One very important aspect of forex trading strategies that many traders never stop to consider is how they might influence their forex trading mindset. Anyone who has been involved in the markets for any length of time has no doubt heard about the importance of psychology when it comes to trading performance. So, it is very important to your on-going trading success to consider how the particular forex strategy that you are trading is influencing your mindset, because it most certainly is influencing it in SOME way.

Generally speaking, trading strategies that require intense involvement on behalf of the trader, either from watching the charts a lot or analyzing fundamental variables, will work to negatively influence a trader’s mindset. The reason why this is true is because once you get in habit of spending a lot of time analyzing and trying to “guess” what the market is going to do next, you actually are trying to control the market through your cognitive processes. It is impossible to control the market in any way, unless you are trading for an institution or giant bank and are able to trade with millions or billions of dollars.

Shorter-term trading strategies are generally ones that require the trader to check the charts more often and are the strategies that usually end up inducing a mindset that is in “analysis paralysis”. This is where you get caught in a never-ending cycle of trying to guess what the market is going to do next by analyzing the shorter time frames and reading every economic report you can get your hands on. The futility of these short-term and day-trading strategies lies in the fact that they make trading much more difficult than it needs to be and also cause you to spend more time and make less money as a result.

Another big downfall of these short-term and day-trading strategies is that they are much more likely to induce emotional trading mistakes like over-trading and over-leveraging than longer-term forex trading strategies. Most people who try their hand at day-trading simply cannot walk away from their computer after a loser or a series of losers, OR after a winner or series of winners. The feelings that get worked up inside of you after a losing trader are typically those of revenge, anger, humiliation, and anything similar to these. Most traders will not be able to ignore these feelings with their logic, and so they give in to them and enter another trade because they think they will be able “fix” their last trade(s) with a big winner. Inevitably these emotionally-entered trades are of lower quality and thus lower probability than the ones entered out of objectivity and after a period of absence from the market. When you trade shorter-term and day-trading strategies you increase the chances dramatically of giving into such emotional trading mistakes, simply because you are involved with the market more.

The same thing happens after a winning trade or trades, it is just a different emotion; euphoria. The euphoric feeling traders get after a winning trade tends to send them back to the market for more; they think they are something special now that they have made some quick money, so they go right back and try their “no found power”, which typically results in losing trades, and then we are back at the emotion of revenge discussed above; it’s a cycle of bad trading habits as you can see.

The best way to avoid committing the above emotional trading errors is to use a simple forex trading strategy that makes use of higher time frames. You should aim to look for trading strategies that allow you to check the charts for a short period of time each day. Once you know what your forex trading strategy is, there is no reason to continue analyzing the charts all day if your trading edge is not present. You simply walk away until the next day if it is not there. This swing-trading mentality is what most professional traders use, and it is a proven fact that longer-term traders make more money on average than their shorter-term counter parts.