Advanced Forex Blog

The Trading Toolbox – Mental Assets for Forex Traders

March 10, 2021 | 8:07 am | Advanced Forex Blog
March 10, 2021 | 8:07 am
Advanced Forex Blog
Trading Toolbox for Forex Traders

The trading toolbox – Assets a trader needs in order to make a daily trading routine successful

When most people go to work in the morning, they pack their briefcase or backpack with the physical items they need to make their day successful. A laptop, notes from a meeting, the day’s agenda, bags are filled with the tools needed to succeed. 

In the world of trading, the trading toolbox is all in your head. When seamlessly combined and cultivated, successful traders will have a total, holistic mindset in order to create the perfect settings for trading. While many traders early on think that trading is all about analysis, later on, they learn that they need money management and intensive work on the mental side of trading.

In today’s article, we’ll do a shortcut for you newish traders looking to build a complete toolset. We’re here to tell you what all the ingredients you need are in order to have a full set trading environment.

Tested Trading Strategy

This is one of the core pillars of any successful trading routine. It’s necessary to learn and have a logical strategy that you understand and you’ve backtested so you can be comfortable and confident that it can work on a probability basis. You must have a working strategy and a proven strategy. This also means that you need to be the one to determine whether it’s good or not, and not let other people prove it for you. You have your own unique view and will see the market and strategy differently from others.

Solid Analysis

Once you have a strategy in you trading toolbox, you should then have a thorough analysis routine that extracts all the signals which are relevant to your trading strategy. Your analysis should be efficient enough and should show enough info in order for you to proceed with your strategy while not falling into traps or reading false signals. This is a very important tool to start off your daily preparation.

Analysis should be part of a work frame and routine that you take no shortcuts with. Through reading and studying charts, the analysis forms a part of the backbone of your daily routine. This will ensure you’re up on all the market nuances while you plan your trade execution.

Effective Money Management

Money management is a key and possibly the most important technical feature in your trading routine. If you don’t have a solid money management plan that supports your statistics and your goals and intentions for trading, everything else you do won’t matter. You must develop a solid money management plan that is perfectly suited to your needs, personality, and skill level.

Mental Strength and Awareness

We’re gonna sound a bit like gurus for a moment, so bear with us.

Dive deep into your inner personality in order to reflect your personality to yourself.

Trading will affect you in a very emotional way. The market tricks you, tests your patience, challenges you in many stressful ways. It will put you in losses and in winners – it’s an emotional rollercoaster. You need to be extremely self-aware of how you react to the events the market puts you on.

In order to deal with this up and down, you have to map everything that engages with emotions. You have to map what brings you up and what brings you down. Then you need to determine how to use these feelings to push you or how to cope with the down periods.

Don’t try to eliminate emotions completely, rather, find the best ways to make them less significant in your routine or outcome.

Trading Plan

All of the elements of the trading toolbox up until now need to work in unison and harmony in order to create a complete trading ecosystem custom made to fit your needs and personality.

Your trading plan should have many chapters, including the trading strategy, the rules to enter or exit, and then the analysis and ways to efficiently do the routine. Map the mental tools and create an action plan for dealing with different situations in the market. Include money and risk management rules while you execute your trade in and out of the market.

The trading plan is crucial because it’s going to be your rule book, like your bible. A book to always go to when things are working and when they’re not working. It should be a source of constant education. Prop it up next to your computer screen so it’s always easily accessible and visible. It needs to be constantly updated as you learn, make mistakes, evolve. It should be a dynamic resource absorbing everything you learn and discover.

   

The Workspace

Create a space with fewer interruptions and more elements that gather you and put you in the focus of what you do. It’s hard when you’re connected to the internet and have all the distractions which come from that. Build a workspace that pushes aside the distractions but also keeps you stimulated with your work in trading. If you work in a home office, you should be able to lock yourself in and not be with family or digging through the fridge. If you’re in an office and you like to socialize, try to do it in a way that benefits your trading. Try to get your workspace in a way that it will amplify your focus. You’re the only one who can create this and enforce it so make sure you have the right space available to you.

Mentor/Coach/Educator

Many traders think they can go and learn from a mentor and then continue on their own. This isn’t true because trading is a profession that requires continuous learning. Therefore you need to always be up to date, and it’s extremely important to have someone you trust around to help you understand new concepts, ideas, tips, and tricks. You need to find someone you can trust who will engage and inspire you.

Join a Trading Community

It’s very important not to stay in your comfort zone. Go out and get challenged by strangers. Encounter people who don’t know what you’re doing. This will get you to explain it in ways that will further your understanding of your methods. This interaction will also keep you from getting bored and feeling lonely. They will challenge you to always defend your strategy or your trading approach.

Trading Toolbox summary

These are the trader’s tools and we hope you can incorporate them all. If not, take them one at a time into your trading toolbox until you’ve eventually filled it up. We hope these tools bring you success in trading.

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