It’s easy to get distracted when doing any task but this is particularly true when it comes to forex trading. Trading forex requires intense concentration and if you work from home it can also be a lonely profession. Even in a trading room, there is not much need for human connection since traders tend to spend their time focussing on the charts.
The difficulty is that humans have notoriously short attention spans (around 26 minutes). It’s therefore important to train your mind to focus at certain times so you can spend your energy at the right moments. Making sure you focus on the right things is crucial and will save you money in the long run.
But once price action has been studied, it’s important to focus a large amount of time on back-testing. Only then will you have the confidence and tools to follow the strategies that exist in your head.
The difficulty is that humans have notoriously short attention spans (around 26 minutes). It’s therefore important to train your mind to focus at certain times so you can spend your energy at the right moments. Making sure you focus on the right things is crucial and will save you money in the long run.
Price action
The main thing to focus on is of course the price chart. You need to be able to notice small changes in price action so that you can react to them as they happen, and not the other way around. This also relates to how you have observed price action patterns play out in the past. You need to be able to identify the patterns that lead to profitable trades.Back-testing
Studying price action is the first step every trader must go through in order to become a successful trader because it is this that will form the basis of any strategy or system that can then be created. You can’t create a winning trading system if you haven’t watched how the markets behave for a few months/ years.But once price action has been studied, it’s important to focus a large amount of time on back-testing. Only then will you have the confidence and tools to follow the strategies that exist in your head.
Stop loss and target
The moment a trade is placed is the time when your focus must surely go up a notch. At this time, it’s most important to focus in on your stop loss and your profit target. If the market is moving erratically you will want to make sure your stop loss and target are in the right place. Risk needs to be managed like this in a constant fashion.Exit rules
Many traders spend all their time fussing over their entry signals but exits are equally important so you should focus a lot of your energy on working out strong exit signals and finding ways to maximise the profits from your trades.Education
Finally, it’s important to focus on continuing education. New technology and new techniques are constantly coming into play which means there is always more to learn. Books, blogs, social media groups – all can be used to learn about the markets and ascertain how they operate.
Editors’ Picks
EUR/USD holds above 1.1750 after mixed EU PMI data
EUR/USD manages to hold above 1.1750 but struggles to gather recovery momentum on Friday, following the mixed February PMI figures from Germany and the Eurozone. In the second half of the day, Q4 GDP, December inflation and February PMI data from the US will be watched closely by market participants.
GBP/USD recovers further toward 1.3500 after UK PMI data
GBP/USD is recovering ground further toward 1.3500 in European trading on Friday, helped by a modest uptick in the Pound Sterling after stronger-than-expected UK January Retail Sales and February PMI data. However, the pair's further upside could be limited amid persistent US Dollar strength as the focus turns to key US data.
USD/JPY sticks to gains above 155.00, over one-week top ahead of US data
The USD/JPY pair gains positive traction for the third straight day and climbs to over a one-week top, around the 155.35-155.40 region. Data released early today showed that Japan’s key inflation gauge eased to the slowest pace in two years, tempering expectations for an immediate policy tightening by the Bank of Japan.
Editors’ Picks
EUR/USD holds above 1.1750 after mixed EU PMI data
EUR/USD manages to hold above 1.1750 but struggles to gather recovery momentum on Friday, following the mixed February PMI figures from Germany and the Eurozone. In the second half of the day, Q4 GDP, December inflation and February PMI data from the US will be watched closely by market participants.
GBP/USD recovers further toward 1.3500 after UK PMI data
GBP/USD is recovering ground further toward 1.3500 in European trading on Friday, helped by a modest uptick in the Pound Sterling after stronger-than-expected UK January Retail Sales and February PMI data. However, the pair's further upside could be limited amid persistent US Dollar strength as the focus turns to key US data.
Gold sticks to positive bias above $5,000 ahead of US data
Gold gains some positive traction for the third consecutive day on Friday. holding above $5,000. Traders now look forward to the key US macro releases – the Advance Q4 GDP report and the Personal Consumption Expenditures (PCE) Price Index – for fresh trading impetus.
US GDP growth expected to slow down significantly in Q4 after stellar Q3
The United States Bureau of Economic Analysis will publish the first preliminary estimate of the fourth-quarter Gross Domestic Product at 13:30 GMT. Analysts forecast the US economy to have expanded at a 3% annualized rate, slowing down from the 4.4% growth posted in the previous quarter.
Iran tensions and AI fears at the forefront ahead of key US data
Thursday’s scorecard shows major US Stock benchmarks closed modestly in the red amid mounting US-Iran tensions and AI disruption worries. The S&P 500 shed 19 points (0.3%) to 6,861, the Nasdaq 100 lost 101 points (0.4%) to 24,797, and the Dow Jones Industrial Average dropped 267 points (0.5%) to 49,395.
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