We start off in Forex learning the easiest parts, things like chart reading and interpretation of data. We waste all that time and more trying to get the entry and exit correct, and it never crosses our mind that the most important aspect is ignored. Can be said to take place solely in your mind and without the right mind set, you have lost even before you began! Most new traders ignore the fact that training your mind and your heart is THE most important aspect of trading. That’s why close to 95% of new traders rarely see their 9th month, most traders would have been wiped out by the 6th month or even earlier. To survive and be profitable, you have to begin by changing your mindset and mental attitude. You cease to be a player instead you become a spectator in the market. You distance yourself away from your trades. To get a firm grasp on how the market works would take a person of average intelligence no more than 3 months. But as you and I know, it is not knowledge of the markets and how they function that will make you money. Instead it is the process and the decisions that arise from the process that affects our bottom line as traders. We are all different and for some, making a firm decision and staying by it is simple, for others it might not be the case. For example you have a good edge (trading plan) and that edge gives to you close to a 70% probability on normal market situations. You enter into a trade and you follow your rules of the trade (this we term as process). Now the trade turns against you and you lost your trade. The next trade that you enter, do you increase your stakes, do you become uncertain of your trading plan, or do you proceed as normal? While we discuss this on paper, it seems easy and even a little simplistic. When you are in the midst of trading, these simplistic principles become harshly complex. This is especially so as it is YOUR hard earned money and it becomes doubly painful to make a concrete decision. This decision making process is what most new traders find difficult to overcome and to master. There is no easy way around it and we all know that as humans we would go to extreme lengths to avoid pain, than to gain pleasure. There are of course means and ways to overcome this problem. In fact many traders that succeed do suggest this method as well. 1. Buy a note book 2. Take down all aspects of the trade, including your state of mind and your emotions 3. Take all trades as they come 4. Keep the journal for a week, and then review 5. Always write, before, during and after the trade. Now keep this journal serves a two fold purpose. The first being discipline and the second reflection. Discipline can be built by habit, that’s a piece of good news for traders who think they might have an issue with discipline. Like how you brush your teeth every morning, the same discipline can be applied to your journal. If you keep doing something for 21 days everyday , it becomes habit and once you manage to create this habit you can use your newly gain discipline and apply it to trading. Reflection is the second purpose that this journal will serve. When you know yourself and you know your emotions, you can better control them and better harness that energy. Trading can be emotionally tiring and draining. With your daily note keeping and weekly reflection you will be able to learn about your own psychology and that will help in your decision making process. At the very least it will highlight to you when you are in the midst of making a bad decision brought about by errant emotions!

Source by Joshua Geralds