When it comes to forex trading, that’s a trading strategy that is bound to lose you money – unless your gut is highly trained and impervious to emotion. The trick to making money in the currency exchange market is to avoid making emotional decisions and follow a carefully thought out strategy that takes the current market and history into account.
Letting your emotions rule your decisions can hurt your trading in several different ways. It’s the reason that most experienced traders tell novice traders that they need to develop a system – and stick to it no matter what. The system tells you when to buy, what to buy, when to trade and what to trade for. By sticking to your system even when you want to fly in the face of accumulated data, you’ll maximize your profits.
Using a mechanical system takes the emotion out of your trading, eliminating one of the key factors that people fail. Your system doesn’t get stubborn about proving a theory. It isn’t swayed by bad news, or elated by good news. It doesn’t hold onto a bad trade hoping against hope that if it just holds on long enough, the trend will turn around and become a moneymaker.
By employing a system to tell you when to get in, out or stick, you’ll minimize the impact of your emotions on your trading and maximize your proft.