Taking Only the Best Trade Setups (part 2)

Filed under: Learn Forex Trading |

When things are going well (and by that, I mean that we are having a lot of successful trades), it is natural to feel like we are untouchable and we want to get in on every single possible trade setup that we see. Unfortunately, by doing this, we are setting ourselves up for a fall. By taking every single possible trade setup, we will inevitably take some trades that are not as strong as they should be. Conversely, when things are not going so well (and by that, I mean that we are having a lot of failed trades!), there is a tendency for us to want to ‘catch up’ and make up for all the losing trades. As a result, we again take every single trade setup that we see in the hope that we will get back in the game. So whether we’re being successful or we’re not doing so well, the result is often the same – overtrading.

 

The best thing to do is to try (and this is easier said than done) to trade in the same way that you would if you were starting from scratch (i.e. From a 0% profit/loss figure). Being successful or failing brings emotion into it – fear and greed. Without these emotions, we are much more likely to pick and choose the best trade setups and only take the ones that we are really, 100% happy with. By only taking the very best setups with a confluence of signals all telling you the same thing, we have a much better chance of being profitable in the long term.

 

Once you get into a habit of only taking the best trade setups, you will begin to get a sense of when a trade is not quite lining up. And if you can fine-tune these instincts, they will also come into play when you are experiencing a degree of fear and greed, which is a very important instinct to have as a trader. So in summary, only take the very BEST trade setups and in the long run, you will have a much better chance of success.

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