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Financial markets, whether you are talking about Forex or any other commodity for that matter, are not going to be easy to trade. Part of the problem when it comes to trading financial markets is that there are a lot of factors that can easily go your way on one day and then not go your way on others. This is like having a small business, but all of the extremes are squared. When things go right, they really go very right and when they go wrong, they really go very wrong. Much of the time it can be an unpredictable swing and therefore it can cause a lot of emotional distress in traders because they can either see themselves rescued from bad decisions or sunk after brilliant implementation of a working strategy.

Of course, the traders that learn to deal with these emotional highs and lows are the traders that eventually do well. Whatever walk of investing you are talking about, whether it is Forex, commodities, stocks or any other type of investing, psychology plays an important role. Do not downplay the importance of psychology as that has been the downfall of many a novice player. Psychology is discussed for your benefit briefly below.

Psychology

There are a number of different aspects to psychology, but since this is a short article it is important to give the general outline of psychology and then focus in on one or two specifics related to the actual field itself. Psychology is simply the way you can get your mind to act when you are trading the actual Forex market (or any other financial market for that matter). If you have ever played at a casino or played a game like poker, you will understand the psychology behind it. The psychology is such that you are able to take your emotions and make sure that they do not affect your decision making. Many people that don’t have this ability ultimately end up failing at trading.

Becoming Fearless

One of the biggest favors you could ever do yourself in trading is to become fearless. When you become fearless, what this essentially means is that the financial markets and the way in which they work do not hurt you emotionally. Anybody can say to themselves that the movements are out of their hands, but to actually take that the next step forward and to make sure that you really do believe that and just try to react to what you see is the first step towards becoming fearless. It is important to realize that fearlessness is not the absence of fear, but simply the resolve to remove fear from the decision making process.

The Five Minute Rule

If you really can’t seem to get it together when it comes to the psychology of trading, then here is an exercise that you can use to help yourself out. Implement the five minute rule from this day forward in all of your trading. The five minute rule simply states that you are allowed to enjoy your victories for five minutes and you are allowed to complain about your defeats for five minutes. Once five minutes are up, you move on; no exceptions. It might help if you wrote down the actual event on paper and then threw that piece of paper away; that psychologically helps some people get over the hump.