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 near 1.1900 ahead of US data
EUR/USD struggles to build on Monday's gains and fluctuates near 1.1900 on Tuesday. Markets turn cautious, lifting the haven demand for the US Dollar ahead of the release of key US economic data, including Retail Sales and ADP Employment Change 4-week average.
GBP/USD declines toward 1.3650 on renewed USD strength
GBP/USD stays on the back foot and declines to the 1.3650 region on Tuesday. The negative shift seen in risk mood helps the US Dollar (USD) gather strength and makes it difficult for the pair to find a foothold. The immediate focus is now on the US Retail Sales data.
USD/JPY drops toward 155.00 as focus shifts to US data
USD/JPY meets fresh supply and inches closer toward 155.00 in the Asian session on Tuesday. The Japanese Yen holds the upper hand over the US Dollar after Japanese Prime Minister Sanae Takaichi led the ruling Liberal Democratic Party to a historic landslide win and on intervention talks. Traders brace for key US economic data that could offer more clues on the Federal Reserve's monetary policy.
Editors’ Picks
EUR/USD holds near 1.1900 ahead of US data
EUR/USD struggles to build on Monday's gains and fluctuates near 1.1900 on Tuesday. Markets turn cautious, lifting the haven demand for the US Dollar ahead of the release of key US economic data, including Retail Sales and ADP Employment Change 4-week average.
GBP/USD declines toward 1.3650 on renewed USD strength
GBP/USD stays on the back foot and declines to the 1.3650 region on Tuesday. The negative shift seen in risk mood helps the US Dollar (USD) gather strength and makes it difficult for the pair to find a foothold. The immediate focus is now on the US Retail Sales data.
Gold stabilizes above $5,000 ahead of US data
Gold enters a consolidation phase after posting strong gains on Monday but stays above the $5,000 psychological mark and the daily swing low. US Treasury bond yields continue to edge lower on news of Chinese regulators advising financial institutions to curb holdings of US Treasuries, helping XAU/USD hold its its ground.
Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals
Bitcoin Cash trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.
Dollar drops and stocks rally: The week of reckoning for US economic data
Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.