Direct from the desk of Dane Williams.
Recognising emotional triggers like FOMO and your desire for quick profits will help you know when you're chasing a forex trade.
Recognising when you're chasing a forex trade is crucial if you’re going to maintain the disciplined and strategic approach needed to make money in this game over the long term.
Chasing forex trades will lead you down a path of significant risks and drawbacks, including financial losses, stress and a deviation from the sound trading principles laid out in your strategy.
So, how can you determine if you're chasing a forex trade?
Let’s take a deeper look.
Determining if you’re chasing a forex trade
Firstly, it's essential to assess why you’re entering each specific trade in the first place.
Understand your motives and decision making process behind entering each and every trade you enter, before you take it.
Have you gone through each possible scenario and are you entering that trade based on the trading plan in your strategy?
Or are you doing nothing more than acting impulsively in response to what you think you see or feel in that moment?
Chasing forex trades often involves entering positions hastily, without proper analysis, consideration of risk or your strategy.
If you find yourself making decisions based on emotions such as FOMO or the desire to quickly recoup the losses you made on previous trades, you are doing nothing more than chasing.
Another indicator you’re chasing a forex trade is the complete departure from your established trading strategy and risk management principles.
If you normally trade support and resistance zones like me, then maybe you saw on Twitter that there was a moving average crossover that happens once every 50 years and you just can’t help yourself.
This will again always lead to inconsistent and erratic trading behaviour, undermining the integrity of your trading strategy and turning your forex trading into nothing more than gambling.
Additionally, paying attention to your trading mindset and emotional state can provide insights into whether you're chasing a particular forex trade.
Chasing trades is often driven by emotions such as greed and impatience to make money when it's probably not there to be made.
As I’m sure you know, you experience heightened levels of stress and anxiety when chasing trades, as you attempt to catch up with to a setup that you never planned for.
If you do identify that you’re chasing a forex trade, being mindful of your emotions and maintaining a disciplined mindset will help you avoid falling too deep into the trap that you can’t recover.
Moreover, reflecting on your trading performance and outcomes will help you identify patterns of impulsive behaviour and hopefully stop you before you do it again.
Reviewing your setups and analysing the reasons behind why you decided to take each trade will provide you with the valuable insights you need to discover what preempts you to chase trades and ultimately show the impact it's having on your results.
Are you consistently entering trades based on impulsive impulses, or are you sticking to your trading strategy like you know you should?
Honest self assessment is the key to recognising and addressing any tendencies towards chasing trades.
Know you’re chasing a forex trade by identifying triggers
Knowing if you're chasing a forex trade requires self awareness, discipline and a critical assessment of your motives and entire decision making process surrounding your strategy.
By examining your behaviour, adherence to your trading plan and emotional state, you can identify whether you're chasing forex trades that you have no business in and ultimately take the steps required to stop.
Remember, trading success requires patience and discipline.
Best of probabilities to you.
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