Trading Your Edge In The Forex Markets

Trading Your Edge In The Forex Markets - Trading Dispatch

For ages we’ve probably heard the successful traders say, it is important that you define your edge in the Forex market when it comes to trading. So that there is something that separates you from the other traders in the world. Now can you imagine the number of edges that are out there in the world if we all need to be separated to reach greatness?

The interesting thing is that our brain automatically thinks about the most complicated things in order for us to get ahead of everyone else. We start to complicate our process of trading when instead our edge is meant to help make it easier to extract money out of the Forex market.

Trading edge explained

A Trading Edge is defined as a technique, observation or approach that helps us as traders make money in the Forex market. As simple as that!!! Not so complicated. Now it’s easy for me to say that now in hindsight, however when I started my trading journey I thought a trading edge meant coming up with a new system of trading altogether. I know right! How daunting! But that is the truth, that’s what I thought.

Too many of us get caught up in systems to the point where we tweak every piece of our trading strategy in the name of ‘finding an edge’… but we’ve forgotten 2 things. You’re probably wondering what we’ve forgotten about having and finding an edge, yet its right in front of you.

What we are most likely to forget (if we haven’t already) are the OBSERVATIONS AND APPROACHES in the Forex market! Having an edge also means having clarity. The clarity to know what you’re looking for at a particular point in the market and if you don’t find that, it’s all good! Go play a game of golf!

Because they do say that staying away from the markets is a form of discipline in managing yourself. So, when it comes to your observation of the market, you’ll probably realize that you don’t see the same things your friend might see, and over a period of time and lots of chart work, you may pick up on certain traits of the market.

Those traits are your observation. The same way a teacher observes a child’s behavior in class is the same way us traders should observe the markets. “BUT, surely I cannot be at my screen the whole day, I have a life!!” – No one is saying you should… here is what I mean.

You can be observant inside the class as much as when you’re outside the class, simply by journaling what has happened in the Forex market at a particular point and also by becoming exceptional and taking mental pictures of the behavioral patterns you pick up as time goes on. That is how you get to an edge, day by day. It is not a quick discovery! It takes time. As well as devotion to your craft!  Trust the process and it will come!

Application in the Forex market

Being observant in the markets may look like you noticing little changes in a certain currency pair and having that spark up your edge going forward for some time. With the ever-changing Forex market conditions, volatile or not, your edge would help you get a grip and still extract monetary value out of the Forex market.

Your edge is what contributes to a chunk of your success as a trader and the fascinating idea about an edge is what we will look into next.

Think of the last idea we haven’t covered about having or finding an edge. The APPROACH! The approach we take in ANY component of our trading makes a huge difference. Our approach may even be the determining factor as to whether we are successful or not. To bring it closer to home, this may be the difference between a 40% win ratio and a 60% win ration!

You can do a whole lot more with a 60% win ratio by further immersing yourself in your process, whether that be how you manage risk and cut your losses with different strategies and techniques.

Your approach may even come from your psychology towards the market as we’ve discussed before. These are the tiniest of reasons as to why it is so important to not be trading without a trading plan! Because there is a wealth of knowledge in the details that we overlook more often than not.

What should you do?

Trade a strategy that works for you, learn more about yourself as to how you trade on your best days and worst days, ask yourself questions. Become more self-aware and focus on the details that no one else bothers to. Define your edge, no matter how small, because even the smallest of edges can still get the jackpot!

Happy trading Traders!  

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Emmanuel Maphosa

Emmanuel Maphosa

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