Feel lucky for a trade? Verify it first.

Getting emotional when trading is something that happens to everyone. When you are looking at charts, you might suddenly have a flash of something you learned or read about a currency and feel that you have a great trade before you.

Should you ignore your emotions and dismiss what you’ve seen? Absolutely not. First of all, it’s hard to control your emotions. You are human, after all. It is not possible to think and do things without any emotion.

Also, sometimes you emotions can be right and lead to a winning trade. Which is great! Controlling emotions is not easy, but you can still control your “trading fingers” and examine the trade before taking action.

Examine with your system. Does the trade match up with your trading system? Or is it disconnected? If there is no correlation, your hunch may very well be wrong.

Money and risk management. Don’t be overconfident with a trade. Always prepare for handling the consequences when the price goes to the opposite direction of your trade. Never enter a trade without deciding where to put this order and don’t forget to place a stop loss and take profit. And do not change them afterwards.

Verify on a clean chart. You probably saw the trade on the same chart you look at every day. Before placing a trade you should always check that chart in a new window, remove unnecessary indicators and tools that might make the chart messy. Redraw the lines you used to plan the trade if necessary.

After examining things mentioned above, you are ready to place a trade. If you are successful with a hunch, congratulations. You’ve developed an ability to predict a trade with relatively naked eyes. You are on the road becoming an experienced trader.

But don’t let your intuition decide everything.

The next time you have a similar hunch and feel you are “in the zone”, remember to control your fingers from hitting Buy or Sell before you have verified the trade.

How do you handle your intuition? Do you go with the process, depress it, and verify it comprehensively?

 

Further reading: 5 Most Predictable Currency PairsQ1 2012

 

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About Yohay Elam

Yohay Elam is the founder of Forexcrunch.com. He has been into forex trading for more than 5 years and will be sharing his experiences with Fair Trading Technology’s customer base. Before founding Forex Crunch Yohay worked as a programmer in various hi-tech companies. He holds a B. Sc. in Computer Science from Ben Gurion University.
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