What is the best method to avoid emotion based decisions when trading in the forex market?

Question

I have stop-loss orders in place but still find myself wanting to move on emotion rather than logic at times.

Answer 1

The best way is to use a forex robot to TELL YOU when to trade.

There's nothing better than a systematic, robotic piece of software to analyze the market and give you strict direction on when and what to trade.

I suggest taking a look at some Forex trading systems at http://fxsystemscompared.com/forex_syste...

See what they do and how they will help remove the "emotion factor" out of trading :)

Answer 2

The best solution is to use suitable software for your needs.

I don't recommend special software, but you can read this important article about "the important steps to choose best forex software" at :

  http://ezinearticles.com/?3-Tips-to-Choo...

Best Luck!

Answer 3

Your trades are motivated by fear and greed, and you are trading too large a position for you.

Scale down your positions and trade only with one unit (not one lot) with 10:1 leverage. When you have mastered your ego and emotions trading with low leverage, either add more units to trade, or trade with slightly more leverage.

If you cannot trade with one unit and the least you can trade is one lot, move to a broker that lets you trade with units instead of lots.

Hope this helps.

- Jim http://jsforex.blogspot.com

Answer 4

Do a search for Michael Shermer and economics.  He has a great article about how we make stupid choices based on emotions in investing.

Answer 5

Keep your rule book nearby, set your stop losses and time of purchase and DO NOT change the rule.  Yes there will be times when your emotion though will be right....but in the long run the logic moves will always tend to give better returns.

Another idea is to keep a copy of a trans gone really bad because of an emotion move rathre than the logical one nearby.  whenever you are thinking of going over to the emotion side.....read the results of the bad trade.

Answer 6

People have emotions, this will always come into play. I've been making money for a long time with Forex now, but after a couple really dumb emotion based decisions my friend told me about a program to automate Forex trading, I haven't made a mistake like that since. If you want to read up more the website is http://www.ebooksreviewed.info/forexbot and I highly recommend it, I'm no beginner Forex trader but I will take all the help I can get.

Answer 7

Hi,

This could give you some ideas:

http://where-to-invest.blogspot.com/sear...

Answer 8

The best method is not to trade!!!

Second best idea, when you feel like doing something, buying or selling do 1/2 of what you are thinking, when you get confirmation that your trade was right do the other half.

You are a human being therefore you will always have emotion, learning to control that emotion starts with the understanding that you have it, accept it, and then use it.

Oh wait, the best method, is to get a Vulcan to trade for you but make sure they are not 1/2 human, Spock had way too much emotion to trade the forex.

Answer 9

Try this tool, its totally analytic and helped me and my wife reach our goals much faster.  Seriously

http://forex.lem4.com

Good luck!

Answer 10

The best way to control your emotions is start meditating. This will give strength to you mind and soul. Also you will have a good control  on your body and mind. There are various moments in a traders life where we get driven by the emotions and we get into wrong trades. To avoid these type of decisions set some guidelines and then don't cross them even when you gain. Thats because 7 times out of 10 you will see emotions are wrong. And if you cross these rules and gain then this temptation of getting carried away would become a habit. and you will loose a h**l of money.

I am trading with Finexo and they are giving these tips time to time so that traders can understand well what they are doing and how they can earn more. You also get connected and feel the difference.

Answer 11

The only people who get really really rich base their purchases on "hunches".   By calling it "emotion" it cheapens its value.  YOu have to go with your hunches.  They will make you rich.

If there were a logical way to make money in stocks, everyone would follow it and everyone would make a profit. No, doesn't work that way.  Every time a stock is sold; someone thinks it's going down and someone thinks its going up.  What "logic" system would predict that?  

I also hope that you are buying and selling individual stocks and trusting your instincts.  I think you can do this.

Answer 12

Currency trading-http://tradingsforex.info/