Forex traders who want to make consistent profits know the importance of tracking the rights and wrongs of their trades.
Unfortunately, the impact of the deals they don’t make is often overlooked.
Traders are no strangers to missing out on good trading opportunities.
At one point or another, we have encountered settings that we would not have taken even though they clearly fit our biases and strategies. Often times, those lost trades also tend to be winning ones.
There are many reasons why we fail to score good points. We are all human, after all.
For example, Steve could have chosen to stay on the sidelines after losing a trade or two.
Tony would have been distracted by another trade while Peter would have lacked the confidence to pull the trigger because his biases did not match those of his friends.
Meanwhile, Natasha met her daily quota and stopped trading while Clint did not have enough balance to make another trade.
Although there are good reasons for missing business opportunities, Not making valid settings can also cost you in the long run.
Traders who miss a good opportunity tend to “compensate” for it by taking a less than ideal setup and perhaps trading more aggressively while they are at it.
As I mentioned before, retaliatory trades can kill your account one trade at a time.
So how can you reduce lost trades? Here are four ways:
1. Set alerts and orders
If you don’t have time to watch your charts or aren’t there when good opportunities usually appear, consider setting up price alerts or using entry orders for your trades.
You can also take it up a notch by designing a simple mechanical system on your own platform.
2. Diary
It’s hard to address a problem if you can’t see it. What made you hesitate? Were you distracted? How many times has your husband gone your way? What could you have done to avoid missing out on this type of opportunity?
Recording your missed trades in a trading journal can help you identify your triggers and motivate you to stick to your plan in the future.
3. Reduce your position sizes
If you miss most of your good trading ideas because you lack the confidence to implement them, you may want to reduce your position sizes. This way you will relieve the stress of trading for money.
Of course, practicing good risk management techniques can go a long way in boosting your self-confidence.
4. Look at the big picture
Accept that losing is as much a part of trading as winning. One or two losses won’t matter if you trust your system and look at the big picture.
Getting used to losses is the only way you can focus on the process rather than profits.
Traders ignore missed trades simply because they do not see their impact. Unlike losing trades they make, lost trades are not usually recorded in spreadsheets with the aim of minimizing them. Unfortunately, you can’t improve what you can’t see.
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