Forex trading is a great way to put extra money in your pocket or to earn an unconventional income without having to worry about working a 9 to 5 job. However, the results that one gets depends on a variety of factors, including time spent researching, effort, trading strategies and plans, and so on. Revenge trading, overtrading, and other bad habits can wreak havoc on your trading profits and cause some traders to walk away forever after losing their investment. If you’re currently practicing bad habits, or if you haven’t started trading yet, consider trying these healthy trading habits if you want to see your profits improve significantly.
Habit #1: Reviewing Closed Trades
It’s important to take a look at your results after every closed trade, even winning ones. This helps to distinguish what you’re doing right and wrong, or where your trading plan is or isn’t working. Some traders might pay more attention to these details in the beginning but get lazy with reviewing their trades later on. Don’t fall into the bad habit of letting things go out of sheer laziness, or else you might start to miss things that could be changed to improve your results. Our best advice for this healthy habit is to keep a trading journal, which is used to log important details about each trade for review. This is the easiest and most organized way to keep up with your trading activity and to track improvement over a period of time.
Habit #2: Only Enter Trades for a Reason
Some traders fall into the bad habit of overtrading because they are looking for the emotional rush of entering a trade, even if evidence doesn’t support it. Others might make the mistake of feeling lazy if they don’t trade on a certain day and enter a trade so that they feel as though they are doing something productive. The best traders actually recognize when it isn’t a good time to enter the market and know when to do nothing. If you want to practice this healthy habit, you need to start by outlining the reasons why you will enter trades in the first place. You might base this on economic data, fundamental analysis, technical analysis, or other pieces of factual information. If you don’t see the signs you’re looking for, simply don’t enter the trade. Remember that it’s better to do nothing than it is to enter a losing trade for the sake of doing something.
Habit #3: Don’t Let Your Emotions Get the Best of You
Trading when you’re emotional is a very bad habit that can cause you to make clouded decisions that will likely lead you to lose money. It’s true that many professional traders can control their emotions and don’t get bent out of shape over losses, however, it takes time to become disciplined enough to keep those emotions at bay. If you feel yourself getting anxious, fearful, or overly excited, you should take a deep breath and step away from the computer for a moment until you feel more level-headed.
If you find that a certain emotion is affecting you often, consider doing research online for tips that can help you deal with that exact problem. This is another habit that revolves around the need to recognize when it’s best not to trade. Like with our 2nd healthy habit, you can also double-check that the trade you want to make meets the criteria you’re looking for if you’re feeling out of your element.