Forex training - The Transition to Live Trading

In this Forex training article we will look at how some traders struggle to come to terms with trading in the live markets, even after doing their back-testing and forward testing. There are a number of reasons why so many people struggle with this transition. The most prominent however is the realisation that losing real money does not feel good. From doing all their preliminary work putting their Forex trading strategies into practice, traders already know that that their system is a profitable one otherwise they will not be trading it in the live market. Assuming the trader’s system has positive expectancy; traders at a conscious level know that their systems (despite being profitable in the long-term) will still incur losses in the short-term. However, it is the lack of complete acceptance at a sub-conscious level that losses are part of trading that leads to so many traders finding the transition to live trading so difficult. When losses arrive in their numbers many trader suddenly become emotional about what are supposed to be a straightforward rule based Forex trading strategies; then comes the temptation to tweak the strategy while trading live (which is one of the worst things you can do). Use what you have learnt in your Forex training which has made you chose that strategy – do not change it.

On the contrary, what traders need to be doing is applying solid trading discipline by adhering to their trading rules and start to operate out of a different set of beliefs which supports successful trading. To help make the transition a smooth one, before placing the first live trade, traders must first understand and truly believe that it is their mental attitude combined with their trading system and money and risk management that will determine their long-term success in the market. Mental attitude or psychology is widely stated to account for about 90% of trading. What this means for new traders is that in addition to creating a profitable system they also need to develop the right frame of mind for trading.

One simple exercise which traders can begin to use from day one is the idea of thinking in probabilities. By saying to themselves that they will fully commit to taking the next 50 trades and executing them perfectly as dictated by the rules, it suddenly becomes easier to not attach meanings to single trades. This can help reduce issues such as anxiety and stress while trading. This simple exercise simply shifts his/her perspectives from trying to make money to impeccably following their rules on the next 50 trades. At the end of the exercise, the trader can then assess how the system has performed and make changes accordingly. This is simply a part of your on-going Forex training – a path where you constantly improve your strategy and mental state, not change what you have learnt in the first place.