What would you do if you ever feel lost while trading forex? This is something that all traders would face as they manouver the forex market. How would anyone ever get lost in the forex market? Well, it is a feeling you get when after looking through the charts, you still don’t know where the edge is in the market.
This feeling of being lost in the forex market can happen when you get into a situation where you start opening long positions, closed it with a small profit and then started going short in the other direction, only to get stuck in a losing trade, cut that trade and started going long again, and again getting yourself in a losing trade. I am sure that most of you reading this post would have been through this. I am sure that I have and sometimes feel helpless in this kind of situatons. Nevertheless, after going through all that experience, I have learned to device some rules to follow when I am in that kind of forex market situation.
First of all, we must understand that as traders we make money when we take a trade that goes in the anticipated direction. Usually, when the forex market is trending, it gives us a better chance of being profitable as we jump on the bandwagon. At other times, the forex market can be a lil bit more tricky and you just couldn’t get a grasp of what is happening at that moment in time while you are watching the screens and see the chart move up and move down with no real patterns forming except a market landscape that I term as the “jagged” market landscape that moves up or down with a srong push only to go the other way a short while later. This can be quite tricky and if you get stuck in a market that behaves in this manner, you have to get ready to quickly cut your loss if you happen to be on the wrong side of the band wagon.
Ok, lets go on to what I think is important in this post. The tips and strategies that you can take and adhere to if you ever get lost in the forex maze:
TIP NUMBER 1
Whenever you get into the situation that you don’t really know the direction that the market is going, the best thing to do is to stop trading. Stop taking any trades and stay away from the computer for a while. Play with your cat, strum the guitar, water the flower, just do something else that will get you away from looking at the screen and getting even more confused. For me, I love looking at my fishes and my guppies that I breed a s a hobby. You might want to look at my guppies in my guppy blog here. Worst still, there are traders with the tendency to feel that they can conquer the forex market and even in a situation where they lack an edge, these traders still want to take a trade, knowing real well that such a market poses more risk than rewards. Don’t do these things and don’t ever think that you can conquer the market. The real fact is that you can’t. What you can achieve is more experience and mastery over this activity called trading and which will allow you over time to be able to follow the market and where it is going more accurately. The word is “more accurately” as there is no definite in trading except taking losses of course. So, stay away from the screen and come back later and get a fresh view of the market when you come back to looking at the screen again.
TIP NUMBER 2
If you ever feel lost in the forex maze, another thing you can do if you feel that you really need to take a trade is to open up a demo account and start taking trades on that demo account for a while. Of course, it would not feel as great as trading a real account, but at least you would not lose real money if the market goes against you while you are trading forex in that demo account. The market sometimes need some time to figure itself out. Once the market start developing into something that you can identify with, the switch on over to your real account and start trading with the edge that you believe you have. It does pay to be patient you know. I realised that there is a time for you to be patient and there is also a time for you to be fast in your actions (But remain calculated of course.)
TIP NUMBER 3
Another thing that you can do when you feel lost in the forex market is to look at the various time frames and what they are telling you. Here, I would like to share with you a simple method to use multiple time frames and using it in anon complicated manner. I use the 21 exponential moving average on all the 4 time frames that I use. The 4 time frames that I use are the 15 minute chart, the 1 hour chart, the 4 hour chart and the daily chart. I look at where the price is in relation to the 21 ema on the 4 charts.
If all 4 charts show me that the price is trading below the 21 ema, I would look for good opportunities to short. If the prices is trading above the 21 ema, I would look to take long positions. If the charts give me mixed signals, lets say two time frames are showing me to take long positions, and another 2 time frames is telling me to take short positions, what I will do is that I will give the bigger time frames more credit. If the 4 hour time frame is showing me that price is trading below the 21 ema (Bearish) and the 1 hour chart is showing me that the price is trading above the 21 ema (Bullish), I will do either one of these 2 things:
I will either (1) Wait for a bearish signal to appear on the 1 hour time frame, which would usually be bearish candlestick signals like a candle with a long shadow from the top or a double top formation and from there take a short position. (2) The next thing I could do is that I could deploy scalping startegies to scalp the market. I would decrease my position size when I scalp as I usually do not like to go against the bigger trend and I want a lesser risk threshold. With that in mind, I would scalp the market for an average 5 to 15 pips per trade. I would draw the support and resistance lines and trend channel on the 15 minute chart. My stop loss is usually situated just below the or above the trend lines. So, if there is any breakout through the trend lines, I would get stopped out and feeling happy about it as first I do not have to go through the harrowing experience of waiting for a trade to come back (In most cases, it won’t come back until it of course after it has burned your account to shreds, so quit playing the hopinggame) and secondly I would now be able to take a trade that goes along with the trend.
I hope that you have gained some helpful tips from readingthis post. Markets can be challenging at times and at other times it can give and give and give till you drop. Till that time comes, you need to be patient and to hold on to your horses and not allow it to take it away from you.
Wishin you the best in your forex trading journey.
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