Do you tend to over-analyze the charts before acting? This doesn’t guarantee better results.
Here’s what you can do to shorten the process and keep it organized and straightforward, eventually also improving the chances of winning.
Too many traders stick their noses to the screens for too long, trying to analyze, verify, double check, re-analyze, add indicators, remove them, adapt to market conditions that have changed in the meantime, re-analyze, rinse repeat.
And when they do eventually place a trade, is it the perfect one? Was it worth the effort? Probably not. Some will come to the conclusion that they didn’t do enough checks and will find themselves working even harder next time, diving deeper into the charts.
Others will be discouraged and will try the opposite approach: going by the gut feeling and acting spontaneously, without any indicators. This isn’t productive either. There has to be some middle ground.
This is good balance between serious analysis and a practical approach.
What is your process of preparing for a trade? Are you organized?
Here’s what you can do to shorten the process and keep it organized and straightforward, eventually also improving the chances of winning.
Too many traders stick their noses to the screens for too long, trying to analyze, verify, double check, re-analyze, add indicators, remove them, adapt to market conditions that have changed in the meantime, re-analyze, rinse repeat.
And when they do eventually place a trade, is it the perfect one? Was it worth the effort? Probably not. Some will come to the conclusion that they didn’t do enough checks and will find themselves working even harder next time, diving deeper into the charts.
Others will be discouraged and will try the opposite approach: going by the gut feeling and acting spontaneously, without any indicators. This isn’t productive either. There has to be some middle ground.
- You already have a system and you’ve seen something interesting in the charts.
- Use a checklist to see if the trade opportunity matches all the criteria of your system, including the risk reward ratio, risk management, and anything else. Everything should be on the list.
- If conditions aren’t met, let it go. Don’t look for a position that isn’t there. This will have dire circumstances, especially if you win this specific trade: it will encourage you to constantly break the rules, take bigger risks and eventually lose more money.
- If conditions are met, make a quick double-check to verify the exact checklist that you use for your system: don’t omit any important condition and don’t add any extra indicator – just make sure that you didn’t overlook anything the first time around.
- Place the trade!
This is good balance between serious analysis and a practical approach.
What is your process of preparing for a trade? Are you organized?
Editors’ Picks
EUR/USD faces next resistance near 1.1930
EUR/USD has surrendered its earlier intraday advance on Thursday and is now hovering uncomfortably around the 1.1860 region amid modest gains in the US Dolla. Moving forward, markets are exoected to closely follow Friday’s release of US CPI data.
GBP/USD inching closer to 1.36
The Pound Sterling edged higher to 1.3640 on Thursday, recovering from an earlier pullback after stronger-than-expected US jobs data initially weighed on the pair. The Bank of England held rates at 3.75% at its February 4 meeting in a narrow 5-4 vote split, with four members preferring a 25 basis point cut to 3.50%.
USD/JPY sinks back below 153.00 as undaunted Yen continues to climb
The Japanese Yen strengthened past 153 per US Dollar on Thursday, rising for the fourth straight session after Prime Minister Sanae Takaichi's decisive general election victory on February 8 gave her a clear mandate to pursue expansionary fiscal policy. Markets are betting that her agenda of increased government spending, tax cuts, and a two-year suspension of the 8% food sales tax will strengthen economic growth and provide the Bank of Japan with greater scope to normalize monetary policy through additional rate hikes.
Editors’ Picks
AUD/USD: Some profit-taking should not be ruled out
AUD/USD has quickly faded Wednesday’s strong advance despite climbing to new multi-year highs around 0.7150 earlier on Thursday. The pair’s decline comes amid a marginal uptick in the US Dollar, while investors gear up for US CPI data and relevant Chinese releases on Friday.
EUR/USD faces next resistance near 1.1930
EUR/USD has surrendered its earlier intraday advance on Thursday and is now hovering uncomfortably around the 1.1860 region amid modest gains in the US Dolla. Moving forward, markets are exoected to closely follow Friday’s release of US CPI data.
Gold falls to near $4,900 as selling pressure intensifies
Gold price faces some selling pressure around $4,910 during the early Asian session on Friday. The yellow metal tumbles over 3.50% on the day, with algorithmic traders appearing to amplify the precious metal’s sudden drop. Traders will closely monitor the release of the US Consumer Price Index inflation report for January, which will be released later on Friday.
Ethereum investors face huge unrealized losses following price slump
US spot Ethereum exchange-traded funds flipped negative again on Wednesday after recording net outflows of $129.1 million, reversing mild inflows seen at the beginning of the week, per SoSoValue data. Fidelity's FETH was responsible for more than half of withdrawals, posting outflows of $67 million.
A tale of two labour markets: Headline strength masks underlying weakness
Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.
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