If you are serious trader then you must have heard about the Flow State in Trading. When I started trading, I thought emotions were the ones that got in the way of my trading – fear, greed, and doubt were the ones that were causing me losses.
But then I read a post about “Flow State in Trading” that changed my perspective. You need to understand one simple thing that will help you use your emotions to your advantage, rather than letting them destroy you.
There are two types of flow states – positive and negative – and both affect your behavior in the market.
Negative flow state: In a negative flow state, fear will make you hesitate when trading, greed will make you over-trade and over-leverage, and doubt will make you change your strategy after every losing week.
Many people try to completely eliminate fear, greed, and doubt, but they don’t realize that it’s impossible to completely eliminate them. Instead, you need to replace them with positive qualities – confidence eliminates hesitation, gratitude stops over-trading and over-leveraging, and trust allows you to stick to a single strategy. But how to change these feelings?
There is a simple method for this – you need to use repetition and simulation of trades, just once a month, through backtesting and simulation trading. If you want to become a profitable trader, you definitely need to use this.
To replace greed with gratitude, you need to understand that in a profitable system, every trade is profitable and necessary – it is impossible to distinguish between winning trades and losing trades,
so you have to take all the trades. Once you understand this, you will be grateful not only for winning trades, but also for losing trades. To overcome doubts and believe in your strategy, you need to understand that a strategy is like a diet plan – if you want to lose weight, you need to go to the gym and start eating right. You won’t lose a pound just by trying different diets. If you want to learn more about the flow state, let’s take a closer look!
Positive and Negative Flow state in Trading
A flow state is a state of mind where you are completely immersed in your work, your entire attention is on that thing, and you don’t even notice the passage of time.
In trading, a flow state is when you are completely focused on your strategy, putting emotions aside, and taking trades according to your trading plan. But there are two types of flow states – positive and negative.
In a negative flow state, you get carried away by emotions, and it negatively affects your trading. In a positive flow state, you use emotions wisely, and your trading improves.
I suffered a lot from the negative flow state at first – I hesitated to take trades out of fear, took too many trades out of greed, and changed my strategy frequently because of doubts. But later I realized that instead of eliminating these emotions, we should replace them with positive ones.
2 Win Rate Forex Strategy : Triple EMA & RSI/Engulfing
Negative Flow State: The Bad Effects of Emotions
- Fear: You hesitate to take a trade because of fear. Because of fear, you miss out on many good opportunities.
- Greed: Because of greed, you over-trade and over-leverage. It generally happens after winning 3 trades in a row, and you start to think you could win all the trades now. So you went outside strategy and started taking more trades and using more leverage. But soon, you will find your account will get almost empty.
- Doubt: Doubt makes you change your strategy frequently. Please stick to your strategy and give it a little more time.
Positive Flow State: Using Emotions Properly
- Confidence: Confidence removes your fear. When you believe in your strategy, you don’t hesitate.
- Gratitude: Gratitude reduces your greed. When you understand that every trade is important in your strategy – whether it’s a winner or a loser – you become grateful for every trade.
- Belief: Belief removes your doubts. When you believe in your strategy, you don’t change it often.
Also Read: Forex Binary Options: My Rookie Mistakes You’ll Want to Skip
How to change emotions? Using backtesting and simulation
What is backtesting?
Backtesting is testing your trading strategy on data from the past few years. This will make you feel confident in your strategy, and fear will decrease.
What is simulation?
Simulation is where you practice trading in real-time market conditions, but without using real money.
Use of Repetition:
You need to test your strategy frequently.
Did You Know: How Risk Reward Ratio and Win Rate work together!
Some tips for staying in a flow state
- Understand your strategy: Understand how your strategy works. I studied my strategy thoroughly, and wrote down its rules.
- Backtest and simulate: Test your strategy through backtesting and simulation.
- Be grateful for every trade: This was the most important thing for me.
- Analyze your emotions: Monitor your emotions. Start keeping a record of emotions in a trading journal. When you feel fear or greed, It would stop emotional imbalance and increase focus on strategy.
What I Think!
Flow state is a very important thing in trading. If you use your emotions correctly, you can become a profitable trader. Backtesting and simulation were two very important things for me, because they made me feel confident in my strategy, and my negative emotions were replaced by positive ones. If you also want to improve your trading, backtest and simulate your strategy, and learn to use your emotions correctly. If you have any more questions, be sure to ask me. I will explain it to you in simple terms!