Getting a lot of profit is the dream of all traders. Unfortunately, not all traders can do this. Believe it or not, a trader’s success is born out of habit, not talent. Habits can be formed from routines that are carried out consistently and patiently so that they will form a good trading mentality and psychology. Simply put, you can see the routines of successful traders before trading.
Successful traders will certainly not open positions without careful preparation because this is the same as provoking losses. Before trading, successful traders will carry out certain routines until they finally settle for opening a position. This is done over and over again until it becomes a habit that leads to success in achieving consistent profit.
7 Routines of Successful Traders
So, what routines do successful traders usually do before trading? Check out the following explanation.
1. Pay Attention to Long-term Chart Analysis
Paying attention to long-term chart analysis is one of the routines of a successful trader before trading. Even for a short-term trader, there is nothing wrong with seeing further trend confirmation by using a larger time frame. The goal is to get a more accurate picture of market trends.
Trends that have been confirmed on large time frames (H4, D1, Weekly) are usually calmer and avoid price noise, so that market trend movements are more valid. By knowing the direction of the trend, it will be easier to prepare a trading scenario.
2. Always Update Fundamental News
Some traders think that trading using fundamental analysis is a waste of time. WRONG! In fact, fundamental analysis is very useful for predicting market sentiment. In addition, some fundamental news releases can have a significant impact on currency movements in the forex market.
So, fundamental analysis really helps traders find the direction of the transaction in accordance with market conditions. In this case, the usual pre-trading routine for professional traders is to read the latest forex news to get trading ideas with fundamental news.
Fundamental data is usually very attractive to professional forex traders because it can help anticipate currency volatility. If you already have sufficient data regarding the targeted currency, then create a trading scenario. For novice traders, making analysis of fundamental news releases is usually considered difficult because it will take up a lot of time.
But believe me, trading only relying on technical analysis will reduce trading accuracy, and vice versa. All types of forex analysis complement each other. So, even though you are a technical trader, it doesn’t mean you can close your eyes to fundamental news. If the cause is limited insight, then start by understanding the terms in fundamental news first.
3. Pay Attention to The Risk-Reward Ratio
As a trader, the important thing that must be embedded in your head is that you will definitely experience loss or profit in forex trading. If you only expect profits but don’t want to bear losses, you should abandon your intention to become a successful trader. The term is ‘no pain no gain’. The risk of loss cannot be eliminated, it can only be minimized. Therefore, the term risk-reward ratio emerged.
Simply put, the risk-reward ratio is a term used by traders to compare the expected return on the amount of risk taken. The ratio can be calculated mathematically by dividing the amount of a trader’s potential loss if the price moves in an unexpected direction (risk), compared to the amount of potential profit a trader expects when the position is closed (reward).
In this regard, the routine of a successful trader before opening a position is to always calculate the risk/reward ratio for each trading position, then apply it with discipline. This is what can be imitated. Apart from that, it also helps traders get consistent profits.
4.Understand Price Action
Actually, price movements can be seen only from candlestick patterns. In forex trading, this term is called price action. The bar formation in price action reflects the sentiment of market participants. The signal from price action is usually seen by the formation of a pin bar with a tail (axis) that is longer than its body. The longer the tail, the stronger the rejection sentiment at a certain price level.
The most popular terms of price action are up bar, down the bar, inside the bar, and outside the bar. An example of its application can be seen in the basics of a trading strategy with price action. Therefore, recognizing the patterns that have hit the chart has become a routine for successful traders before trading. Apart from that, price action is also used to identify market momentum and volatility.
However, relying solely on price action patterns for puppets is also not recommended, because it puts traders at risk of being trapped in a failed bar (fake candle signal). The solution, use other indicators to confirm price action signals.
5. Recognizing the Characteristics of Matching Pair Systems
One of the characteristics of a successful trader is being able to find the most profitable pairs and have their characteristics. Every trader must have their own mainstay trading strategy, which sometimes can only work on certain currency pairs.
So, carefulness in choosing a currency pair for the trading system that is made also really needs to be considered. In order not to choose the wrong currency pair, you need to recognize its characteristics first. One way is to look at the liquidity and volatility of the currency pair. The following video podcast introduces how to find the most suitable currency pairs for the intraday trading system.
6. Create a Mature Trading Plan
The routine of successful traders that must be followed is to always make a thorough trading plan before entering the market. As it is said, trading without a plan is tantamount to suicide, so this is where the importance of a trading plan. Especially for novice traders, it is highly recommended to make a trading plan so that every action taken has a solid foundation and is not just ‘gambling’.
In making a trading plan, you don’t need to contain a long description, just make it short, clear, firm, and easy to understand. In short, a trading plan is a list of things that will be done or must fulfill before opening a position on the market. Then, make sure that the trading plan that is made includes 3 main pillars in forex trading, namely trading strategies, money management, and trading psychology.
7. Make a Trading Journal
In addition to trading, usually, a successful trader’s routine is to always record all their activities, such as Entry levels, Exits, Stop Loss levels, Target Profits, Lots, etc. It looks trivial, but learning from experience is one of the determining factors for the success of a forex trader.
It is very important for a forex trader to document his successes and failures. In addition to a trading track record, by looking at the trading history that has been recorded, will help traders analyze and find weaknesses that need to be corrected in the future.
In essence, keeping a trading journal is indispensable, especially for novice traders. In making it, you don’t need to be fine, the main key is that you can understand when you see the trading journal that is made.