Wednesday, February 8, 2012

Trading psychology benefits of demo trading.

I entered in today's second forex trade for the coin flip account and noticed something of my mentality that I wanted to share. Here is a screenshot of the trade. Its a 15 minute chart of the EUR/USD. About 4/5ths the way to the right is a green arrow. That shows my trade's entry point.

Notice for most of the recent past the candlesticks were very small. Not much action. Then as I am getting ready to enter my buy trade we get possibly the largest 15 minute candlestick of the day going against me.... as I enter the trade. The next candlestick started to go down further.

What were my thoughts? Was I yelling at the coin for coming up heads? Perhaps yelling at myself for logging on at the time? No. My thoughts were of something new this trade vs other ones.

"Yeah that's not a good start but my trading history shows on average a trade gets me +$0.81. There have been plenty of trades that looked bad at the beginning that turned around. The 50 pip stop loss gives plenty of wiggle room. By entering this trade there is no reason to think this trend shouldn't continue."

At the beginning of this coin flip experiment I was keeping a close eye on each trade. Guessing what was going to happen and guessing where I would be stopped out at.  After 28 trades I have realized that the begging and pleading does little good to will the market into a direction. The trades have become a routine pattern. Flip, enter trade, done.

This is a benefit of demo trading that I think some experts do not realize. The practicing and conditioning of ourselves is as beneficial as practicing our trading strategy.

Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

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