Why Forex Traders Break Their Trading Plans
We all know that the forex market is open 24 hours a day, 5 days a week but that doesn’t mean that there are trading opportunities the entire day. It is important for us traders to learn to adapt to different market conditions and know when and when not to trade.
You may think that following your trading plan is that easy but there are a lot of factors than can influence the way you react to the market and without giving it much thought, you might be actually breaking your trading plan altogether and go for that trade.
Here we will list some reasons why some traders break their trading plans.
Like what we said before, there are times that the forex market is quiet and liquidity is so low that it will take you almost the entire day just for the currency pair to move 50 pips. There will be times when activities are so limited that it will be quite boring to wait for a potential trading setup.
Here is where the problem kicks in. Some traders are so used to the volatility in the market that they almost can’t keep their hands off the keyboard and their eyes on the screen. The more they wait, the more bored they become thus they are FORCING a trade just get a little bit of excitement.
This will destroy the trader’s trading plan because he is taking a trade not under normal market conditions. Impatience and compulsiveness can result in bad trading decisions that’s why forex traders need a lot of patience in the forex market.
If you find yourself bored due the less activity in the market, you can focus your self in other tasks such as reading the news, studying and researching new strategies and things about the forex market or whatever it is that you need to do.
We have mentioned this a lot of times as well in our previous articles. Being surrounded by so many things and excitement can also be harmful to our trading decisions.
Having a workspace only set up for forex trading is what we need. As much as possible, if you can minimize the distractions in your workplace, do so. Any distraction can lead to a loss of focus. The market waits for no one and it deserves your attention.
There are a lot of ways to minimize distractions. If you are living with your family, you can inform them to not disturb you during your trading hours, you can restrict frequent non-trading related websites that you used to visit during when trading and such and many more.
There will be a time when you have win-streaks and you start to feel overconfident and you may think that the market will move the way you want it for the trading session.
Unfortunately, this is where you start to get greedy and you keep on getting in and out a trade, completely forgetting about your trading plan because you are trying to seize the opportunity that the market is providing you.
This is dangerous not just because you are getting in and out of the trade a lot of times, but you may also be starting with higher lot sizes which completely affects your risk-management. This way, once the market shifts, the market may wipe out all the gains that you have accumulated earlier in the session in just 1 trade.
Being overconfident can cloud your judgement and it will make you invalid trade setups, risk bigger positions, or leave a losing trade open longer.
The trick to avoid being carried away by a streak of wins or being bogged down by a string of losses is to always remember to take things one trade at a time. If you devote all your attention to the trade at hand, it makes it easier to clear your head of past successes and failures.
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Information on this page is solely for educational purposes only and is not in any way a recommendation to buy or sell certain assets. You should do your thorough research before investing in any type of asset. Learn to trade does not fully guarantee that this information is free from errors or misstatements. It also does not ensure that the information is completely timely. Investing in the Foreign Exchange Market involves a great deal of risk, resulting in the loss of a portion or your full investment. All risks, losses, and costs associated with investing, including total loss of principal and emotional distress, are your responsibility.