If you think about it, following a trading plan is really just creating trading habits. A habit is a tendency or customary practice like turning off the lights when you leave the room, waiting 30 minutes after you eat to brush your teeth, surrounding a trade when you see the start of a consolidation phase, or even placing an order when you see a candle cross the end of your Bollinger Bands. A big part of trading forex is just developing profitable habits.
A lot of our habits we perform unconsciously. I am willing to bet that most of us don’t spend more than a seconds thought when we go to shake an outreached hand, look both ways before crossing the road, or when we cut our winners short in the currency market. Yes. That’s right. Cutting winning trades short is a trading habit that we struggle with here at the Apiary Fund. Below are some of the top trading habits a survey of traders here at the Apiary Fund are working to break.
Cutting Winners Short.
About 43% of traders working at the Apiary Fund admit to having a propensity to cut their winners short. We know that holding onto losing trades for too long is usually due to controlling our emotions. Often times, the decision to exit prematurely is also based off of emotion as well. We like to win, and we don’t like to lose.
Good habit to develop instead: Decide upon an exit strategy early.
Losing Concentration When Tired
Trading early in the morning or late at night is important; that’s where a lot of volatility is experienced. However, if you’re exhausted and your mind isn’t present, then it might be more beneficial for you to skip that trading session.
Good habit to develop instead: Vilas, one of our technical experts, would say find something stronger than coffee ;) Develop a personal routine that helps focus your mind when you feel your concentration slipping.
Not Trading or Over Trading
One of the major things we focus on here at the Apiary Fund is consistency. We need to be trading frequently in order to develop the consistency that we believe is critical to learning to trade successfully. If we under trade, we might find ourselves missing good quality setups or not being confident in our trading plans. On the other hand, over trading will also lead to decreased profits. Those who are over trading might find themselves switching stops, cutting out early, or getting involved with trade setups that aren’t part of their strategy.
Good habit to develop instead: Stick to your trading plan. Always.
The best way to combat a bad habit is to form a good one. So if any of us do struggle with these (remember, these are habits that even experienced traders face), we shouldn’t feel discouraged. Focus on the good habits you are forming, and the progress you are making there; relax, develop a trading plan that best serves you, and don’t forget to share your progress with others!