Be like Spock: Forex Spread Betting without Emotion
Emotions will send you to the poor house quicker than you can say “holy bankrupty, where the heck did all my money go”. Fear, greed, hope, despair, love, hate. If you can remove all of these while spread betting forex, you will make a huge leap towards long term profitability.
Spread betting in the Forex market can be extremely exciting and seriously stressful (by the way, if you do experience this, you pretty much don’t know what you’re doing). When you’re spread betting currencies in such short time spans using a day trading strategy, you have to stay on the ball all the time. If you don’t, you’ll probably lose all your money (and sanity) pretty quickly.
Other spread betting styles are of course on offer:
– scalping (trades last seconds to minutes)
– swing trading (trades last days to weeks)
– position trading (trades last months)
But we’re focusing on day trading right now, and it can offer you real satisfaction and some juicy profits if done properly.
Control your emotions (easier said than done, I know).
It doesn’t matter what instrument you’re trading (stocks, indices, commodities, forex), you have to stay as cool as a cucumber. If you start getting all teary eyed or warm and fuzzy (emotional) , it’s game over.
This is particularly true in Forex spread betting, as the numbers (pips and dollars) are always changing due to positions being opened and closed many times a day. If you don’t have razor sharp focus, you’ll miss the big opportunities and jump in on the worst ones.
As an example:
If you place a trade to sell a forex pair at a certain amount and an hour later the sell price goes up, you might get angry or sad because you missed the chance to make even more money. This is emotion kicking in and it will affect your mindset, your focus and clarity, and ability to make logical decisions. You might get de-motivated and miss out on the next opportunity, or you might want revenge and jump in on a bad trade. The reality in trading is that this happens all the time, accept it and move on.
On top of obsessing about previous mistakes, greed is another real threat to profitable forex spread betting. Let’s say you’re on a winning streak and you think that the market will carry on blessing you…
But, your trading signals say the opposite – that the market is about to turn against you. You’re so involved in your amazing winning streak and your god-like powers to predict the market, that you don’t pay attention to the facts in front of you.
You enter trades even though the numbers tell you not to. Guess what? Thats right, you start to lose some of your profit. This is when vanity and denial come into play, you won’t accept that you were wrong. ‘Its just an anomaly, a freak occurrence’ you say. Maybe you carry on trading and lose even more, until you’re so deep in the red that either you get out at a big loss or carry on hoping for the market to turn in your favour, and eventually blow out your entire account.
What you need to do is take the profit you have been given, be happy, chill out, shut down your PC and get a life for the rest of the day.
Be like Spock.