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How to Control Harmful Emotions While Forex Trading


Happy New Year! 🙂

It is the first day of 2015 and it is not a good idea to talk technical. Instead, I am going to get emotional and talk about controlling of the emotions while trading forex, because it is the most important thing for traders.

If you want to trade proficiently, you must control your emotions. As you read this article, most likely, you’re in a calm state and can agree with everything stated here. But once you’re trading, you may momentarily forget what you’ve read. Remember:

(E)Motion = Energy + Motion

Think of emotions like water. Water will usually find an outlet, but if it doesn’t, it will make one. Like water, emotions find outlets of their own, as in the form of behavior. Quite often emotions work their way into other parts of the body as causing gastrointestinal upsets, muscle tension, headaches, or even some form of disease.

There are two types of emotion: present (what you’re feeling right now) and anticipatory emotion (what you expect to feel later on). While the first needs to be addressed, the latter type is as powerful or can be even more so than the first. An anticipatory emotion (or possible future regret) is for instance, “if I exit the trade too late and lose a lot of money, I’ll feel horrible.” Another good example is if you’re in a winning trade and it isn’t yet at its target and meanwhile, you’re nervous as you see your gains slowly diminish, you’ll regret not exiting the trade sooner. As a result, you pull out, having made only a small profit, but knowing that you have brings a small sign of temporary relief. Hence, the early exit prevents the feeling of future regret.

So here is what you ought to do. Always take three days before engaging in action. The first day will be to anticipate emotion. We all have different future emotions, so you must predict what your feelings will be before entering a trade. Next, you need to acknowledge an emotion by describing it in words (write it down) being as graphic, vivid, and descriptive as possible. Finally, you’ll want to analyze this emotion. When have you felt this way before? How has it made you behave? What might it be connected to? Why are you feeling this way?

Anticipating an emotion is not always so easy. It takes practice and a lot of people have trouble doing that. How do you manage anticipatory emotion? Imagine you’re watching the market and want to jump in, yet, you have issues with impulse trades. You need to project yourself into the future emotional state by asking yourself, “how would I feel if I were to enter right now?” “How would it affect me in the future?” This is a technique professional traders use.

As we observe the Forex market, each raise in pips brings us a sense of hope and relief while each drops in pips brings a feeling of fear or personal attack. One way of dealing with these emotions is by analyzing process goals and outcome goals. Process goals are things you can control, but require practice. On the other hand, outcome goals are circumstances you have no control over such as profit and loss and the movement of the market. However, outcome goals can become a result of process goals. The best process goal you can practice is controlling your actions despite pain or discomfort.

One instance of a process goal is to create a pre-market routine to use right before you begin trading. This can be meditation, exercise, or any activity that enables you to focus on the market. Likewise, you can create a written journal of your emotions as you trade and then review it before trading the next day.

Controlling your emotions and setting goals are extremely important in Forex trading. They provide direction and discipline, which in turn leads to success. Without them, you will have no goals and your trading techniques are not too likely to improve.

Bottom line:

I am sure 2015 is the first year of being a “consistently profitable” trader for many of you. No matter how long you have been learning and practising, 2015 can be a different year for you. It is all based on yourself. You are the one who can change everything overnight. Believe me that it is not too hard to become a “consistently profitable” trader. Here is what you have to do briefly:

  1. Learn the basics.
  2. Learn a trading system.
  3. Demo trade at least for 6 months to master your trading system.
  4. If you could make profit for 6 consecutive months with your demo account, then open a too small live account and repeat what you did with your demo account.
  5. Keep on trading and growing your live account.

Forget about looking for more profitable trading systems. If you can consistently make profit with a trading system, it is the best trading system for you, and there is no better trading system.

Just follow the above stages, and don’t worry about any other things. Emotions will have no room to interfere if you follow the right track and think about taking the strong setups only.



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"Whether you think you can, or you think you cannot, you are right." - Henry Ford

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26 thoughts on “How to Control Harmful Emotions While Forex Trading
  1. Paul

    Happy New Year 🙂

  2. kamal

    Hi Chris, happy new year.
    Great writing about emotion. I learned a lot from LuckScout thanks for all your great teaching.

  3. Omusa abubakar

    Happy new year to all of us, wishing all the best of 2015.

  4. Andy Aristiyanto

    Hi Chris!

    Happy new year to you and family! I would like to thank you for the resources you have provided in this blog. It’s trully a blessing for me to have found your site.

    I hope you’ll keep on writing as many of us learned a lot from your analysis. You wrote difficult subjects in an easy language. Your analysis is very procise, not only from a technical perspective but also from phsycological perspective.

    I’m not suprised that you’re a humble person. Only a humble person has a heart to share his knowledge to others.

    Once again happy new year and thank you.

    • Thank you Andy. Happy new year to you too.

  5. R.RAGULAN

    Excellent, HAPPY NEW YEAR TO YOU, CHRIS POTTORFF

  6. singh

    Great article to read on first day of new year

  7. Antonio J. Gonzalez M.

    Happy New Year Chris!

    Please keep going with the good work. After a year and a half trying to learn how to trade Forex I finally settled with you as my mentor and I’m very happy with that.

    Thank you very much for each little thing you share in this site.

    Hope you have the greatest year for you and the ones you love.

    Cheers,

    AJ.

  8. Otto

    Happy New Year To Everybody!
    Thank you Chris for your months of hard work on this blog. It is really useful. I try to become consistently profitable from month to month. I have been practicing for 4 months, the first 2 were profitable, but since Nov 7th I could not close any profitable trade, all of them (there were only 5) resulted in loss. In spite of this I am in profit altogether. So I am really not ready yet, still have to demo a lot. Hopefully in this year I will become successful as you mentioned.

  9. Kerry

    Happy New Year Chris and Kamal

    I have only been following your site for a month (profitable for the first month!!! yahhh) but I am super excited about the coming year. Thanks for the great advise and teachings.

  10. ambrose

    I welcome everyone in LuckScout to 2015.

  11. Ted

    Ever since I started learning Forex on September 7 2014, I told myself that I was not going to give up on it. Thanks to you and the team, I have learnt a lot. This year is a year for change. The new year’s resolutions are quite obvious.
    Thanks Chris and happy new year!

    Ted

  12. Shafique

    Happy new Year 2015 Chris,
    Thanks a lot for your valuable articles once again to cheer up our trading strength in forex. I think that will be great one to the success steps to become a profitable traders in 2015. Best of luck for….

  13. jeff

    Happy New Year Chris!

  14. Karakasa

    Hi Chris, a very Happy New Year to you. Thanks again for the wonderful articles and your continuous guidance to put us on the right track to trade profitably.

    With best wishes,
    Karakasa

  15. Feri

    Happy New Year 2015 folks. Keep up doing a great job! 🙂

  16. redpants

    Chris Thank you for all the articles in 2014 . The road to success is not hard if you focus on these articles .
    Would not even got the confidence to go live until I found this site !
    Nearly completed 15 weeks and 14 successful and one just plane dumb but the learning off those mistakes is paramount . After learning your systems the next so important point is Trading Psychology . Good luck to all in 2015

    • Thank you John. Happy new year and good luck to you too 🙂

  17. Amar

    Dear Cris , Kamel! and FX Team!

    I wish that the New Year turns out to be a very special one for you filling each day with peak of health, abundance of happiness and sunshine, bountiful luxury and prosperity and Zen like serenity.

  18. Fabian

    Happy 2015 Chris!

    Great psychology article for supporting us entering the new year!

    Thank you for being with us every day helping us following the right track!

    In your daily articles you not only teach us how to trade, but you give us the confidence that comes from the right way of thinking about how to trade!

    This will be the year of a change in life! Because everyday I can count on the mentoring of you, Kamel, Peter, Martin and your great team!

    May this be an excellent year to you all!

    • Thank you Fabian and happy 2015 to you too.

  19. Jeng

    Thank you Chris, for this most informative, encouraging and motivating post. Once again, you reveal and display your generous and unselfish commitment to your Followers.

    Kind regards and, Best Wishes 2015.

    Jeng

  20. Muhammad

    I think our past life also create emotional disturbance and I think we can only wait for recover our past and build our future as success , so I just wait for bright future .

  21. Thank you chris … great article, I hope they have all passed a successful year on 2015.


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