Forex traders constantly emphasize the importance of maintaining discipline and sticking to a solid trading plan. However, while discipline is crucial, being too rigid can lead to the mistake of imposing your preconceived notions onto the market, instead of responding to the market’s actual behavior.
The secret lies in questioning the market. Yes, it’s really that straightforward.
Why, you might ask? Because posing questions opens your eyes to market perspectives you might not have considered otherwise. When you challenge your market assumptions, think creatively and avoid limiting yourself to basic questions like, “Which currency pair should I trade today?”
By questioning, we mean setting expectations based on the comprehensive picture—this includes fundamentals, technical analysis, and market sentiment at the time. For example, you might wonder, “How will traders respond to the dollar following yesterday’s dovish Fed announcement?”
If you focus on technical analysis, scrutinize the market by examining recent price movements. Suppose the USD/JPY has been climbing recently, as suggested by its series of higher lows on an hourly chart. Ask yourself, “Does this uptrend hold up across broader timeframes? Is it hitting new highs? Could it soon meet a resistance level?”
Perhaps USD/JPY approaches a major psychological barrier yet still rebounds from another significant support. In such cases, you might consider seeking scalping opportunities in intraday movements instead of committing to swing trades. After all, it could be gearing up for a consolidation phase—do you want to be trapped in that?
Engaging in this exercise encourages you to explore various scenarios, allowing you to become more adept at “listening” to the markets, rather than merely projecting your biases, which may carry little weight in market dynamics.
Ultimately, much of the crucial information we need to spot lucrative trades is already accessible. It’s just that our own prejudices often blur these signals. Continuously questioning the market might not be a science, but it does nurture openness to the myriad possibilities the market presents.
