It is the nature of any market to be moving and dynamic. Prices are never the same and always in motion. The Forex market is no exception and so prices can fluctuate to a great degree.
A good trader should be able to remain profitable and keep trading no matter what condition is predominant in the market. There will be those times when the market is against you and things are not as favorable as other times. What should you do then? In this article we are going to take a look at this topic exactly.
Employ Manners of Risk Management
The first thing that you ought to do when the market is not doing as favorably as other times is that you should employ every manner of risk management possible. This is because your first move against bad market movements should always be to protect your already existing assets.
So go on the defensive immediately and try to protect whatever trading capital you have and keep them from being lost to bad positions. You can for instance employ orders such as stop loss orders to make sure that there is a threshold for the maximum amount of money that you allow a position to lose.
Expect Unfavorable Times in the Market
Another point that can really help you go through tough times in the market is to expect that there are going to be unfavorable conditions in any market. No market is an exception of this rule, even the foreign exchange market.
If you get too hung up on one certain condition or certain results that you have been getting in the market, then you will definitely get caught off guard. You should know that any financial market can be subject to change at any moment.
One important reason for this unpredictability of the financial world is that markets are exposed to so many different factors. Some of them are internal including the sentiment and force by which the market participants or traders act in it. But there are some seriously significant outside and external factors that just as easily and strongly impact the market.
Take the forex market for example. This market is impacted by so many different fundamental factors that could just as easily make prices change and shift at any moment.
And also keep in mind that no one can accurately and precisely predict market and price movements all the time. So by simply keeping a mindset that is ready for changes can be a good start to build up your defenses against bad market moves.
Use All Forms of Analysis
One reliable way that can help you not only defend your assets against bad market conditions but also to remain profitable when the market is against you is to use any possible form of analysis that can help you in this regard.
This of course includes using any necessary technical analysis method and indicators that can market signs of reversal, price breakouts, and any other bout of volatility in the market. This includes technical indicators such as the Bollinger bands that could show you where the market is overbought and oversold and where prices could be heading for a breakout or reversal in trend.
Of course add to that fundamental factors and fundamental analysis. This can help you stay ahead of external factors that could make prices change due to some factor that is outside of the market.
Have Sentiments Under Control
When the market is moving against you, it is imperative that you have your sentiments under control. The true market of a successful and professional trader is one who has his emotions under control.
The worst thing that you can do when things do not go your way is to get overwhelmed and make even worse decisions. There are both the possibilities of overtrading and under trading when the market is not doing so well. If you get overwhelmed, you might give in to overtrading and open really bad positions that could only lead to more losses.
On the other hand, if you get too scared then you will shrink back and put too much distance between you and your routine trading process. This can damage your profitability in both the short term and the longer term.
So it is incredibly important for any trader to be in full control of their emotions when the market is against them.
Look Ahead to Coming Market Movements
One final thing that can help you remain logical and reasonable even under tough conditions is to remember that just like the really good times, the bad times in the market are also temporary. No trend is permanent. So always keep in mind that during the challenging periods, you can look ahead to coming market movements.
