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Fixing the Beginner's Mistake or How to Stop Looking for Suitable Trades

9:05 AM Jan 28, 2020
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For beginners

Today we will talk concisely about the problem that can destroy the beginner's capital. There are many rules for trading, but one of the most important is to open new trade with adequate preparation. So let's speak about the typical beginners’ mistakes and find out how to avoid everyday lousy trading habits.

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:

  1. 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.
  2. 1 month if you are testing a new system for a daily timeframe (for example, swing trading).
  3. 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:

  1. Once a day for D1 charts.
  2. Every few hours for H4 charts.
  3. 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.

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to reward ratio trading calculator trader’s age emotion control stop-hunting false signal trading session New York session Asian session non-farm payrolls fed rates decision central banks mentor teacher Forex education Forex books candlesticks bonuses tradable bonus no deposit bonus deposit bonus cashback pending orders counter-trend trading risk-to-reward ratio 1-2% rule uptrend downtrend news releases slippage emotional trading stop orders limits orders trailing Stop correlation Correlation Matrix EURUSD EURJPY RSI Overbought/Oversold indicator doji morning start candlestick pattern liquidity London session gap requote US dollar greed excessive trading Expert Advisor trading instrument Twitter Trump euro Canadian dollar Japanese yen Mexican peso currency pairs Fed China economic news currency wars USA interest rates trade agreement H1 H4 D1 sell trade buy trade price level trading system COVID-19 coronavirus lockdown checklist Default mode network Nonfarm Payrolls intraday traders lot size Stop Out margin breakeven pip point entry price chart candles weekly candle daily candle engulfing candle Doji W1 fears money management trading signals Charles Dow Dow theory primary trend Relative Strength Index signals market noise trading volume oversold/overbought corrections candle M30 GBPUSD GBPJPY pending order fundamentals Interbank order Stop order Limit order Standard account Interbank account liquidity provider M5 chart gold XAUUSD Chinese yuan flat US Dollar Fed Interest Rates inflation level XPTUSD platinum XAGUSD silver USDCNY Chinese Yuan instruments swap trading hours Buy Stop Sell Stop Average True Range ATR range sideways range price level trading scripts Excel tables entry point equity balance applications highs and lows RSI Fibonacci terminal server proxy OS Windows XP self-trading Forex advantages gap trading Fibonacci levels USDJPY Buy Limit Cherry Blossom market cycle mark-up mark-down consolidation distribution long positions short positions double bottom triple bottom double top triple top pattern signal presidential cycle Elliott wave Kondratiev wave Forex terminology quote standard lot mini-lot micro-lot cross pairs exotic pairs counter-currency terminology Margin Call long position short position buy sell candlestick chart bar chart line chart range market channel high low ADX OHLC patterns profit level martingale aggressive EAs VPS demo account EA tester trading signal chasing the market clicking the button oil trading lot EUR cent account Forex mentor novice trader emotions control fear psychological level round numbers Key Levels indicator MetaQuotes iOS Android mobile trading mobile terminal VPS server financial portals day trader position closing short timeframe fast trading news site news portal FXStreet Investing.com Forex Factory ForexLive DailyFX CPI PPI economic indicators Non-Farm Payrolls monetary policy FOMC retail sales inflation rates program installation intuition apps ECN brokers market makers financial 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market cryptocurrency market figures diamond divergent triangle symmetrical triangle reversal signal financial intelligence financial education long-term investing triangle ascending triangle descending triangle risk control stocks Forex mutual fund EUR/AUD AUD Australian Dollar Australia ECB RBA demo live live account spike bearish spike bullish spike breathing techniques meditation unusual trading tips useful habits nutrition intermittent fasting Three indians pamm mam expert advisors start-up capital business Forex business oversold overbought reverse signals 15-minute chart full-time trading discipline drawdown inflation devaluation IDR LAK export Russia regulations regulators Central Bank quantitative easing quantitative tightening Donald Trump Joe Biden coins indexes DXY ICO Mrs. Watanabe beginner trader carry trading young traders women traders productivity self-discipline rectangle sideways channel trend figure Alexander Elder John Murphy Jack Schwager limit order leaving Forex 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losing streak perfectionism consistent profits starting capital initial investment market psychology japanese candlesticks PAMM trust management money manager holidays market sentiment CHF CAD Great Britain pound Swiss Frank reserve currency averaging morning routine initial capital potential profit reverse pattern rounded bottom rounded top saucer inverse saucer IB Program IB Commission Sharing reversal patterns deposits payment methods payment systems local transactions trader’s block market balance