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 regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
USD/JPY climbs relentlessly ahead of BoJ meeting
The USD/JPY extends its uptrend despite verbal intervention from the Minister of Finance. The wide differential between US and Japanese interest rates is seen as a major factor contributing to the rise. The idea that a lot is already priced into the US Dollar could limit USD/JPY upside.
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.
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