Forex

What is Your Forex Trading Routine – Part 2

rickwright
Rick Wright
Instructor

Hello traders! In part 1 of this two part series, I gave you the first half of a day trader’s daily routine. Depending on your own personal trading style, you may need to slightly customize it a bit. On with the list:

9. Look for another trade! Depending on your trading style, your first trade might not have “taken off” yet. In the meantime, why not see if there is some more action out there? Swing and position traders will definitely consider this. Very short term day traders, especially new traders, may be too fixated on one trade/position to manage a second. Another note about this is that I would prefer you not put all of your eggs in one basket, all of your trading account on one trade! This would be overly aggressive, bordering on stupidity.
10. Manage any trades you are in. So, you’ve entered a position or two, looked for new trades, now what? Well, you must go back and check the trades you are in. Have they moved far enough to move your stop to break even? Far enough to start locking in profits? Perhaps you will consider moving your profit target further out. (I know some of you would never think of moving profit targets once they are set, but hear me out. When you find a currency pair (let’s call it pair A) that seems to lead another one (let’s call it pair B), what do you think when the leading pair breaks forcefully through a supply or demand zone yet the other hasn’t yet? Perhaps pair B hasn’t even reached the zone. If pair A rips through a level, you would expect pair B to go through as well. Why limit your profits on pair B when it is very likely going to move to the next level? Figuring out which two pairs are related enough, and then which leads another is mildly complicated and a bit too much for this newsletter. To see how I do it, hope to see you in one of our classes!)
11. Rinse and repeat. Look for new trades and manage any trades you are in.

So now you have basically decided to end your trading day. Does that mean you just turn off your computer and come back tomorrow? Not quite, a few things remain.

12. Check your orders and positions one last time. Having a day order for a stop loss could be a huge oops in the account. What about a stop order for two lots when you have ten lots as a position? Also a potential disaster. ALWAYS double check your orders and positions before closing down your computer! We’ve heard too many horror stories of huge losses when a trading error is made to ignore this crucial step. It’s weird how trading mistakes seem to always make money in demo accounts, but lose money in live accounts.
13. Check the economic calendar for any overnight news on currencies you are trading. I would not be a fan of being in a EUR trade if their central bank was planning on an early morning interest rate decision. It is up to you to decide if you will wake up early, before the announcement, so you can exit a trade or use a trailing stop, etc. Just be aware that big news can dramatically move these markets!

Now, you also must journal your trades as you do them, especially if you are new to trading! I didn’t put journaling the trade as its own numbered entry, as many traders do this differently. Some take a simple screen shot of the trade they just did while others will fill out an extensive Excel spreadsheet on all of the reasons for this particular trade. If I were you, I would go get a beginners book on Excel and learn to use that program. This way you can easily put in all of the reasons you are taking trades, then easily sort out what is helping you and what isn’t. For example, if you are trying to trade the EURCAD using a 5/17 moving average crossover strategy on a 6 minute chart and you are losing money every time you do it, STOP IT. Without keeping track, journaling what is consistently making you money and what isn’t helping you make money, you might be tricked by your memory. Very often someone will take a trade with some crazy reasoning behind it and make good money the first time. Then, the inexperienced trader will continue to use that same silly idea to make decisions over and over again losing much more than they originally made. For example, “I made $5000 on a trade when I bought because the first car I saw today was green! I will buy whenever I see a green car!” You would be surprised the reasons I’ve heard new traders take trades… If you aren’t measuring your trades, you aren’t keeping track. If you aren’t keeping track, I have no sympathy for you when you say you aren’t making money trading.

Free WorkshopSo there you have it. A short suggested list for a daily routine. If you are more of a swing / position trader, you might only be checking orders/looking for new trades once a day or two, and that’s fine. Trading is a great pursuit; you can customize trading to your life instead of being forced to customize your life to a business.

Until next time,

Rick Wright
rwright@tradingacademy.com

Disclaimer
This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.