Many of the new Forex traders should be having a trading plan or system. If they don’t, then their first responsibility is to develop their own trading system to trade Forex in an organized manner. A forex trading system or plan is a key to good trading and for those who think that it is not necessary, it is only a matter of time that the law of averages catches up with them and makes them pay for under-estimating the market and the concept of trading. Having a Forex trading system or plan is very important but the most important thing in Forex trading is sticking to it and following the rules.
Let’s assume that a trader has developed a great Forex trading system that works 70% of the time. It is on a 1H timeframe and the trader usually gets signals every day. So now what happens? He gets a signal. He either takes it or leaves it. Assuming that he takes it, and he gets a profit of say 50 pips and then closes out his position. All is well till now. Then the pair continues to move in his direction and keeps going on for 2-3 days in the same way. He is out of the trade and slowly he gets frustrated. What does he do? He tries to generate signals in his mind. He opens the chart, has a long hard look at it and tries to see things that actually do not exist.
Why would he want to do that? This is because he is out of the market and he wants to get into the action. He sees Forex traders around him making money out of the move but he is left behind. So he wants to do something to get back to it. The charts do not show signals for him to get into the action but somehow he wants to do it. So he starts seeing signals which do not exist. One of the biggest mistakes made by traders in the Forex market is to see things in charts that do not exist and make trades just because he wants to be in the thick of things. Signals in good trading systems should jump out of the charts and stare at you in the face. They should not be hiding inside the charts that the trader has to go in search of it. If they are like that, then either it is not a good system or it is not a good signal.
Wait for the signals to jump out from the Forex charts. This requires lots of patience. That is the key. Don’t try to generate signals and don’t try to look hard to see things that are not there. The idea is to enjoy trading in the Forex market. As well as enjoy the times when a trader is out of the market and wait for the right signal. Signals, if they arise, would be good and bright enough for any trader to see even when they are half asleep. They need not put their reading glasses on to see where the signals are. They will come to him eventually. It might take hours or even days but they will come. The trader needs to make sure that he takes them when they come and only when they come.
So getting a good system for Forex trading is only part of the job. The biggest and most important thing is sticking to the trading system at all times and at all costs. In our blog http://tradinginsingapore.com, we write a lot about different trading Strategies and tips applied in the Singapore Forex market.
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