When I first started trading I lost money left, right and center. After I blew up one trading account I would decide to change my trading strategy and open up another trading account. Then I would blow that account up, so I would have to save some more money, open up another trading account, and then guess what? I would blow that trading account up, so then I would change my trading system again, or I would blame the broker for my losses and find another broker, once I saved up some more money.
That is why I consider myself an expert in forex trading mistakes, believe me, I have made them all, more than once.
One thing that has really changed between my losing days, years ago and my trading now is this: I listen to the market. That may sound a bit weird, and perhaps a bit ambiguous, so I will try to explain.
I like to trade using very simple trading strategies. Most of my trading strategies involve no indicators, and a few of them involve one trading indicator. For me simple is best. So how do I decide when to exit the market if I am not using any technical indicators? The answer lies in the market.
For example, if I am looking at taking a trade on the daily charts (my favorite forex charts by far) I will usually place a buy stop or a sell stop on the trade. This means that if the market moves in the expected direction I will enter the trade. If the market moves in the opposite direction I may not see the trade triggered. In this way I let the market show me that I am correct before I risk any money on a trade.
Likewise, if I am in a trade I will listen to the market. If, for example, I buy the EUR/USD on a daily chart trade and the market does not start moving up after a few days, I may close the trade. This is true even if the market has not yet hit my stoploss. I always look to enter the trade when I think things are starting to move in the expected direction, but I will always listen to the market. If the market does not indicate that I am correct in my timing it is always acceptable to close out the trade and wait for the next trade.
What about your trading? Do you listen to the market? I have found that listening to the market helps me to adopt a more neutral view. In the past I may have held onto a trade because the market “is supposed to go” where I think it will go. Today if the market tells me my timing is off I will listen.