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The Importance Of Continuous Learning For Consistent Forex Profits

The Importance Of Continuous Learning For Consistent Forex Profits

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The Importance Of Continuous Learning For Consistent Forex Profits

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The Importance Of Continuous Learning For Consistent Forex Profits

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The Importance Of Continuous Learning For Consistent Forex Profits

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Having a consistent trading strategy cannot be underestimated when it comes to the trading process. This is because uniformity leads to sound business decisions. But building a market edge is more about a consistent method that you are comfortable with, as opposed to a perfect system that captures 100% of the pips in a market move.

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This article will address the importance of consistent trading, from the type of analysis and use of tools, to trading execution and risk management.

Consistency in trading refers to an individual’s consistent/repetitive nature of a set of trading principles. This adherence allows the trader to avoid “overtrading”, while maintaining adequate risk management. There are several characteristics of consistent trading, which include:

Consistency in trading acts as a catalyst for successful trading because it avoids the emotional influence of the trader. Irrationality and irregularity often lead to inconsistent results, as can be seen in the graphs below.

The Importance Of Continuous Learning For Consistent Forex Profits

Chart one below shows a simplified strategy of using an RSI oscillator to time entry/exit points in a trending market. Chart two uses the CCI oscillator for the same market to identify entry/exit points. Chart two shows a significant increase in the frequency of overbought and oversold signals – highlighted by the blue rectangles.

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This direct comparison shows how changing strategies can alter trading decisions and trading consistency (even with a small change like a different oscillator). Trading strategies are generally much more complex than the examples below, so deviating from a trading strategy can result in variable results.

There are several ways in which traders can adopt a consistent approach to trading. Planning ahead, applying risk management and recording daily activities and price movements are among the most important.

1. Have a Trading Plan – A detailed plan of attack provides the necessary framework for a trader to ‘stay the course’. There are facets of trading that a trader can control and those over which he has no control. Following a minimalist method of analysis is a way to maintain control and helps to avoid “analysis paralysis”.

For simplicity’s sake, traders are recommended to follow some basic methodologies/tools when analyzing price movements. There are a myriad of ways to analyze and visualize the markets, with no right or wrong way. The key is to be consistent in whichever approach you prefer.

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2. Be consistent when executing trades – There are several ways to execute on opportunities identified in the markets. For example, when trading breakouts; does the trader buy the first price above a certain level or wait for the candle to close first? Or perhaps a combination of the two? Any of the above is fine, but the most important point is that there is consistency in the trade.

3. Risk Management – Risk management is the most important aspect to trading success and where many traders fail. It must be approached consistently if a trader expects to achieve consistent results. Trading is all about probabilities: percentage wins x win/loss ratio. With this in mind, if traders don’t have a consistent amount of risk per trade, these odds won’t matter, as winners and losers will be at varying risk levels.

For example, if a trader earns 2% on one trade, loses 4% on the next, and then gains 1% on another, this will result in uneven (and in this case, negative) results – even though two out of three trades were profitable. The risk/reward objectives (stop/target) need to be consistently skewed in favor of the trader.

The Importance Of Continuous Learning For Consistent Forex Profits

4. Keep a Journal – An excellent way to ensure consistency is to keep a trading journal, whether it is

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