3 Ways To Simplify Your Trading

I get a lot of emails from clients on a variety of topics, mostly trading related of course, but also just good 'general life'' stuff too.  A recent email from a fairly new client caught my eye.  The email and my response are below.

Dave,

New to your service but have been following you on-line for some time.  Quick question:

"I am a part-time trader given that I have a full-time job and plenty of family obligations.  I am under no illusions of keeping on top of the market all day long, but would at least like to keep my finger on the pulse.  With so much info out there, any ideas on what I should focus my limited time on?

Thanks,

Khalid - Newcastle UK

Khalid, thanks for the question it is applicable to so many of our clients and 'would be' clients.  I think the best place to start is with expectations.  Once we get a realistic view of what the forex markets offer up, we can then know how best to observe and trade them.  In addition, when you have a low volatility market like we have witnessed in recent weeks and with the typically quiet summertime trading fast approaching, it is always a good idea to make sure you are following best practices in your forex trading to make sure you are staying the course.

1. Manage Your Expectations

Unrealistic expectations. Yep, that’s the #1 reason I come across that puts aspiring traders behind before they even get out of the gate.

It is easy to understand why. The marketing surrounding the forex trading industry often times paints an unrealistic view. The hip 40-something guy/gal trading from the coffee shop or the full-time executive running a scan for hot set-ups in between meetings.

Let’s face it, selling the dream gets people to pay attention. Sure, there is an element of truth to it, but it takes time to achieve those goals and is not found in some trading app or worse yet a forex bot - good grief!

• At best your win/loss ratio is likely to not exceed 65/35 - accept losses as part of the process
• Trading is not a 9-5 job - trade less to make more money
• Avoid short-term noise, markets do not change that much day to day or even hour to hour
• Chasing short-term price action is counter-productive

2. Embrace Part-Time Trading

While the idea of quitting your job to trade full-time is very appealing, it comes with major risks and is not practical for most individuals.  Trading forex part-time, and getting solid returns that can make a meaningful impact on your finances is possible.

There is no reason why you cannot do analysis once or twice a day, place your trades and go about your day.

For those that are not experienced, seek out a service provider that will do the 'heavy lifting' for you and provide the trade alerts as well as insightful analysis.

Like a friend of mine always says, "..once the analysis is done, I add little value to the process by staring at the screens."

3. Try Focusing On Only 3 Time Frames: 60/240-Minute & Daily

As noted in Point #1 above:

• Avoid short-term noise, markets do not change that much day to day or even hour to hour.

This could not be more true.  It is easy to look back and see moves and say to yourself, "I could have grabbed that one.", when in reality it was not obvious at the time.

Any successful trader will tell you their best trades come from aligning oneself with the dominant trend and then picking attractive entries.  If we work our way back from the daily time frame to the 4-hour and then hourly we will align ourselves with the market rather than against it.

Let's face it, shorter time frames certainly provide more 'action' but often times they offer more work and less pay-off then simply picking your spot and letting the trend work for you.  Simply put, there’s a lot of meaningless price action on time frames below the 60-minute chart and it only gets more noisy and meaningless the lower you go.