Trading forex can prove to be a tough calling, especially for people who are venturing into the forex market for the first time. It is demanding, requires a lot of learning, dedication, adjustments and experience in order to hit it high and be at the top bar.

There are different kinds of traders, those who trade what they see and those who trade what they think. It is advisable to always trade what you see and not what you think.

There is a difference between trading what you see and trading what you think. Trading what you see happens when a trader decides to trade forex by looking at the charts, the prices and the direction in which the market is moving.

This is what winners in forex trading especially the professionals in this field do and that is why they make it big in the business of exchanging currencies.

Trading what you think on the other hand happens when a trader decides to trade by following the trends as shown on the news or on the newspapers.

Some traders go to the extent of trading just because their mates are also into forex trading and so they decide to join in and be counted among the forex traders.

This is common with amateur traders who still do not understand the forex market neither to they have any prior knowledge of the same.

In order to make it big and be counted among the winners in the forex market, it is important to learn how to trade what you see and not what you think.

There are several tips that may act as guidelines to beginners or a reminder to those who are already established in the foreign exchange business.

1. Understand the Technical and Fundamental Analysis

Technical analysis helps the trader to put down strategies that look into the broader picture of forex trading. It gives the trader insight on what to expect in future while trading currencies.

A good start is understanding the basics of technical analysis like learning about the various charts used in forex trading such as bar charts, line charts, or candlestick charts.

Fundamental analysis is concerned with the growing trends, interest rates, and the different prices. Learning about fundamental analysis provides solid foundation to future investments in the forex market.

It also helps the trader to know more about the forex market, how forex trading is done and also the future of the forex market. This is done by going through annual reports and financial statements.

2. Be Realistic

Even though traders know the unwritten rule of trading what you see and not what you think, not many traders go by that rule and most of them end up losing out because of how they set their targets.

Most targets are often unrealistic and unattainable yet traders still set them and expect to gain.

Traders are advised to never begin trading without putting stop loss. The stop loss is determined by the strategies that were initially laid down by the trader.

Traders are also warned against putting their stop loss too tight as they risk being thrown out by other traders whose strategies operate strictly on stop loss. It is also important to know when to stop trading even before you begin.

This is where setting realistic goals come in handy. Targets set should be easily attainable within a reasonable period of time and should not make emotions run high in case they are overtaken by time.

3. Allow Yourself to Make Mistakes

It is often said that no one can learn without making mistakes and the same applies even to trading.

You are prone to making mistakes whether you are a beginner or an experienced trader but the most important thing is to accept the mistakes made and learn from them.

It is easier for a trader to accept a mistake when in the beginning the trader understands the fact that he or she will not always be a winner and therefore when a mistake or a loss occurs, such a trader would simply look at it logically, and not emotionally, and this will help him or her create another strategy for the next trade.

4. Keep Emotions at Bay

The topic of emotions seems to be a delicate one and it is one of the major topics that beginner traders should take a keen interest in. Amateur traders mistakenly believe that they can invest little money and within no time make huge interest.

This is a false belief that makes emotions run high when the set target is not achieved. Most beginner traders are often advised to set realistic goals and learn to accept losses logistically instead of letting their emotions rule how they come to terms with the losses.

Putting emotions before logic is known to have caused many beginner traders to lose out on the big earning opportunities that the forex market has to offer.

Those who do not set realistic goals often venture into over trading in order to meet all the goals that they set initially and this dangerous habit often sends the trader into using a lot of money with no returns.

Once a trader realizes that he or she has used up all the capital he or she intended for the forex order yet he or she has not realized any returns, the trader might become emotional and may not make informed decisions regarding the same.

Traders who would wish to become successful in the forex industry are advised to act coldly and stay level headed to the losses incurred and other challenges faced during the initial stages of becoming a forex trader.

Summary

Trading what you see and not what you think may seem to be an obvious phrase but unfortunately not all traders adhere to it. People tend to ignore it for unknown reasons.

It is important to trade according to what is there on the trading charts or according to the market trends and not according to the directions of your feelings.

Successful forex traders know exactly where to keep their emotions and the forex market is definitely not the place!