In this quick educational video, I will go over how I incorporate “forecasting” in my trading, and how that helps me to be a better trader overall emotionally and psychologically.
Couple things you “forecast” prior to the actual entry:
1. You should draw out the different possibilities on the price’s movement.
Different possible scenarios if possible. IF you are looking for short, then draw out the actual move from where the current price is, and take a screenshot of the possible move.
This allows you to remember your plan to execute the position once it appears.
2. You should also think about a back up plan, what if the price goes up now instead of down from your analysis ?
Are you still looking for short then? Or are you going to change your bias if price action then develops price action instead?
You should prepare yourself if your bias is wrong, then what would you do next.
3. Utilize the R:R tool box, “forecast” the actual entry, SL, potential TP.
This will allow you to understand your R: R and where you would set your first, second targets.
Take screenshots if necessary to remember.
4. Forecast what you will do once price hits your TP.
Are you simply just going to exit the trades now, or will the further development of price action give you extra confidence that the trade can keep going, and you should hold on to the trade?
What do you want to see from the price action in order to change your thoughts?
This will eliminate emotions as to whether to hold onto a trade or take profit.
As you do more and more of these forecasts, the actual entry will be relatively easy.
You have already forecast the possible scenarios, entry, SL, TP, continuation..etc. So there won't be any fear of losing, or fear of missing out.
That will help you to keep your emotions at bay, and execute the trades accordingly.
Many beginner traders often lose money because they are not prepared for what the market will do. When something happens, then they react to the situation. Often enough it's too late, and they will make a decision based on emotion.
Forecasting allows you to eliminate those emotions, and let your plan run.
As always, let me know if you have any questions or comments.