Becoming a Better Trader: Q&A Session
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Today, in our Q&A session there were a lot of good questions asked and a variety of trader performance-related topics discussed.
We discussed the importance of having a game-plan and then ultimately being consistent in application – whether it be utilizing the same analytical tools, executing trades once proper criteria are met, or keeping risk-per-trade in a tight range so as to help ensure more consistent results.
One trader said they had a difficult time not getting caught up in the price action and swinging P&L while in a trade, and that it caused them to overtrade. First off, overtrading, whether it be with too much size or too much frequency, is a very common problem among traders. Before entering any trade you should have a high degree of conviction that the trade will work out, which means that the trade likely fits within your game-plan. You should be able to ask yourself before entering any trade, “Can I accept a loss on this trade should it not work out?” You should be able to answer with a confident, “yes”. If you can, then you are likely taking a trade within your game-plan and with risk within your scope of risk tolerance. Both necessary to managing a trade properly and seeing it through to either your stop-loss or target.
We also discussed various types of analysis, and which one is more superior than another. To begin with, there are a lot, and I mean a lot of ways to make money in the market. The key is that your analytical process isn’t overly complicated and clear-cut. You also want to be careful and make sure you don’t have any significant redundancies. For example, if a trader used a moving average cross-over for trend identification, Fibonacci retracement for determining support or resistance, and a candlestick formation they would be using separate, but complimenting analysis and entry criteria. Redundancy free.
For the full conversation, please see the video above…
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.