FX TRADING PSYCHOLOGY by Etienne Crete
How To Stay Out Of Bad Trades
As a Forex trader, you constantly take trades. Tat’s given. Yet, for some of those trades you might look back and think “why did I take that trade, again?”. You had no reason to enter that trade. Tat is usually accompanied by an unpleasant feeling of fustration. Te question that arises is: how do you keep yourself out of bad trades? How can you not let bad trades affect your trading returns? Te easy answer is: don’t take them. “But how?”, you might say. Answering this will be the purpose of this article. Let’s just make sure we both agree on what’s a bad trade…
What is a bad trade?
You have a trading plan, right? (if not, create one!) At any time, if you enter a trade that doesn’t respect your entry criteria, you’ve entered a bad trade.
Now, the definition of a bad trade can go further because you might go against your plan aſter you’ve entered
60 FX TRADER MAGAZINE January - March 2017
the trade, but for the purpose of this article, I’ll keep the definition of a bad trade as “a trade you’ve entered that doesn’t respect your entry criteria”.
I understood pretty quickly that taking bad trades wasn’t the way to make money in Forex trading. Nevertheless, it took me a very long time to figure out how to not take those bad trades.
Ask yourself questions
Te trick, I’ve found, is to force myself to think and realize what I’m doing. Taking only a few seconds before entering a trade to reflect helps tremendously. Tat is done, by asking yourself a very simple question: “When I’ll look back at my trade at the end of the week, will I feel proud of myself or disappointed for taking it?”
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