In this article, we will discuss why, looking at the set up as it is right now on the chart is so important and why, not being influenced by past experiences is a key to bettr trading signal placement and bigger long term profits. 


First lets look at one of the most common scenarios which happens to novice traders which stops them, making big profits and it's thinking they have missed profit from a trade. 

The Present Price Set Up and Your Signal 

One of the ways to spot a novice trader is when they have a trading signal they want enter and ask me, if I am in the market. If I reply “yes” the novice trader, asks me where from but it doesn't matter where I am long or short the trading signal from, because they have no signal in the market! It's the present chart set up they should be focused on, not what has gone on before on the chart or where I am long or short from. 

If my entry level is well in profit, the novice trader who has asked me, normally thinks I had better wait to get in! He shouldn't be thinking this way. Sure I maybe in earlier and have profit but it doesn't mean he can't make profits from the move because trends last a long time and getting a trading signal in with the best risk reward and the potential for profit is all that should matter.

“ Let's say the market moves rapidly through your buying zone and you miss it, you miss your buy signal and instead wait for a retracement to maybe buy cheaper. But, the market just keeps going higher and higher and never retraces. Now what do you do? There's a great temptation to reason that now it's too high to buy. If you buy it now you'll have an initiation price that's too high? No, the initiation price simply won't have the kind of significance you suppose it will have after the trade is made. You can't miss these trades. Trading systems force discipline to make sure these trades are not missed” (William Eckhardt)

To make big profits you need to get in on trends and you won't be able to get in at the trend change or be in at as good a price as everyone else but why does that matter? It doesn't. You have to take the signal if the set up looks good to make money. Waiting for pullbacks is the strategy of novices – pro traders get their trading signal in when the risk reward looks good. 

Today's Good Pair Can Be Tomorrows Dog 

Traders fall in love with any currency pair they make money with and will continue to trade it just because they have had a good past experiene from trading it and they will enter trading siganls with this in mind and NOT is the pair offering the best risk to reward and profit potential? 

The key point to keep in mind is - don't let your past trades determine what you trade today. There is no logical reason to do this and you need to avoid this common trading trap. You need to forget, how a currency pair performed for you in the past on your trading strategy and  focus on the present set up. 

Its a fact that if a currency trading pair has given you a few good trading signals doesn't mean you will get another one. There is no such thing as a “lucky” or good pair top trade. All pairs should be scanned and the best trade set ups traded. If you have lost a few times on a trading pair, it could easily be the next big winner for you, if the set up on the chart looks good so don't be afraid to trade it. 

Revenge Trading on a Currency Pair 

Do not try to take revenge on a currency pair when you have lost! This is a key error many traders make – they lost money in the pair and are fixated in getting revenge and getting it back but no one cares that you lost money but you. Trying to recoup a loss made in a pair is not a strategy. It's simply an emotional reflex action to gain revenge which is doomed to failure. Trade in the present, without regrets and revenge on your mind.

Memory of Profit in a Trend Blinds You to the Obvious

It happens in all markets not just Forex and its the fact that whats gone on before in a trade means – the fact you are making profits means you become complacement about a turn against you. The mug investor, tends to be so happy that he's making money, he ignores clear warning signs of a turn in the market and when the market does turn, the fact he has a big profit, tempts him to hang on after all it could be just a temporary dip. It could of course but you need to look at the charts objectivley and not just hope. 

I read a quote from Jim Paul who said that after he had been winning he felt invinsible and most novice traders feel this emotion so what do they do? They don't pay enough attentioj to their open trades and becuase their winning they take bigger risks on their account with new trading signals and the market teaches them a lesson for their arrogance. 

In Conclusion - Know the Past But Think in the Present

When trading Forex the pro trader never trades any pairs UNLESS they offer good risk reward and he forgets about any past experiences he has had in them. Furthermore, he doesn't fall in love with a trade when he is in it, just becuase he's making money – he normally becomes more alert to a turn in the market! If he is doing well on his account overall he knows that he still needs to be alert and focused on the charts right now and never drops his guard. 

Don't regret anything you missed in the past, never feel angry or try to take revenge on the market. Be alert when your doing well and stay disciplined and never fear trading a trade which has lost you money or ognoring a pair which has made you money in the past – think only in the present and you will be doing, what most traders fail to do and will increase your chances of making money from the markets