Forex traders who want to be consistently profitable know the importance of tracking the rights and wrongs of the trades that they take.
Unfortunately, the impact of the trades that they DON’T take is too often overlooked.
Traders are no strangers to missing good trade opportunities.
At one point or another we’ve encountered setups that we didn’t take even though they so clearly fit our biases and strategies. All too often, those missed trades also tend to be winners.
There are plenty of reasons why we fail to catch good pips. We’re all humans, after all.
Steve, for example, could have chosen to stay in the sidelines after losing a trade or two.
Tony could have been distracted by another trade while Peter lacked the confidence in pulling the trigger because his biases didn’t match with his friends’.
Meanwhile, Natasha has met her daily quota and has stopped trading while Clint simply didn’t have enough balance for another trade.
While there are good reasons for missing trade opportunities, not taking valid setups can also cost you in the long run.Traders who miss a good opportunity are tempted to “make up” for it by taking a less-than-ideal setup and possibly trade more aggressively while they’re at it.
As I’ve noted before, revenge trades can kill your account one trade at a time.
So how can you minimize your missed trades? Here are four ways:
1. Set alerts and orders
If you don’t have the time to watch your charts or you’re not around when good opportunities usually pop up, then consider setting price alerts or using entry orders for your trades.
You could even step it up by designing a simple mechanical system on your platform.
It’s hard to address a problem if you can’t see it. What made you hesitate? Were you distracted? How often did the pair go your system’s way? What could you have done to avoid missing those kinds of opportunities?
Logging in your missed trades on a trading journal could help you identify your triggers and push you into sticking to your plan in the future.
3. Decrease your position sizes
If you miss most of your good trade ideas because you lack the confidence to take them, then you might want to decrease your position sizes. This way you’ll lessen the pressure of trading for money.
Of course, practicing good risk management techniques can also go a long way at boosting your confidence.
4. Look at the big picture
Accept that losing is as much part of trading as winning. One or two losses won’t matter if you trust your system and you look at the big picture.
Getting used to losses is the only way that you’ll be able to focus on the process instead of profits.
Traders shrug off missed trades simply because they don’t see its impact. Unlike the losing trades that they do take, missed trades aren’t usually logged in the spreadsheets with the goal of minimizing them. Unfortunately, you can’t improve on what you can’t see.