Now that we’re into the last month of the first trading quarter, you’ve probably had enough time to gain momentum on your 2016 forex trading goals and resolutions. How are you doing so far? Have you made any progress? More importantly, are you tracking them?
If you’re like many traders out there and the only thing you remember about your start-of-year goals list is that it’s buried deep in your desk drawer, then it’s probably time to revisit those goals, if not make new ones altogether.
Let’s take a look at some pretty easy (but necessary) trading habits that have helped many traders but might have missed your resolutions radar. Hopefully, you will give these a better chance (if you haven’t already) over the next few weeks and someday you’ll look back and be thankful that you did!
1. Using stop losses
Losing trades are inevitable. Even the best of traders have losing days. Unfortunately, many newbie traders would rather be right than be profitable and using stops would confirm that they are wrong. This could lead to uncontrollable losses and ultimately, blown accounts.
While you can’t control market behavior, you can control how much you lose per trade. You can widen, tighten, or adjust your stop losses, but make sure that you always have them.
2. Making pre-trade preparations
If you plan to win, you don’t go into a match without a game plan, which means you also don’t start trading without some kind of strategy or play in mind. Those who don’t have any plan in mind unnecessarily expose themselves to psychological mistakes that could cost them avoidable losses.
Making pre-trade preps can be as simple as marking important economic events and chart levels, or it could be as detailed as considering different setups and contingency plans for a single event.
3. Journaling trades
Keeping a journal is a crucial task in any performance or goal-oriented endeavor. Remember that your broker logs only give you the raw data of what happened, not WHY it happened. Also, you can’t improve what you don’t measure. The key is to have some way to track and stay focused on improving your performance.
Whether it includes just your basic journal statistics or even the overlooked ones, a trading journal is a must-have for consistently profitable traders.
4. Allotting a specific time for trading
Just because forex trading is a 24-hour party doesn’t mean that you should be around the charts all day. Fact is, a lot of you are part-time traders. This means limited trading time and even less time for other trading activities.
You can still make the most of your trading time though by avoiding distractions and focusing only on trading-related activities during a specific part of the day.
5. Specializing: finding your niche
I have met a lot of newbie traders who have been trading for months but have yet to determine strategies that suit them. I always recommend specializing.
While it’s always good to try out new methods and systems, it’s also great to be able to pin down which currency pairs, time frames, and indicators generally work for you. This way you’ll at least have some place to start when you’re ready to improve your trading performance.