Keep your Day Trading Simple
Keep your day trading simple.” It’s logical advice, yet rarely does the one saying it explains how to keep it simple. With thousands of indicators, strategies, and traders all saying something different, how do you reduce it all down to the simple minimum and keep it simple? Keeping your day trading simple means following the simple 3 steps, on every single trade and just focusing on one step at a time.
3 Steps that Keep your Day Trading Simple
Step 1: Setup
To be an active trader you need to trade setup. In a sea of ever-changing conditions, you need to filter out all non-relevant information on your trading chart. A setup is a specific set of conditions which must materialize to indicate a trade could happen. Every trader’s setup will be different.
The triangle is your trade setup. When a triangle appears, it lets you know a trade could triangle be expected. Until the triangle looks though, you are relaxed and focusing on nothing but finding triangle chart patterns. By having a setup, you keep your trading in a way simple. You aren’t concerned about whether the price rallies, falls or what the news is stating. Until a triangle pattern appears you have nothing much to think it about.
Click on below video: Forex Trading Setup
Step 2. Trade Trigger
The best trade setups let you know in the advance what your entry point will be. Once a triangle chart pattern appears you know that your entry will occur when the price breaks out of the triangle. A trade trigger is an event happens following a trade setup that lets you know it is time to enter into trades. If using an indicator, the trade trigger could be the exact moment the indicator passes through a particular level or crosses another indicator line.
Click on below video: Learn How to Pull the Trigger on a Trade
Once step one has happened, and you have valid trade setup, you no longer question whether you have a valid trade setup, it was already decided. Once you have identified a trade setup, your only task is to isolate it where/when the trade trigger is.
Step 3. Risk / Reward Assessment
A setup has occurred, and you defined specifically where/when you will enter the trade. During every stage there is nothing else to think about in the first stage you watch for setups, that is it; in the next stage, you have to define your entry point. With the setup in place and a trade trigger pending your next step is to decide if you take the trade or not.
Click on below video: How to use the Risk Reward Ratio And Probability?
If the potential reward based on the setup outweighs the risk, execute the trade when the trade trigger happens. If the potential reward doesn’t outweigh the risk, move back to the first step and start looking for another setup.
Being aware of economic or company news events is part of the risk/reward assessment. Since we don’t know in advance how the market will react to an economic release then avoid taking trades 3 minutes before or after a high impact economic/company specific data release. Check an economic calendar before the trading day begins, so you know the data release times. Block off those times on your charts, so you know not to take trades, leaving you to focus on every stage as it comes.
During the trading day, there’s only one thing you are thinking about, and that thing is dependent on which step you are on. All additional information is irrelevant. First, just focus on finding your trade setup. Once you have seen a trade setup, focus on finding where the trade trigger is. Once you know the trade trigger, you can determine where your stop loss order and profit target will go. Based on the stop and target focus on whether you will take the trade when the trade trigger occurs.
If the trade makes sense, execute a trade at the trade trigger. If the trade doesn’t make sense, go back to step one.
This is how you keep the trading simple in real time. It requires that you have done your homework though. You need to have defined a trade setup, determine what a proper risk-reward ratio is and also it means you have isolated a precise event which tells you when to get into trades.