Forex traders tend to sabotage their own profitability record by eventually trading at the wrong moments. Even a small and rare misstep could prove to be too much for a trading account and a higher frequency of mistakes only worsens the odds.
This blog does its best to discuss and show interesting trade setups, good reward to risk opportunities, valuable currency pairs to monitor, and trending markets and pairs. But this time around our focus is on the opposite: market conditions and personal circumstances which are best avoided. Here is a summary.
- Market structure Try to avoid trading market conditions that do not match your strategy and your own personal trading style.
- High spreads Higher spreads have a direct effect on the trading performance as it eats up a substantial part of the potential profit. Make sure that you measure and monitor how much impact spreads are having on your performance.
- Extreme volatility Trading at extreme moments of volatility such as the financial crises in 2008 and the Swiss National Bank (SNB)’s removal of the peg with the Euro this month can be potentially lucrative but pose extreme risks. The market can go into frenzy with massive spreads and removal of quotes.
- Not trading at decision spots Trading at decision spots increases the odds of price making a sustainable reversal or breakout.
- NOT part of your trading plan A Forex trader sees tons of charts and time frames and could be persuaded to take a trade which does not match the trading plan. Avoid this undisciplined trait. If the urge is really big, take the trade on a demo.
- Chasing the market This happens when you had a trade idea but failed to execute, and then see the trade develop as you expected/planned. Do not try to correct a past mistake by taking the trade too late.
- Jumping the gun This happens when you have a trade idea but the circumstances have not yet lined up. Do not try to take a trade before you have the actual confirmation. Read more here.
- In need of trading Avoid trading Forex if you feel imbalanced. Needing a trade and taking it any cost is a bad business decision. Take a trade on your own terms, not when you feel forced to take a trade due the market pressures/price movements. We need to take trades with higher probabilities.
- Proving yourself right or the market wrong Trading is not a battle between you and the market. Remember that it is the market which offers you the opportunity to trade. Trading performance is a scorecard of the success of your business model and trading plan.
- Not mentally focused and ready Social media, internet, commercials, TV and our environment can distract you while trading. Traders must ensure that their attention is fully focused on trading to ensure optimal performance of their business and trading plan.
- Trading without an open attitude Be open for the feedback of the market and your trades. If you are not in a receptive mode, it is best not to trade for a while. Traders want to approach the market with a learning attitude. You want to learn from every trade and each situation and if that vibe is missing, trading will be less profitable and certainly provide less learning experience.
- Your ideas. There are many good points that can be added to this list. Let us know YOUR idea down below!
That wraps it up, thanks for sharing and happy Hunting!
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