Walker England of DailyFX.com explains how to overcome the fear of missing a trade using software as a tool for overcoming emotional trading.
Traders combat a variety of emotions on a daily basis. Most emotions when trading are unavoidable simply due to the fact that we are human! If we fail to deal with these emotions effectively, it can lead to catastrophic results in our trading.
Today we are going to specifically look at the impacts of greed and the frustrations of missing a trade, and specific measures we can take to keep this from happening.
Missing out on a trade can be extremely frustrating, a position that most of us have experienced at one time or another. Primarily this frustration is based in greed, as we busily consume ourselves with the pips we “would have made.” By giving into this emotion, we often forget that our trading accounts are still intact and we have other market opportunities available.
For most traders, if this feeling of greed goes unnoticed, it may elicit a response of revenge, in order to “get even” with the market. More often than not, this response results in disaster, as a trader may consider taking bad trades not in line with their trading plan, or increasing their leverage to quickly makeup for a missed opportunity.
Below we can see a daily graph of the AUD/USD daily chart. Let’s look at the two ways this scenario can be avoided, if price breaks above new highs at 1.0450 on the graph.
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Price Alerts
The first way to help overcome the fear of missing out on a trade is to use price alerts. The FXCM Trading Station is designed so we can be notified when prices reach a certain level. This is a great tool when you want to see how prices react when they reach an important technical level, such as a support/resistance line, Fibonacci level, or Donchian Channel.
Price alerts can be set as audio alerts, or messages through the trading platform or even e-mail. If you are not a customer of FXCM, nearly every forex broker offers similar functionality. Whether you use Marketscope or not, setting price alerts is something every currency trader should be doing.
To set a price alert on the FX Trading Station’s Marketscope 2.0 charts, follow these steps:
- First select Alerts and Trading Automation from Marketscope 2.0
- Select to create a new strategy or alert
- Now choose Price Alerts from the drop down menu
- Select the currency symbol and price
- Press OK
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Entry Orders
Using entry orders with a breakout strategy is another great way to avoid the feeling that you have missed out on a trade. Entry orders allow us to set a specific price in the market where we wish to execute a preset trading plan. This way, we get to enter into the market on our own terms when the price we select becomes available for trading.
Creating an entry order is an easy process, and can be done by first clicking on the Entry tab inside of the Trading Station software. Doing this will cause the entry order box (pictured below) to appear.
Select the pair, whether you want to sell or buy and that rate at which you want to do so. You can click the advanced tab to input stops and limits. These orders will remain active even if you log off from the FX Trading Station.
Again, the look and feel of this functionality is likely available on any forex trading platform.
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Regardless of the method you choose, both price alerts and entry orders can help traders avoid the fear of missing a trade. When a specific price is reached in the market, we will either be notified or ready to execute a preset strategy through pending entry orders.
Through this process, what was once seen as a roadblock to our trading success can now be effectively turned into an opportunity!
Walker England is a trading instructor with DailyFX.com.
