In forex trading, greed can sometimes get the best of you. In your journey to be a consistently profitable trader, the urge to bag those extra pips can be too irresistible. As a result, you sometimes force your trades.
During losing streaks, your frustration and need to enter more trades to earn lost money can overwhelm rational thinking. This line of thinking may actually make a lot of sense to you because it’s not like you can make money if you don’t have a trade on, right? Instead of being patient by waiting for the best setups and letting the market come to you, you… well, force a trade.
A way to get over the impulse of forcing trades is by making your trading rules your habits.
Just like how your mom made you put your dirty clothes in the laundry basket to keep your room clean, you start forming good habits by consciously repeating an action.
Whether it’s by saying “no” to that second doughnut, going to the gym twice a week, or something as simple as eating breakfast in the morning, habits start with deliberate repetition until the act becomes a part of you that you no longer need to be reminded of the rules.
Consciously sticking to your trading rules is a solid step towards forming good trading habits. You may still experience anxiety over price action, but you will control your decisions better because you stress less over it.
Here are a few things you can do to help turn your forex rules into habits:
1. Make a list of rules and write them down.
The first thing you should do is to make a list of trading rules. These rules will govern how you trade, where you will enter, exit, and how much you will risk.
It also isn’t enough to just have these rules in your head – you should write them down on a trading journal. Writing down your rules solidifies and reinforces them as you will always be reminded what they are.
2. Visualize different scenarios.
Imagine that you have an open position. Think of all the different price action scenarios you could encounter and imagine how you would adjust your position in these situations. Visualize yourself following your rules.
The more you practice and repeat this process, the more natural it becomes for you to follow your rules and turn them into habits in a real trade.
3. Review your trading.
At the end of each trading day, take some time to review your trading. Ask yourself, “Did I follow all my trading rules?” Grade yourself and make it a point to work on your weaknesses. By reviewing your trading, you can see whether your rules are effective and whether you are really following them or just fooling yourself.
Always remember that good trading decisions begin with good trading habits. Doing something well once doesn’t automatically make you a good trader. It is the constant repetition of the act that will play a major factor in making you a better trader.
As the wise Aristotle once said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”