I had a belief about a trade.
I had a view and a trade idea that was very carefully thought out.
I ignored price and I suffered.
Many traders obsess over news or their view of the fundamentals.
But if you must obsess over one thing, obsess over price.
In trading, it’s easy to develop a bias toward a particular market direction based on what is read or heard.
Instead, look to what the price is doing first.
Is it going in the direction our view suggests it should? If not, then you are trading your view against the price, something only very experienced contrarian traders can do.
Once you’re in a position, is the market showing signs that it is reversing? Has a trend broken out in the opposite direction, eroding your profits or taking you into a loss? If you ignore what the price is doing, you are simply holding on and hoping that you are right.
Never fight what’s going on right in front of you on your computer screen just because you have an idea. Look at what the price is telling you.
- What is the current market type?
- Are you trading the correct strategy for the current market type?
- Are reversal patterns telling you the direction is going to change?
- Is price going up on good news and down on bad news (or vice versa)?
Treat price with the respect it deserves and it will tell you a lot—and save your bacon many times over.
Cheers,
Sam
About the Author
Sam Eder is a currency trader and author of The Consistent Trader and the Advanced Forex Course for Smart Traders (get free access). He is the owner of www.fxrenew.com a provider of Forex signals from ex-bank and industry traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter or get FREE access to his acclaimed How to Be a More Consistent Trader Short Course.