Time to work out those bad trading habits
5 steps to correct and improve your trading habits
Many traders find learning new methods – or unlearning old ones – frustrating. After all, it’s taken a long time to learn the habits we’ve developed over a long period of time.
So how difficult is it to learn a new way of trading and undo those bad trading habits? Should we learn a new method of trading?
If we’re successful traders; if we are already profitable and can make at least a comfortable living at trading the markets, then there’s no reason for us to change what we’re doing, we have good trading habits but if we’re not quite there, lets look at where we can improve.
Bad Trading Habits #1 - Stop and analyze your statement
However if the method we’re using doesn’t cut it and we lose more than we win, then perhaps it’s time to have a look at a different method. One that boasts a 70% success rate over a series of trades and perhaps with harmonic patterns. This doesn’t mean that we will win 7 out of 10 trades. It does mean, however, that in the long term we will have a 70% accurate ratio. Some months might be 80-85% and other months might be 50-60% but testing over 754,000 patterns has shown us the patterns are successful 70% of the time. Now, having said that – what we do with those successful trades and how we manage them, will determine whether we really are successful or not. Why? If we close a trade once it gets into profit, for fear it might move back against us, we can’t reach our full potential as traders. We need to stop analyzing our statement while we build up a track record using good trading habits.
Bad Trading Habits #2 - Stop trying to make 1+1 = 4, work with the numbers, not against them.
If our average loser is higher than our average winner – we’re in trouble and have found another bad trading habit. How do we work that mistake out? The formula is simple: We might find a harmonic pattern alert that has us risk 30 pips to make 20 pips. Is this a trade to take? The answer is no, because we’re risking more than our potential to win. And if we do that math, if our average winner is $20 and our average loser is $30, we would need a very high win ratio to make a decent amount of money. Anything else would be another bad trading habit.
Bad Trading Habits #3 - Stop trying to trade without understanding the reason behind what your doing.
The most important reality is that FXGroundworks will educate traders about pattern selection and how to take better trades and ditch the bad trading habits. Their whole purpose is to educate traders to give them a better understanding of how to take profitable trades and to take trades with better probability. The mentors go through a considerable amount of daily training to make sure traders can determine what things to look for – how to enter and exit trades, which trade alerts to take with high probability, and which ones to leave alone all without developing bad trading habits.
Bad Trading Habits #4 - Stop trying to get rich over night
If trading was as simple as taking every pattern, everyone would be prosperous. So the question then becomes, why isn’t everyone rich beyond their wildest dreams? We go back to education again – a lot of people might risk 30 pips on a trade, which has a goal of 60 pips, but once they are up 10 pips they take the profit and close the trade. This is a mistake and one of the worst bad habits you can get into because even though they wanted to take 60 pips, they cut their trade short – making it harder to win over the long term.
Bad Trading Habits #5 – Stop trying to beat the odds, work with them instead.
You see, it’s a numbers’ game, and we need the math to be in our favor. It’s like someone giving us a hammer and expecting we can build a house. They can tell us how to build it, but unless we know where to place the nail, what foundations to use and where to nail our bearers and joists, we have no chance at getting the frame up, let alone completing the building. However, if we are taught how to build the house – the hammer will be very effective for us.
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