Hello There Forex Traders!
Today is Friday, which means we close yet another week of Forex trading. Hope you all had a fantastic week and collected tons of pips.
Our Forex trading room sure has gathered a ton of them. We capitalized very nicely on the AUD and CAD weakness. Take a look at this example of a trade taking place live when recording.
Examples of trades this week:
AUDCHF short +33 pips / 2:1 R:R
GBPAUD long +170 pips / 1.7:1 R:R
GBPAUD long +250 pips / 2:1 R:R
USDCAD long +58 pips / 2:1 R:R
GBPCAD long +62 pips / 2:1 R:R
The total of all the trade calls adds up to more than 1,000 pips and 12 units of reward to risk. Make sure to join TODAY! https://tradingstrategyguides.com/trading-room-page/
CHASING THE MARKET
One of the most common and biggest mistakes Forex traders tend to make is chasing the market. You might even wonder what on earth does this really mean. Or not even realize that you have created this nasty habit.
Chasing the Forex market is when a Forex trader is in need of a trade, independent of the fact whether the current market conditions are suitable and correct for their kind of trading./
Or in other words: the need for taking a trade is more urgent and powerful than the will to wait for the valid trade setup. That means that regardless of whether the market conditions meet the specifics in their trading plan or not, a trade is needed and must be found regardless of the cost.
This behaviour is often exhibited at specific times, which we will discuss in more detail now.
MARKET IS MOVING
Often Forex traders tend to get nervous and hyperactive when the market is moving quickly. Nothing is more exciting than watching a currency pair move fast. And the temptation to jump on and catch a few pips could be very appealing and irresistible to avoid. Also, in many cases, the currency has already travelled already a lot of pips down or up and the Forex trader regrets having missed a particular move.
This regret could lead to the trader becoming impatient and either taking an undesirable with the trend trade or a speculative early counter trend trade. Both in fact, have a high probability of turning into a losing trade.
The remedy is always the following: remember that a Forex trader is focused on analyzing what opportunities lie ahead of themselves, not how much has been missed. A Forex trader only reviews and uses past pricing data to make an informed decision, not to reminisce on missed pips. By doing that, an emotion of greed and impatience is created, which undermines profitability. Never ever should a trading decision be made based on the fact that they regret not being in any particular trade. In fact, it could better to walk away from that chart as soon as a Forex trader detects any of such sentiments.
CHASING DUE TO OTHER FACTORS
Here are some other factors that could be the reason for chasing the market.
1) The Forex trader is treating trading as a hobby and not as a business. This is someone who is trading because they like to trade just because it seems exciting (but I don’t think they would be reading this article so if you are reading this article, then that excludes you!).
2) When the Forex trader thinks that the market might do a particular movement in the market without a genuine trading plan. The trader does not want to miss the pips of a trade which they envision happening. Emotions then drive the trader to take a setup which does not qualify in their trading plan, just because they do not want to miss a trade that might happen.
3) Often enough a reference to recent history is a driver of decision making. Internal thoughts in the mind such as “yesterday the trade did exactly as I thought” or “last week I missed that great trade” apply and play around with one’s own psychology. This is not desirable as a trader bounces back and forth between various options with a very short-term reference.
FOREX TRADING = TRAPPING Forex traders must never ever chase the market. This is a sure recipe for disaster. In case a trader is chasing, then they are in almost all cases too late to react and anticipate. Let me explain in more detail.
It is vital to realize that a currency pair that is on the move is riskier to trade. Every Forex trader must plan the trade ahead. Never ever should a Forex trader trade a setup just because candles are moving. The goal is to be prepared and anticipate movements. All traders need to realize that when a currency pair is moving fast, the reward to risk ratios are decreasing rapidly and so are the chances of the currency pair moving more pips before it makes a retracement. By jumping in a trade that is moving, the likelihood of a lower reward to risk ratio is high and the chances of a continued move without retracement is smaller. Only seasoned and experienced traders can attempt this.
Use this as an example (!): it is similar to taking a train. When waiting for a train, train passengers are advised to wait at a train station and the for the train to have completely stopped before boarding the train. Passengers who attempt boarding when the trading is picking up speed could still manage, but when a train is in full speed then the action would be very risky and only one of the best stuntman on earth should attempt this. The same holds true in the Forex market.
All trades should be planned when the market is standing still and not when a market is on the move without a pre-planned idea what to do and what to look for. Traders can then carefully consider if they are looking to trade a break out trade, a retracement trade, a reversal trade, a range trade, a continuation trade. The point is that the trade must always be planned when a train is at the station, not when the train is travelling with 300 miles an hour.
Read more here information on the path of becoming a Forex trader and at what stage you might be in!
1) They are ambushing the market at specific planned spots and conditions.
2) Nothing is at random, everything is planned.
3) In a certain way, they are literally planning a trap for the market to walk into.
4) They are in control of the trade plan & actions and do not let the market toil around with their emotions when trading.
5) They are in fact waiting for the trades to come to them, and not the other way around. They are not chasing the market, they are not impatient, fearful, nor undisciplined; they are patiently waiting for the right circumstances to emerge before trading.
6) They are not thinking nor concerned about what the market can and might do. They are coolly viewing and analyzing what the conditions of the market are and then comparing that setup to the desired market environment. If those are aligned and the market is offering sufficient odds of success and reward to risk ratios, then the trade plan is executed without any emotional disturbances.
Do you, as a Forex trader, find yourself chasing the market? Or have you been doing so without even realizing it? Do you think the above realizations would help you as a Forex trader? Please write down your feedback down below in the comments section!
Wish you all Good Trading today and a good weekend later on!
Thank you for reading!
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