Analyzing the market isn’t just checking your charts – how can you become a consistent trader?
OK, I understand the heading may be a little weird but bear with me a minute as this article may not only save you some cash but also lead to a massive improvement in your overall performance and to becoming a consistent trader. Now everyone understands the weather and the role it plays in our daily life, so I’ll be using it as my analogy.
Rise & Shine it’s a new trading day
When you get up each day, you either look out the window or check on the internet what the weather is going to be today. Why? Well, it determines what we wear and what activities we can potentially do today right. It’s not likely you’re going to go ahead with a planned picnic at the beach if the forecast is for rolling thunderstorms and torrential rain!
Well, this is the same way you need to be able to read the markets and become a consistent trader. If you only have an MT4 platform, then you can’t see diddly-squat. All you can see is some prices on your charts. Sure that may tell you there is some volatility in the market, but you won’t know if it’s good volatility or bad and they will not alert you to potential problems around the corner.
Analyzing the market should be the first thing you do each and every day
To be a consistent trader, we analyze the market every day looking for potentially good trading opportunities. Analysing the markets involves checking the charts for trendlines & recent moves as well as incorporating past and future economic data releases. Once we’ve analyzed the market, you generally have a good idea if there are potentially good trades coming up or not. At the same time, before you do anything, you should be analyzing the ‘weather’ or overall market conditions.
Are the major currency pairs trending, trading sideways or trading erratically?
Trending markets are ‘sunshine with no chance of rain,’ they are great trading conditions.
Trading sideways is ‘slightly overcast’ conditions; they can be OK but lack direction.
Erratic markets are ‘rolling thunderstorms, heavy rain,’ whatever you do, don’t go outside. In fact, make sure your car is locked up in the garage and call your insurance broker and increase your cover as this could get nasty!
Get into the habit of checking the Weather before you start trading each day
Believe me; this will save you loads of time and money. I know a lot of traders get a day off during the week and they make that day their trade day. Now that could be OK if the conditions are ‘Sunshine,’ but how do you think your results are going to be if unbeknown to you the weather conditions are ‘Thunderstorms’ expected. It can be carnage, and you can rip big holes in your trading account on these days. So make sure you avoid them and be a consistent trader. On the Sunshine days, you can maximize your potential by increasing your trade size as you know the conditions are optimum for trends. On the days that are cloudy, you can let the market go and enjoy your day instead of spending endless hours waiting for that magic moment, which just isn’t going to come.
Don’t forget being a professional trader is all about being precise.
So just in the same way you check the weather before leaving your house each morning, be a consistent trader and make sure you check the market conditions before you trade! This aspect of analyzing the market is one thing we try to highlight to our traders every day on our myFXTradingHub. In fact, it’s so important we’re building it into our main member’s page as I speak.
This should be a part of your overall daily routine to be a consistent trader.
If you’re having issues understanding how to read the ‘market weather conditions’ then give us a call or send us an email and we’ll point you in the right direction. It’s amazing sometimes how just a little bit of knowledge can make a huge difference to your overall performance.