The phenomenon of the Forex market is that you can find a “suitable” trade on the chart at any time if you really desire it. And it’s a completely different thing whether this trade will be profitable or not.
Too many traders spend hours sitting in front of screens looking for trading setups. As a rule, such traders very quickly lose their capital because far-fetched signals do not make a trade profitable.
If you notice a similar problem for yourself, then whatever you are guided by, it is time for you to stop. Today you will learn how you really need to look for suitable trades and what you need to do to get rid of a bad habit.
He Who Seeks Will Find
It only takes a couple of seconds to understand if there is a suitable trading setup on the chart or not. If you see a trade immediately after the launch of the terminal and it meets all the points of your trading plan, then you can safely make an order. If you need to change the timeframe, turn on additional indicators, or draw additional price levels to confirm the setup, then the trade is clearly far-fetched.
The problem is that any moment on the chart can be turned into a suitable trade if you want it. Moreover, using the “right” techniques, you can detect signals for both buy and sell trades at the same time.
There can be many reasons for this relentless search for trading setups but all of them are caused by simple emotions:
- Greed - the desire to earn as much as possible in the shortest possible time
- Despair - the need to earn extra money on essentials
- Euphoria after a successful trade
- Anger and revenge after a losing streak
Why We See Suitable Trades Everywhere
Our brain has an incredible property - we often notice exactly those things that are least likely to meet. It's like noticing a foreigner with a different appearance. With a high probability, you will notice him in the crowd, even if you do not peer.
Scientists even conducted several experiments:
- People were asked to choose faces with a dangerous and frightening appearance among the proposed pictures. The subjects quite easily pointed to the corresponding photos. Later, scientists removed all the truly scary faces from the proposed options but people continued to point to pictures with completely ordinary faces simply because they were asked to do it.
- In another experiment, a group of combatants was asked to report all crimes they noticed in the neighborhood. Even when the crime rate decreased, the subjects continued to report the smallest violations.
What conclusion can be drawn from this? If we want to see something, we will certainly find it. The same applies to trading setups.
How to Fight the Urge
Unfortunately, if you desire to find a suitable trade is strong then your brain will sooner or later find confirmation on the chart. It will find the correlation between the facts that actually have nothing to do with each other. The only thing you can do is follow a clear plan. At the beginning of your trading career, you could try using a checklist. There you can make sure that the trading setup suits every single aspect of your system. If at least one point is missing then you shouldn’t open a trade.
It is worth noting that seeing suitable trades in a few seconds won’t come out immediately. It requires practice. At the very beginning of your trading career, as well as at the time of the introduction of a new trading system or strategy, make sure to use a demo account.
The time you have to spend on a demo account varies:
- 2 months if you are just starting to trade Forex. During this time, you will have a chance to experience all the possible market conditions.
- 1 month if you are testing a new system for a daily timeframe (for example, swing trading).
- 1 week to test the intraday strategy (for example, day trading or scalping).
How Many Times a Day You Should Check the Charts
The answer to this question depends on the timeframe you use:
- Once a day for D1 charts.
- Every few hours for H4 charts.
- Once per hour for H1 charts, etc.
Remember, however, that you should not stare at the chart around the clock. If you trade on low timeframes then you should choose the best trading session for you and look for trades during this period. For example, if you trade on the H1 chart and prefer the European and American sessions, then you should check the chart once an hour during these periods.
To Summarize
It makes no sense to look for suitable trades on the market. Eventually, they will fall directly into your hands. This approach to trading is also called the “Low-Hanging Fruit” strategy that we have already told about earlier on our blog.
All you really need is to practice your strategy on a demo account. When you are comfortable enough with your system, the suitable trades will appear on their own.