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February 28, 2021

Deliberate Practice in Forex Trading

 Whether it’s the result of unexpected forex market events or just a poor trade idea, losing money really sucks. What’s worse is that when it happens over and over again, it eventually affects your confidence and trading approach.

Just to make up for your losses, some of you probably resort to revenge trading by throwing your trading plan out the window and jumping in at every possible forex trade opportunity. Or maybe you become so scared of incurring more losses that you even begin to avoid trading some of your best trading setups.

Instead of reacting negatively to losses, a better mindset would probably be one that involves actively learning and improving from those losses. Successful traders study the mistakes they make and the market conditions/behavior in which the losses occur. They try to dissect the factors behind those price movements and adapt their trade strategy accordingly.

This process is called deliberate practice and it’s what the pros do in any performance field to get better! Professionals of every kind (including athletes, doctors, musicians, etc.) participate in this process to get where they are today.

Deliberate practice can be broken up into three primary stages: the act itself, feedback, and incorporation. Let me discuss each one.

1. The Act

As the name suggest, the act is your attempted performance. It doesn’t matter whether it was successful or not; what is important is that you tried to the best of your abilities. In forex, the act pertains to actually taking demo or live trades.

2. Feedback

You must always remember that you cannot actively watch yourself when you trade. Instead of mindlessly going through the motions, you need to make a conscious effort to take a third-person point of view, record everything you can with your forex performance, and analyze what you did right and what you did wrong.

3. Incorporation

After you have properly recorded what you have done, you now need to take the steps needed to change the things that need changing. Ask yourself the following questions: Which pairs do I trade well? Which pairs do I do poorly? Which forex sessions are more suitable for my systems? By actively doing this everyday, you are able to jumpstart competence and develop your skills much, much faster.

By engaging in deliberate practice every day, not only does it become easier but the effect of the recording, reviewing and making adjustments turns one trading experience into many–thus speeding up the learning process.

Getting a jump start on this process is not hard at all. In fact you’ve got all the tools you need right at your fingertips! By getting accustomed to this process of reviewing both winning and losing forex trades–and actively adjusting to improve one’s system–losses can be soon minimized and market patterns can be learned.

Deliberate practice becomes much easier when you continue to expand your knowledge of forex trading. The world of trading is so big and dynamic that there is always something new to learn almost every day or every week.

Once you’ve learned the basics, don’t stop there! The more you learn, the more tools you can add to your forex trading tool box. And the more knowledge and tools you have, not only does deliberate practice and trading become easier, but the less risker your trading decisions can become. Here are some more ways to improve your deliberate practice:

1. Accept your losses.

It starts with accepting defeat. Once you accept that losing is part of forex trading then you can truly move on to deliberate practice and hard work so you can learn from these losses. Combining this with the thirst for knowledge and good discipline will set up your foundation for success.

2. Don’t stop asking questions.

Asking questions opens to the door way to more opportunities, new discoveries and more knowledge. An old and wise Chinese trader once said, “One who asks a question is a fool for five minutes; one who does not ask a question remains a fool forever.”

Asking questions from those who are more experienced might give that one bit of insight that could push you in the right direction or to the next level of your forex trading skills. You never know. It never hurts to ask. So, unless you want to remain a fool…ask questions!

3. Keep a trading journal.

Lastly, like any good student, you should always track your progress. You do this by keeping a detailed trading journal of the market’s behavior and your forex trading performance. This helps you see your strengths and weaknesses and helps you determine what you are doing right or wrong.

More importantly, keeping a journal keeps you honest. Most of us do not have the luxury of a forex trading mentor or coach to keep us straight, so in the end, it is only you who stands to gain or lose.

All it takes is initiative to keep learning and improving, and the discipline to stay on course towards your goals even when the going gets tough. Your success depends on YOU and YOU alone.