The biggest challenge to trading once you learn what you are doing is the waiting. The waiting makes you itchy. You have got to trade or bust. Staying out the market is probably the hardest discipline you will have to learn to master as a trader. Itchy is dangerous. It is that horrible nagging feeling(almost a compulsion) that you are going to miss out on something. Every nerve in your body is screaming at you to jump on this opportunity NOW before it is too late and you miss out.If you have been trading any length of time, you know what I am talking about; and there are a few times that you can remember missing out, then you begin to chastise yourself for not getting in at the most opportune time. That missed out recording is still playing in your head. Now I want you to remember more accurately all of the time that you followed that itch because you were so sure of the market's direction and got your butt handed to you. Then you cursed Forex, your broker, and kicked your little dog Mike. You went around all day in a funk because of your lost, and if you continued to trade trying to make your money back, you only dug a dipper hole.
I know these things, because I too have been there, except I don't have a little dog(smile). As a recovering 'type A' personality, it was and sometimes is to hard to wait for the market to do what it is I want it to do. The best thing to do so that you don't over-trade is to turn off your monitor, do something else, and wait for a valid reversal signal on a larger time frame chart and then trade.
When you know better psychologically but, you just have to get in or bust, a practice account comes in handy. That way you can play, test your strategies and instinct without getting killed. Trading emotion without logic will get you killed.
When you are not the most patient, times of deliberation and congestion are the worst. That time is designed to work on your nerves, make you antsy, distract and confuse you and cause you to make big mistakes. It is a very successful deterrent and works on most traders, we get caught up, then we have made a commitment with our money that we usually soon regret. Trading isn't hard because it takes a rocket scientist to do it, active trading is hard because in order to trade successfully, you must master and conquer YOU.
By all means stay out of deliberation/consolidation, where price is in a tight trading range. You are much more likely to have successful trade if you wait for a valid breakout from the tight trading range ( a close of a breakout candle below your support/or above your resistance level), to add to the probability of your success.
Price movement is the next most important behind emotional control. No matter what economic reports or the experts say; the charts always tell the truth. They tell you where the real money is headed. The longer term charts are the most accurate, trading the smaller time frames are more of a gamble.
IF YOU ARE NEW TO FOREX, PLEASE DON'T TRADE THE NEWS, UNLESS YOU HAVE BEEN TAUGHT BY A PRO! NOTHING WILL KILL YOU FASTER THAN THOSE WINDFALL GAMBLES!!!!!!!!!!!!!
ALSO TRY NOT TO HAVE AN OPEN POSITION DURING MAJOR ECONOMIC NEWS BECAUSE OF THE EXTREME VOLATILITY OF THE MARKET
You want to give yourself every possible advantage by trading when the odds are most in your favor. Trading in harmony with the longer term trend will give you a tremendous advantage. When your long term trend is down, you want to sell the highs with a valid trend-line rejection or candlestick reversal confirmation or both. When the trend is up, you want to buy the dips with a proper trend-line rejection or candlestick reversal formation or both. Remember this is not Vegas, it is a business. We don't gamble here.
Develop the discipline of patience, stay out of consolidation,(let the market tell you what it is going to do, don't try to out guess the market, the market is always right), and trade with concrete rules.
A very successful trader once said that he made money not through his thinking, but through his sitting(Patience). (The patience to wait for a proper turn in the market and the patience to ride out the turbulence until he hit his profit target)
HAPPY TRADING, LIVE IN LOVE, HARMONY AND PEACE! STRESS IS A GREAT ENEMY TO SUCCESSFUL TRADING. TAKE A BREAK, BREATHE AND RELAX!
Write me if you need me. You can find me at TradersFriend@yahoo.com
This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.