How to Develop Good Forex Trading Habits

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forex habits

Most expert traders credit their success to good trading habits, which can be developed over time through a solid daily routine. Once these habits are ingrained in your processes, discipline and proper decision-making can become second nature.

As mentioned, habits take quite some time to develop. For instance, becoming a morning person doesn’t happen in an instant as you have to get used to waking up earlier on a regular basis before you get the habit of starting your day earlier. Athletes or performers go through a set of drills regularly before developing muscle memory and strength to do better in their endeavor.

As with trading, you need to be able to repeat certain routines day in and day out in order to turn those into habits. For some, this involves starting the trading day by reading up on economic updates and market events before looking at price action. From there, trading setups can be identified using technical indicators before higher-probability trades are taken. After that, trade review and journaling must be conducted before ending the trading day.

Of course these routines can vary from trader to trader, as some might place more emphasis on technical price patterns and be less inclined to analyze fundamentals. On the flip side, some traders might be more focused on economic reports and schedule their trading routine around news releases.

What’s important is that you are able to set your regular trading routine based on your strategy and trading preferences. In figuring out which methods work best for you, one can be able to fine-tune the trading approach and develop the necessary trading habits.

Another crucial part of coming up with your own trading routine is developing the habit of reviewing your performance for the day. This should include logging in your progress, profits or losses, and market thoughts in your trade journal so you can have something to review and work on later on. Apart from that, being able to sum up how your trading day went can enable you to gauge whether you are on track to meeting your trading goals or not.

Remember that having losing trades doesn’t necessarily equate to a bad trading day, as you can still be able to draw helpful lessons from these losses. In addition, having large wins doesn’t mean that you no longer need to review your performance, as you should be able to build from what you did right and turn these decisions into habits as time goes by.

While some might find a trading routine too tedious to repeat every single day, remind yourself that you can reap longer-term benefits in being able to develop the proper habits throughout the course of your trading career.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.