The Psychology of Placing Your First Trade
The Psychology of Placing Your First Trade
Getting started in forex trading can be quite intimidating, especially for new traders. One of the biggest mistakes a new trader can make is by focussing too much on the numbers and as a result, neglecting the importance of trading psychology.
The two main emotions that govern trading are fear and greed. Fear causes a trader to exit a market too early or enter too late in order to avoid a loss, and greed can cause making high risk trades, and trading without doing the necessary research. In order to be a successful trader, you need to learn both discipline, to be able to make trades divorced from your emotional state, but also when to take risks.
Luckily, we at BlackBull Markets are here to help. This guide will go over how to manage your emotions when trading, and how to improve your psychology by making the most of your BlackBull Markets demo account, as well as other helpful tips.
How to Make the Most of Your BlackBull Markets Demo Account
Many traders don’t understand how to use a demo account properly. They use it to spend hours perfecting their trading strategy, only to have it fail miserably in the real world. This is because of two reasons:
1: The impact of spreads and/or slippage is not accurately reflected in a demo account,
- The trader’s psychology changes when they shift from demo to live trading.
In order to fix these problems, all you need to do is mix small amounts of live trading into your testing. That way, you can tell if you are getting the results you’re expecting, or if your demo trading is off track.
This method also lets you gain lots of valuable experience. By utilising this method, you will either be partway through constructing a system that works for you, or you’ll find that you don’t actually enjoy trading as much as you thought. And that’s ok, because you won’t have already wasted months in a demo environment.
Use your BlackBull Markets demo account to test your ideas and refine your strategy. Just make sure to go back to live trading every so often to test your ideas on the real market.
How to Effectively Execute Trades: The 6 Steps
Placing trades should be a calculated, methodical process. Therefore, your mental state should reflect this and you should be calm, decisive, and committed to your decision. Follow these 6 steps every time you trade.
- See the trade. Find the trade that meets your conditions.
- Feel good about the trade. It’s important to feel good about the trade, otherwise you will have difficulty taking it.
- Key in the order. Check your terminal to make sure you haven’t made any mistakes.
- Execute the trade. Press the button to enter your order.
- Double check your position. View your open positions window and make sure the trade is correct.
- Fix any errors. If you have made a mistake, quickly fix any errors, even if it means a small loss. Don’t hold on and hope. This is critical because you will make mistakes, and it’s important to limit their impact.
Visualise Yourself Performing Perfectly
Visualisation techniques are used by professionals in many fields, and can be applied to trading as well. As a trader, create a picture of yourself performing the above steps in your mind calmly and professionally. Then, when it comes to making the actual trade, your subconscious will be working for you and chances are you will perform just as you practiced.
Don’t Focus on the Result
The only time you should be thinking about the results your trade is in the planning stage. Once you execute the trade, you should divorce yourself from any thoughts of the trade being “right” or “wrong”. You have no control over that.
What you do have control over is the number of mistakes that you make. By focussing on yourself and your strategy, instead of what the market might do, you are limiting your chances of making a mistake. This will greatly benefit you in the long run, even if you find yourself losing trades in the short term, because as you gain experience the results will take care of themselves.
Many forex traders face mental roadblocks when getting started. Don’t be one of them. By combining a mixture of demo and live trading, you get both the benefits of having an risk-free environment where you can practise and experiment with your trading strategy, while at the same time being able to work on your mentality and discipline as well.
Now it’s time to take the advice that you’ve learnt in this guide, and apply it to your BlackBull Markets demo account. You can set one up here at blackbullmarkets.com/en/demo-account/. Our support team is also always here to help, which you can contact either by phone or email at firstname.lastname@example.org.
If there is a time for a currency to be relatively weak, it’s during recessionary periods. A stronger currency entails a rougher time for goods and services to be exported out of the country as those exports are more expensive due to the stronger currency.
We have a relatively light data week ahead regarding the amount of significant data points coming out. However, the economic events are extremely significant in determining the state of their respective economies. Hope you all are staying safe. Here is your week ahead.
In 2020, Silver had a legendary rise from its low during the peak of the Coronavirus lockdowns in March – up over 140%. Analysts (including me) attempted to justify its price and separate its strong correlation with Gold by arguing that Biden’s climate change policies will boost Solar Panels’ use, which extensively uses Silver. This may be a catalyst in the longer term.
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Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
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