Stop Chasing the Trades
Most traders have a mindset of “if you lose, move on to the next trade and forget”, says Leverate’s Adinah Brown
In the world of Forex trading, traders often become addicted to the adrenaline that is brought on by trading the market. Yet even when the signs begin pointing in the wrong direction, they refuse to see it and persist in their confidence that the market will continue to be profitable. Traders are hunters by nature and the smell of a money gives them tunnel vision and makes them see red.
BUT, instead of chasing after trades to be successful, watch the market, analyze the signals, confirm that they align with your trading strategy and you’ll see how trades find you. To the patient trader, trades will eventually come. I know they say if you really want something you should go after it, but trust me, in FX trading, this is not one of those situations.
The tricky thing about opportunities in Forex trading is that they aren’t always good opportunities. Many traders become antsy while waiting for a good trade or frustrated because of a missed trade opportunity, and that is when they make mistakes. The market will always be filled with opportunities.
Your only job is to check which one is the best one, the one that aligns with your trading objectives, and ignore all others. An example of this is the Fake Pattern. An occurrence wherein a price goes to a snap, and back in the opposite direction of a false-breakthrough.
Most inexperienced or emotional traders would immediately jump the gun with these, without checking and analyzing all other components. That is the thing with trading, the sure things aren’t always sure things.
Navigate Around the Market
A slower phase is an advantage in the market. Follow daily charts, tune into news and check currency values constantly. By analyzing the market, you start to see patterns and minimize your directional bias. You will see financial instruments and their purpose. Profit doesn’t come to those who invest big bucks, profit comes to those who invest time and knowledge.
Most traders have a mindset of “if you lose, move on to the next trade and forget”. Everyone wants quick money and not everyone has the patience to fully understand what happened and why they lost. The only thing they ingest is the basic knowledge of how to make money in these trades and how to pinpoint good market directions. This mindset often prevents traders from spotting the really good deals when they come along.
Here are some tips to make waiting worth your while:
• Learn from other traders – No matter if they are experienced or newcomers, everyone can learn something from everyone. Use the down time to understand others’ perspective.
• Write a Trade Diary – Everything that goes down in the market is related to the next move. This is how you start to see patterns. Keep track of everything in order to have a vantage point.
• Improve your game plan – Some people call it a playbook, others call it a strategy. Whatever you name it, this is your strategy for trading.
It is like mapping out good leads and eliminating bad ones. Compare prices and the cause of a breakthrough. You can’t always go against risk in the trading game, but you do need to assess and accept it, otherwise you are going to lose. Your playbook will surely present many risks, but it will just as well help you minimize those risks and help keep you centered until you find a good entry point.