Whether you’re new to Forex trading or an old hand, at some point it will have inflicted on you every emotion imaginable, from elation and joy through to casual boredom and on bad days, desperation, fear and even self loathing.
The mood swings that winning and losing wreak on you can change your perception of the market. If you’re in a losing streak you’ll naturally and instinctively be more pessimistic, your approach to the market will be fearful, protective and you’ll be more risk averse than normal.
A big multi-percent win, or much worse, a series of them, will make you feel unassailable. You’ll spot opportunities everywhere and you’ll start taking setups that aren’t in your trading plan, then as your confidence soars you’ll be tempted to risk more capital, but you’ll lose, and lose big, thus completing the euphoria to despair cycle.
The cycle will be exaggerated when you’re inexperienced and unfortunately that means you stand a pretty good chance of trashing your trade account. It’s thought that somewhere between 90 and 95% of traders fail and most leave the game within the first 12 to 18 months. Make no mistake, it’s a rollercoaster and the only way to master trading is to master your own psychology first. And master it fast.
Now, if you really want to multiply your chances of making mistakes, destroy your morale, obliterate your confidence send you running with your tail between your legs, all you need to do is join the multitude of beginners who dive straight in and trade 5 minute charts.
It’s a hell of a thing for a beginner to get wrapped in – opportunities come thick and fast, entries, risks, stops and targets are calculated in a blur and the trades unfold with all their mistakes magnified. Even 1hr charts can pose serious risks to the green trader.
There’s no need for that kind of stress, so why not look exclusively at end of day (EOD) setups for a few months? You can see the trades setting up days or weeks in advance, your entries are considered and accurate, stoplosses and targets realistic and efficient. The odds of success are much better and you only need one or two trades a month to get great returns.
Some shy away from EOD trades because it’s not as sexy as high frequency day trading. Maybe it doesn’t impress the girls. But ask yourself, does going broke?
Adam – TheDayTrader