Introduction
When you start to become an active forex trader, you will generally find that you will start to develop a daily routine, and will do the same things over and over again.
This is not necessarily a bad thing because if you can adopt some good habits, you can potentially increase your overall profitability and prevent any heavy losses.
Of course you don’t necessarily want to be staring at a computer screen for 12 hours a day, but there are three things in particular that you should do at the start of each day that will help to increase your overall success rate.
Check The Overnight Price Action And Monitor Any Open Trades
If you have already formulated a profitable trading strategy, it is often possible to enter your target price and your stop loss level when you enter a position with your broker, and let the position unwind until its conclusion.
So if you left a position running overnight and it still hasn’t been automatically closed out, the first thing you should do is to take a look at the overnight price action and adjust your target price and stop loss, if necessary, and use this price action to determine your trading plan for the day ahead, regardless of whether you have any open trades or not.
Analyze the Longer-Term Trends
If you are placing several trades a day and trading purely off the 1 or 5-minute charts, it is all too easy to ignore the longer term trends of all of your favorite currency pairs.
However by simply checking out the 15-minute, 1-hour and 4-hour charts, for example, you can get a much better idea of the longer-term trends and can identify key levels where the market is likely to stall and reverse.
As a result of this, you can increase your chances of success by placing any short-term trades in the same direction as this trend, particularly if you trade around the key support and resistance levels and like to trade breakouts and changes in trend on the shorter time frames, for example.
Look at the Economic Calendar
The final thing you should do is to check out the economic calendar for the day ahead on Forex Factory (pictured below), or one of the other sites that provides this information. This will tell you which economic data releases are due to be announced, and what time they are scheduled to be released.
You really need to pay attention to the most important ones, highlighted in red on Forex Factory, because these have the ability to create big price movements in many of the major forex pairs, and could therefore result in some big losses in an instant if you have any trades open during this time.
It is generally best to sit on the sidelines when there are some big economic data releases scheduled, and instead wait for a better time to trade when the price movements are more predictable and volatility has died down.
Final Thoughts
If you can do these three simple things when you first switch on your computer in the morning, you will help to stay out of trouble, trading when the odds are against you, and will increase your chances of success by trading with the long term trend.
In addition to these three essential habits, you should also try to incorporate some kind of exercise into your daily routine because it is really bad for your long-term health to be sitting in front of your computer all day long staring at your screen.
If there are some big economic announcements scheduled or if the markets are barely moving, for instance, use this as an opportunity to get out of your chair and get your body moving. Even something as simple as walking is better than sitting in a chair all day doing nothing.
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