Forex
Day Trading Strategy -
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It can be said that successful trading is the sum of two parts:
1. A solid and reliable Forex day trading strategy
2. A strict, disciplined mental attitude
Often the first part is undone by a failure in the second area. You may have a great Forex day trading strategy but time and again it can be neutralized by one major flaw in part two. What is it?
COMPULSION TO TRADE
Any trader who is enveloped with a compulsion to trade will soon undo any profits a reliable Forex day trading strategy can produce.
Exactly what does it mean?
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Here is a typical scenario:
The day trader approaches the trading session with enthusiasm and optimism and goes through habitual preparation steps which may include:
- Consulting the daily calendar for upcoming economic reports
- Reviewing major news items from the financial markets
- Preparing charts by inserting pivot points, drawing trendlines, marking key support and resistance levels, using the Fibonacci tool
- Doing a multiple time frame analysis starting with the daily chart, then moving down to the 4 hour, 1 hour, and perhaps 15 minute charts
Now, as the new session opens and progresses market conditions are flat. Price is for the most part in consolidation.
A Typical Scenario
The trader starts getting bored, or a little frustrated. Hours pass, nothing happens. The desire to trade starts getting stronger and stronger until it reaches compulsion level.
Now the trader starts looking at the charts through different eyes. His reliable Forex day trading strategy now takes a secondary position in his mind and number one is the need to find a trade!
Result?
The trader enters a low probability trade, the market then picks up steam and goes in a direction the trader did not expect and takes out the stop. The first trade of the day has been a loser.
What happens next can have more serious repercussions. Unless the trader employs strict mental discipline, there is now an even greater feeling of compulsion to trade in order to get back what was just lost.
As the mind is now in free fall, the stable, reliable Forex day trading strategy that works well when employed in a calm, analytical manner, now is cast aside and the trader is in the grip of powerful emotions.
What has just been described is a major flaw in many aspiring traders.
The question is: Do you have the honesty to recognize it in yourself? Or are you in a state of denial reasoning that this doesn't happen to you.
You may be an exception! On the other hand, many traders will relate to the scenario just described.
What is the solution?
During the trading session there is a need to constantly monitor not only candlestick movements on the computer screen in front of you, but also your own mental state and emotional level.
Discipline yourself to recognize when COMPULSION TO TRADE is beginning to build up. Stop. Walk away from the computer. Read a good motivational article on Forex trading disciplines, and return with a fresh viewpoint to the trading station.
Employing this mental/emotional self-check whenever COMPULSION TO TRADE rears its ugly head will help ensure your stable, reliable Forex day trading strategy has chance to succeed!
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