Taking Only the Best Trade Setups (part 1)

Filed under: Learn Forex Trading |

For today’s forex-related article, I want to consider how important it is only to take the very best setups that are available. Trading forex should be like playing snooker. You keep playing safety until a good opportunity emerges, and then you go for it! You do not try to pot a ball on every shot. It has also been called the “sniper” approach rather than spraying bullets everywhere, and this is as good an analogy as any. The point being, that we should not be taking every single setup that there is. Instead, we should wait until the very best looking setup emerges with multiple indicators all pointing to the same thing. When we have this confluence and a trade setup that we simply cannot refuse – that is when we should be taking a trade.

 

There are many setups that look tempting but in retrospect, we can see that they were perhaps nowhere near a grade ‘A’ setup. This is because we are being controlled by greed and we think only of the profits that we could get. This is why it is a good idea to record all of your trades in a visual format so that you can review them later. Our trade setups often look very different after the trade has reached its conclusion; and sometimes we wonder why we got in the trade in the first place. If you can still say, with hand on heart, that you would take the trade setup again after it has lost, then it was probably a good setup. However, if you wonder why you took the trade, then you were probably acting with greed.

 

So, the point of this article really is not to overtrade. Only take the best setups and wait patiently until they arise. Trading forex is a waiting game.   Be patient, and the profits will flow.

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