It may seem to you that your system is already perfect just the way it is. But it’s not possible. There is always something to improve. And it is better to do this not the moment you understand that your trading plan is completely out of date and stopped bringing any profit. Updating goals and improving your plan should be done at least once a year. And preferably - once every six months. It’s like a visit to a dentist. No one likes it but this is the only way to maintain oral health. Same situation with your trading performance.
In the next couple of articles, I will give you some tips that will help you evaluate your current results. Feel free to apply them to your trading plan to improve it.
Prefer Study Rather Than Trading
You will not learn nor achieve anything spending hours in front of the charts. Unfortunately, for the vast majority of traders, Forex trading becomes an addiction. They don’t leave their screens, watching every tick, experiencing a flurry of emotions, both positive and negative. And all these emotions lead to terrible stress that affects not only trading decisions but daily life as well.
If in the words above you recognized yourself at least partially then you should make a change. On Forex, as a rule, less is better. Don’t chase the number of positive trades. Focus on their quality:
- Look for trading setups on higher timeframes to get less market noise.
- Get a daily trading routine and open charts only at the scheduled time.
- Don’t search for trades on the charts. Good trading setups are visible immediately. If you didn’t find them, close the chart, and try again next time.
Most professional traders don’t spend more than a couple of hours a day trading. Try to strive for this. The time that you spend in vain looking at the charts, you can spend on learning:
- Read trading books
- View economic news and analyst forecasts
- Explore new promising strategies and indicators
Solve One Task At A Time
How many trading strategies do you use? How many instruments do you trade? How many indicators are you testing? If your trading performance is not good enough for you then there is a chance that the problem is in multitasking.
In order to become a professional, it is best to master one strategy at a time. The same can be said about different charts, indicators, etc. Try to pay maximum attention to one subject. You will get a better result much faster. Having mastered one thing, you can switch to something new. This is the only way to achieve real success.
Yes, Forex is one of the most volatile markets but it is much slower than you think. In order for your transactions to bring real profit, you need to be patient.
Professional traders prefer to make predictions in the long run and long-term continuous trades until they bring tangible profits. At first, you will have an irresistible desire to close a position as soon as possible in order to get at least some profit. Fight this urge.
Let your transactions bring real profit. To do this, they need a little freedom. Of course, not all transactions will be successful but with long-term transactions, you are more likely to become financially independent.
Here are a couple of advantages of swing traders who hold their positions for several days or even weeks:
- Better emotion control
- Less likely to become addicted to Forex
- More free time
- Higher return on every trade
- Less likely to overtrade and more
Exit Trades In Advance
The advice may sound strange but you will be surprised how helpful it might be for many traders. When your transaction confidently goes to your target and then slows down right next to it, you begin to get nervous. Often, the market reverses right by your Take Profit and leaves you with nothing or even a loss. This doesn’t help to gain confidence.
If you open a chart and see that the price is a few pips from your exit point then just close the position. This way you protect your existing profits and save yourself from unnecessary stress.
It makes sense to analyze your past trades. How often did the chart unfold shortly before your exit point? Perhaps it makes sense to change your risk-to-reward ratio. If you previously had 3:1 try 2.5:1 or 2:1. This may be the solution to your problem, given the current market sentiment.
In any case, after closing the trade always watch how far the price goes in your direction. Perhaps, at some point, market trends will change and you can increase the distance to your exit point to get more profit.
The tips in this article may seem simple but unfortunately too many traders ignore them. That is why the failure rate on Forex is so high.
If you keep a trading journal, analyze your transactions over the past six months, and try applying one or more of the tips in these articles. Perhaps they will help make the next half of 2020 more successful.