (ECB) affect the price of Euro. When Euro weakens against USD,Dax40 strengthens because German exports are paid for in USD and they cost more because of the exchange rate. When Euro strengthens, Dax40 falls, they have a negative correlation.
It is very crucial to understand that all financial instruments do not just weaken or strengthen, there’s always a fundamental reason why they react in a certain way. When you have decided to invest your money in the Forex markets, understanding how the markets work should be your priority.
Thank you for stopping by, please kindly share this post with your peers and help me reach out to as many traders as possible. To read my blog posts on the go, DOWNLOAD the app on Google Play Store. For notifications on future publications, feel free to subscribe. You can also check out this episode on my podcast titled “Do not invest in the markets blindly”.
Recent Comments