A “forced trade” is essentially what we call trades that you take on by sidestepping your usual trading rules, either by engaging in a trade that’s too large, or merely trading more often than you should. Although this perhaps sounds innocent, making forced trades is really one of the most common, yet most serious mistakes a forex trader can make. Over time, a habit of forcing trades ultimately leads to losses in the forex market.
So, the question we therefore need to ask ourselves is how a forex trader can avoid going down this path? The key is to reinforce your trading rules and seamlessly incorporate them into your trading activity.
To help you on this path, here are five of our best tips for how to ensure you’ll never ignore your trading rules again:
1. Write down your trading rules
Your trading rules should cover everything you’ll use to make an informed trading decision, including your risk, reward, buy trigger, and sell trigger. It should ideally also highlight what you should be looking out for in the markets to help you filter out ordinary “noise.”
To enforce this rule, you should start from a broad area and then break down your rules to specific situations. This way, your most specific rules are towards the end.
2. Review your trading rules before each session
You should make it a habit to go through your rules every day before you start trading. This is especially important if you tend to ignore your rules from time to time.
Additionally, it also helps if you picture yourself practicing your trading rules. This mainly works because following those rules doesn’t seem out of reach if you can visualize yourself practicing them.
3. Take regular breaks to go over your rules
While you may follow your rules for short periods, it might be a struggle to follow them for a long stretch, especially late in the day. Because of this, it’s way better to take breaks from time to time to refresh your memory and make it a point to go over your rules again.
These breaks can come at different intervals for everyone, as some would need a refresher every half hour, while others may need one after a couple of hours.
4. Review your trades at the end of each day
Once you’re done with trading for the day, you should review each of your trades and evaluate to what extent you followed your rules for each trade. If you’re scoring yourself, you should encourage yourself to do better the next day.
This method helps you keep track of how well you’re following your trading rules and gives you room to improve.
5. Assign an accountability partner
Nothing encourages or pushes you to do something more than pressure from your peers. Assigning an accountability partner who reinforces your trading rules and ensures you stay on track will prompt you to adhere to the standards you’ve set.
Remember that if you’ve fallen into a habit of forcing trades, it will probably be difficult initially to break the habit. However, with the right discipline and the right approach, breaking these bad habits will surely help you to become a better trader. And what better reward is there than to finally become a consistently profitable independent forex trader?