Forex Traders - Your Psychological Makeup

Your individual psychological makeup will make the single biggest impact on your trading results. It’s not enough to understand the market; you’ll also need to understand yourself as a trader.

Aggressive Or Non-Aggressive?

Take some time to figure out whether you are an aggressive or non-aggressive trader. If you are a naturally non-aggressive trader, an aggressive trading system will never feel right to you and will most likely cause you lots of stress and frustration. As you can see, choosing the right system according to your psychological makeup is crucial for increasing your trading productivity.

There are many ways to trade the market. Be patient and choose the right approach for you.

How Much Technical Information?

Another aspect of your psychological makeup is the amount of technical information that you’re comfortable with handling. The ability to stick to a trading system may be lost if you feel overwhelmed by too much technical indicators and information. You’ll thus need to determine exactly how much or little market or technical information is enough for your own comfort.

To do this, ask yourself what benefit you’ll get from an additional piece of technical information. Will this information help you to better time your trades or improve your trade winning probabilities? If not, then don’t waste your time. Don’t let superficial information clutter your thoughts and distract you from the important trading decisions that you’ll have to make.

Keep your information tools clean, clear and concise.

Environment

This is one aspect which many retail traders ignore. You’ll need to determine just how much or little environmental stimuli is need to maintain your top mental trading performance. Some traders like having sights and sounds around them while others prefer quieter, tranquil surroundings. Having the right environmental surroundings can substantially help improve your mental alertness and well-being when trading.

Forex Training - What Is Stop-Loss Hunting?

Many retail Forex traders are concerned about stop-loss hunting because they are virtually powerless as individuals to defend themselves the powerful "hunters". In this short article, I’ll explain to you what stop-loss hunting is, and how you can avoid being prey to it.

What Is Stop-Loss Hunting?

Basically, stop-loss hunting is a trading strategy that tries to force retail traders (like you and me) out of our positions by driving the market price to a level where our stop-loss levels are placed. This is a strategy that the investment banks and hedge fund managers adopt because they have the resources to do it.

Simply put, the big financial institutions buy (or sell) a large amount of currency that causes the market price to go up (or down), hitting the retail traders’ stop-loss levels, and causing us to exit the market at a loss. In the meantime, they will gain from our losses.

How Do They Know Where Our Stop-Loss Levels Are Placed?

Usually, this happens when there is an obvious support or resistance line on the trading charts. With a clearly defined resistance level for example, institutional traders will know that many retail traders will place their stop-loss trigger just a few pips above the resistance line.

Your trading brokers will also know exactly where your stop-loss triggers are placed. After all, they provided you with the trading platform, didn’t they? Whenever you place a stop-loss order on your trading platform, the information will be relayed back to the broker, and he will know your exact stop-loss price.

It’s hardly fair game, huh? The odds of profitable trading are highly stacked against you. That’s why you’ll need to fully understand the risks of trading, and how to avoid them.

The Top Forex Trading Systems

There really isn't one best Forex trading system that works for everyone. There are many great Forex trading strategies and Forex trading systems but to say there's only one, would not be true.

Each Forex trading system can be as individual as the person using it. One currency exchange trader will find a trading system that works perfectly for them and another Forex trader won't think it's worth the paper it's printed on. If you know something about trading in the Forex market, you know there are certain times of the day your should trade specific currency pairs to increase your odds of making winning trades. Trading off-hours, using the best Forex trading system could be the difference between winning and losing. Try to stay out of the market during the slow times as well.

Experienced Forex traders know the best times to trade in the Forex market. The best times are between the hours of 2AM and 11AM EST. At 2AM EST the European markets are just starting to open and at 3AM EST the London session starts to begin. At 7AM to 8AM EST the New York session start to come alive. At 8:30AM EST there are many news releases (mostly US ones) that can cause market to move. This is when price can move in a big way. These are the times most Forex trader love and this is where the money is made, and lost. The London session starts to close around 11:00am EST and the Forex market tends to slow down until the Asian market start up again around 7PM EST. Then everything starts all over again for the next day. That's why a good Forex trading system is so important to a Forex trader.

To make the most of a Forex trading system, you need one Forex trading strategy for trading at news times and another one to trade for the other times. A good trading strategy for trading the news is to do your homework beforehand. Know what the key news releases are for the day and find out what the consensus numbers are for each news report. There are many Forex news web sites, so I suggest looking at no less than 3 news sites to make sure the consensus numbers are close to each other. Sometimes Forex news websites get the wrong numbers, so doing your homework early, you will easily know if the consensus numbers are on the mark or not. At news release time, what you are looking for are the numbers with a shock value. Numbers that do not meet expectations but exceed or fall shot of the expected numbers. These are the news events to trade. You want to know beforehand what these shock value numbers are, and take action when they get released.

When news is out of the way for the day or it's a very slow news day, that's when you must have a Forex technical trading system. Forex technical trading is when you use forex charts and price action. Forex chart patterns, trendlines (trendline analysis), Fibonacci (Fibonacci numbers/Fibonacci studies) and a many other Forex trading tools can be used for analysis. Just remember to keep it simple. Do not go crazy with the number of tools you decide to use. I recommend picking two or three and work with them at all times. Give each one at least a months time to decide if it's working for you before you move on to another one. Some folks may find they don't like using Fib retracements for example, while other traders like myself, couldn't imagine trading Forex without them. All Forex traders are different so you need to find the best tools and Forex trading systems that work best for you.

There are lots of fantastic online Forex training web sites available to you today and most are free. You should read all you can about Foreign currency trading before jumping in to it. Forex trading is a great business and like any new profession, it takes a lot of time to learn and do it right. Just take your time and remember to get the best Forex trading system that works for you and stay with it.