Trade Management, Less is More
Once you have chosen the market to trade, done your analysis, and are in the trade, you can feel free to relax, even walk away… once you’ve placed your stop. The only time you should need to be “on the screen” to make a decision is on the close of the candle for the time frame chart you are managing the trade on. The most common mistake traders make is second guessing their own analysis, and flubbing the management of the trade because they become distracted. By walking away and avoiding staring at the screen for every tic, and reminding yourself to relax, and breath deep, you are more likely to make less mistakes in your trade management. The key to having the freedom to “walk away” from the trade is going to be in using time based triggers, aka, fact based signals, which are signals that can only be triggered on the closing price of a candle, after specific conditions are fulfilled – such as price closing beyond a support or resistance level, or moving averages crossing on a closing basis. “Plan the trade, and trade the plan” is just as good of advice as when we heard it 30 years ago!
Jay Norris is Chief Market Strategist at Clovernest Financial Group, and the author of Mastering the Currency Market, McGraw-Hill, 2009.
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor!
