One of the most useful skills in forex trading is knowing when to press your advantage. This could be in the form of increasing reward-to-risk ratios by adding to winning positions or even just signing in more trades.
Pressing your advantage is a good skill to have, but sometimes this strategy can get you into trouble.
Instead of waiting for the right opportunity to press their advantage, some traders become impatient and/or desperate for the market to move. They want things to happen immediately.
For example, an impulsive trader will continue to add to his position even though he has identified a ranging market, all because he wants to maximize profits. Thus, he is stopped and his profitable trade is ruined.
On the other hand, a good trader will only exploit his advantage when trading in a trending market by expanding into a winning position. He added every time the price pulled back and moved his stop appropriately.
To put things into perspective, trading is like courting that special someone you've been admiring for some time. You have to know when to be talkative and interest them, and when to keep your mouth shut and let the other person do the talking.
As with trading, winning over your potential lover requires that you be attentive, have self-discipline and control.
Self-discipline again?! As you may have noticed, I've written about self-discipline and forming good habits more than the Kardashians have about their family problems.
But I must say that I cannot stress this concept enough, especially when squeezing trades increases your risk.
Now, if you're new to squeezing trades, increasing your trading volume, or just one of those adrenaline junkies who adds to trades for the thrill of it, I have a three-step process that might work for you.
1. List the rules for squeezing the trade
Before pressing any deal, you should have a framework for it Why when It would be helpful to do so how To do this safely. To start building this framework, ask yourself questions to define these conditions:
- “Under what specific circumstances should I expand and add to my trading range?”
- “When should I back off?”
- “How do I adjust entry levels and stops under different scenarios?”
Another way to help you build your own rules is to review your trading journal and find past situations where pressing your trade would have been a good business decision.
Finding and studying these market behaviors can also be an additional experience in addition to live/demo trading.
2. Make it part of your daily routine
Once you have listed your rules for pressure trading, you need to implement them into your trading.
An exercise you can practice and turn your stress rules into a habit is to visualize different trading scenarios before the market opens and write down how you would respond to them based on your rules.
By doing this, you will not only have ready rules set for the day, but you will also reduce impulsive reactions and give yourself a better chance of minimizing mistakes.
If you stick to this training every time you trade, you will internalize the process and over time, stressing out your trades safely will become second nature. Learning rules can be like learning how to take out the trash every day.
Your husband will “strongly encourage” you to take out the trash so often that you'll eventually do so to avoid strong, annoying, and wrong reminders. Any kind of good habit can be made automatic through daily practice…or through a loving, strong-willed spouse.
3. Review your trading at the end of the day
How else will you know which pressure trading rules are costing you points and which ones are working?
At the end of each day, record market behavior and review your trading performance by identifying what you did well and what mistakes were made. You can then modify it and make it the focus of your trading the next day.
Like any worthwhile goal, knowing the best positions on when to press a trade will take a lot of practice.
But if you are willing to commit to it every day by making it a part of your routine, you will slowly be able to assimilate this technique into one of your good trading habits. This, in turn, will bring you one step closer to becoming a consistently profitable trader.
Are you looking for your own place to record your market observations and trading statistics? If so, check out TRADEZELLA! It's easy to use
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