Are You Trading Forex For The Wrong Reasons?

[dailypriceaction 10]

Too often I see traders getting wrapped up in how to make money trading Forex before they even know why they're trying to make money trading Forex. In this article I'm going to address one of the most overlooked keys to success as a Forex trader. I'll also share with you some insights into my own journey as a Forex trader including how I learned to control my emotions before taking a trade.

 

What if I told you that in order to be profitable you first have to know why you want to be profitable? It's not enough to say, "I want to be rich". There's more to it, and it all starts with a simple question...

 

Why are you trading Forex?

Is it to go on vacations with your family, become a prop trader, or maybe you want to teach others how to trade someday? Regardless of your reason, if you want to be a profitable Forex trader, you need to ask yourself this question and be honest with yourself when you answer.

 

Just as you need to answer certain whys to enter a trade, called price action confluence, you also need to answer one BIG why before you can become profitable - why am I trading?

 

The way you answer this question is important because it's going to help keep you focused and disciplined throughout your journey to profitability. The answer to this question is also what drives your emotional tendencies as a Forex trader.Therefore knowing and understanding the answer is critical to your success.

 

Before we get into answering the question and learning to control emotional tendencies, let's find out why the Forex market has such a strong effect on our emotions in the first place.

 

The Forex Market is an Open Playing Field

For most of us, the unlimited freedom and creative expression that Forex trading offers is all but unknown. We tend to grow up in societies with rules and boundaries. If you cross a boundary, someone is usually there to put you back on the “right” course. When you were a child, it was your parents. Now that you’re an adult, it might be your boss. The point is that your entire life has been guided by society in some way, shape or form.

 

Trading Forex has no limits or boundaries. Think about it. With the exception of abiding by regulatory rules, the Forex market is a “boundary-less” playing field. You open a position when you want, close a position when you want and hold a position for as long as you want. There’s no limit to how much money you can make, just as there’s no limit to how much money you can lose. All of this sounds great, and these are all reasons that lure most of us into the world of trading in the first place. But what happens when there’s no longer someone around to tell us “No”?

 

Most of us don’t like to create rules for ourselves, especially when it was the lack of rules that lured us to trade Forex in the first place. It’s rare to meet a trader who didn't suffer considerably before realizing that more structure was necessary. Sometimes this suffering goes on for months, sometimes years. But I’m here to tell you that it doesn't have to be this way.

 

This section was sourced from and dedicated to Trading in the Zone. If you haven't read this book yet, I highly recommend it.

 

So how do we begin to take control? It all starts with your intentions; your why.

 

Have You Updated Your Intentions?

Do you remember putting on your first trade in the Forex market? Even though it was on a demo account (I hope) you still had certain intentions. You had obviously heard about Forex and were intrigued enough to open a demo account. So your intention was to see how it all worked. To see if you really can make money at this Forex thing.

 

If that was your only intention when you opened the demo account, that's okay! That's what demo accounts are for. But the fact that you're here reading this tells me that you want more.

 

So the next question you should ask yourself is, what are my new intentions?

 

When you placed that first trade in your shiny new demo account you were just testing the waters, right? So your intention was to find out if you'd like to pursue Forex trading further. For some of us it may have been love at first site (myself included) but the fact is that we still knew nothing about trading at the time. The demo account was our risk-free way of testing the waters.

 

Fast forward to today...

 

You obviously liked it enough to pursue it further. So then I have to ask, why are you here? A logical answer might be, "because I want to learn more about trading Forex". And I applaud you for that. But why do you want to learn more?

 

Do you see what I'm doing here? If you keep asking yourself the question, "why do I..." enough times you'll eventually end up at the root of why you want something. The answer to that root question is the one you'll want to focus on.

 

So have your intentions changed, or are you still just testing the waters? You may think your intentions have changed because you've given thought to trading full time. Or maybe you've thought about those amazing vacations you could take as a profitable Forex trader. But have you defined what you want out of Forex?

 

It's critical to your success as a Forex trader that you mentally update your intentions by defining what you want. I've never met a profitable trader whose mental attitude was, "I'm still trying to decide what trading Forex has to offer". Every profitable Forex trader knows exactly what they want to get out of the market. And it's not just money. There's more to it!

 

So how can you start to mentally update your intentions?

 

It All Comes Down to Two Questions

I always like to keep things simple. So when I started to think about updating my intentions years ago, it began with two basic questions.

 

• What am I passionate about?
  
• What kind of lifestyle do I want?
  

 

Both of these questions are very personal, so I can't answer them for you. What I can do is tell you how I answered them.

 

What am I Passionate About?

I'm passionate about being self-sufficient. I don't want to rely on a boss for a paycheck, nor do I want to be told what to do every day. I've worked in an office environment before, and I just don't believe I'm supposed to live that way. I'm sure many of you can relate to at least one of those statements.

 

Most of all, I'm passionate about sharing my Forex experiences, both good and bad, with others who share the same passion. I want to leave a mark on this world, and what better way than through selfless giving?

 

Before we move on, let me be very clear about something. My statements about working in an office environment are strictly my own perspective. I worked in that environment for a long time and had a lot of fun while I was there. My parents, the two most influential people in my life worked in an office environment their entire lives. There's nothing wrong with it, it just isn't for me.

 

What Kind of Lifestyle Do I Want?

When I first asked myself this question years ago I really had no idea. I had never sat down to think about the lifestyle I wanted in detail and how trading Forex could help me achieve it.

 

I finally came up with one word that could define my image... "ability". I wanted the ability to travel the world and live life to the fullest. I wanted the ability to provide for my family - to give them everything they deserve and more.

 

In talking with others, I've found that many people never do this exercise because they're afraid of the "what if". What if I don't achieve it? What if I fail?

 

In most cases they don't even realize they're avoiding the exercise for this reason. That's the power of the subconscious mind at work - protecting us when it thinks we need protection.

 

If you're part of this group that has put off answering this question, trust me when I tell you that you're not alone. But you do need to act on it and decide for yourself what kind of lifestyle you want and how Forex trading is going to help you achieve it. The longer you wait, the longer it's going to take for you to be able to control your emotions and become profitable.

 

Bringing it All Together

So why does all of this matter? It matters because in order to set out on the journey of becoming a profitable Forex trader, you first have to know the destination. The best example I can give is using GPS in a car.

 

When you set out on a 1,000 mile road trip, it's best to know the destination address and enter it in your GPS. This way you get to your destination faster and without the stress of getting lost. Without knowing the exact address, you'll most likely make some wrong turns, deal with the stress of getting lost and it'll take you longer to get to your destination.

 

Trading Forex is no different. You have to know the destination address (your "why") in order to get to your destination (becoming profitable). But it's not good enough to just know it; you have to see it. Your why has to be so clear in your mind that you can reach out and touch it.

 

Sure, you can figure out your why along the way. But just like not knowing the destination address for your GPS, it's going to take you longer to get where you want to go and you'll experience more stress along the way.

 

In closing, your answer (and vision) to why you're trading Forex is what's going to guide you in the right direction. When your emotions start to get the best of you, all you have to do is think about your why and let it correct your course.

 

Before every trade setup you should be asking yourself, "is this trade setup good enough to get me where I want to go"? But in order to answer this question, you first have to know where you want to go...

 

If you ask yourself this one question before every trade, you'll be one giant step closer to becoming a profitable Forex trader.

 

Your Turn

 

Why are you trading Forex? What kind of lifestyle do you want and how can trading Forex help you achieve it?

 

Stay Diligent,

 

Justin Bennett

Daily Price Action

Edited June 10, 2014 by dailypriceaction
Added my website at the bottom for attribution

[dbelov275 11]

Thanks for the article. It was refreshing to read. My motive to trade Forex is to make money and build wealth. But I am crazy about it.

[aimhi 10]

Everyone including those who looses money enters in forex market with a reason to make money with their money but some of them blow their accounts and some go forward making good returns. However those who let go their initial losses also find another good chance to make money on their investments but this is the hard way which they learn making money from trading.