Getting Your Head Straight — Mentally Peparing to Trade

One of the first things you need to
do before you place your first trade is to determine exactly what you want to
achieve.
Get out a piece of paper and write it down. Do you want to
eventually live off your trading? Or are you just trying to outperform your 401k
or Money Market account. Be as specific as you can and then pin this up by your
computer.

When you sit down to trade each day take 4 or 5 minutes and review your goals
before you start clicking that mouse. This will help you keep your goals in mind
as you trade. If your goal is to make 20 pips per day then you will start each
trading day with that particular goal in mind. It is easy to get wrapped up in
the emotion of the moment and forget your larger picture. Taking a few minutes
before the day starts will help you focus on your goals.

Be aware that when you start trading you may be confronted by negativity from
your friends or relatives. They simply don’t understand what you are doing or
the language you are now learning. Some people react to new situations with fear
and frustration. You need to join a traders group, whether it be online or in
person. Make sure you have friends and associates that understand the new
language you speak and can possibly help you learn from their mistakes.

Remain focused. Every new trader will hit a wall. They will become over
confident and lose a lot of money, potentially even their entire account. This
usually comes after a series of wins. The true test of your character as a
trader is going to be what you do with yourself after this happens. Do you quit?
Or do you dust yourself off and build on the hard lessons that you have learned?
Your actions at this stage of the game are going to help form what kind of
trader you will grow to be. My advice for this situation is to lean on your
fellow traders. Anyone who has been in the market for any length of time has
been through this. This is what separates the men from the boys (so to speak).

If you are having emotional responses to your trades it is time to pay
attention. During these times, walk away from your computer if you can. When you
lose your emotional detachment you have lost your perspective. You are now far
more likely to place bad trades, second guess yourself and close out everything
at a loss. Take a break, get out of the house, and come back when you can look
at the charts and your account impassively.

Beware of greed. This is one of the seven deadly sins for a reason. Greed can
cause you to act impulsively and irrationally. Set your goals for the trading
session, achieve your goals and be grateful for another day of trading
successfully.

Track your progress. As long as you can see that you are progressing down your
projected path then you will continue to stick to your trading plan. This also
gives you the confidence you need to see that you plan is working. Don’t deviate
from your plan, remain steadfast and you can achieve your goals. Think slow and
steady and you maintain your trading edge.

Marilyn McDonald is the director of marketing for
online broker Interbank FX. She can be reached at marilyn@interbankfx.com.