In addition to trading the forex market I also have a passion for playing golf. It seems that I continuously work through the same 4 mistakes, so much that I have long since been able to recognize by my ball flight which of these mistakes is creeping up on me again and apply a tested remedy.
I have taken this approach to my forex trading. One of my forex affliction is that I tend to overtrade the market.
To combat this need to be in the market all the time I have developed 2 key strategies:
#1 Take a break from trading when I had a big win or loss.
#2. Set rules for evaluating the market and entering trades.
Here is a sampling of my forex market evaluation rules:
Look at the current price behavior. Determine if the market is oversold or overbought.
Access overall forex market conditions. Look at long term and short term views. Is the market trending or range bound? Is the market trending short term within a long term range.
Determine where your currency price target is located for the respective ranges and time frames.
Determine your criterial for stopping the forex trade on both the profit and loss side.
Determine how much capital your are going to risk.
I have found that one of the most valuable tools is to be a member of a local trading group. This allows you to verbalize your trading actions and will confirm your trading decisions.
If you are evaluating currency trades alone then talk it though out loud.
Yeah, you may sound like a nut to those around you, but you will be a more profitable nut none the less!
For more insight into forex education and trading visit FX Trade Central.
Happy Trading!
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