Why do you need forex trade management?
Well, imagine that you’ve poured over the charts, you’ve learned everything you can possibly learn and you’ve built what you believe to be an almost fool-proof setup. So, why aren’t your trades behaving the way you expected them to?
While there is a chance that your setup is not exactly as it should be, there is a far greater chance that the disconnection lies in your management of the trades, not the setup itself.
There are many influencers that can infect our minds with bad mojo when we’re just about to place a trade or once we’ve already entered the trade. Fear makes us hesitant, anxiety causes us to become a nervous wreck and recklessness arises from overconfidence.
But fear not, because here are 6 great tips to help keep your emotions at bay by leading you down the path to more righteous forex trade management.
As the old adage goes, take the easy ones and don’t mess up in between.
One of your goals as a money manager should be to chain together as many wins as possible. This means that if you have a good setup and things work as they should, taking easy winners should not come as much of a challenge.
The trouble we get into with this is when we want to think outside the box and maybe reach for something new in an attempt to try out a different approach.
When we deviate from our tried, tested, and true – bread and butter setup– that’s when we get into trouble and the losses pile up.
Stick with what works and don’t stray from the rules that you’ve set up for yourself.
… In addition to price confirmation.
Many traders only look to one indicator for confirmation. If you only use price as a confirmation, then you are setting yourself up to miss out on otherwise good trades because at first glance, the price didn’t appear where you had expected it to.
In order to safeguard against this, it’s important to bring secondary confirmation into your trading routine. Look to standard exponential indicators to give you the same story as price but from a different angle.
Stressing over the point-by-point moves of the market will only drive any sane trader to their limits.
To avoid getting caught up in the minutia of the tick by, zoom out and look at the price action over a longer timeline. This should help ease your mind and calm your anxiety.
Have you fallen into a funk after losing a series of trades? Sometimes the simplest solutions can be your best ones.
Create a playlist of upbeat, positive music and let those tunes play. Music is an incredibly powerful mood changer, so try to find some go-to songs that get you feeling those positive vibes.
As we mentioned in the 4th forex trade management tip on this list, when you focus on the small, point-to-point movements of the market, you may eventually lose your mind.
In order to combat this, try using line charts as a way to track your long-term, overall progress. This will normalize activity and help you see what it all means on a bigger scale.
The more information you surround yourself with means the more information there will be for you to juggle with and attempt to analyze. This leads to more complicated scenarios. So as the proverbial goes, you may not see the forest (or wood) for the trees.
It’s very important to pour over and study charts again and again. But after all of that time engrossed in charts, when it becomes time to execute the trade – where do your eyes go as the money moves in the market?
Set up your workstation with two screens, instead of having everything on one. you will become less distracted and more focused on the task at hand.
One setup can handle all of your analysis, while the other is solely dedicated to your actionable trades. you will be able to work on your analysis and not be tormented by the sign of price ticking up or down.
Even when you already have a successful strategy, it still does not mean that you will be able to execute it when you come to trade in the real market. There are quite a few variables that can disrupt your decisions.
Use the tips in the article to help you get the most out of your trading plan and improve your success rates.
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