Have you ever heard the phrase, “Try it till it works”? Well, I’ll let you in on a little secret.
In some cases, the transaction may not apply.
One of the most common mistakes novice traders make is overtrading. They are afraid of missing out on making money, so they throw themselves into every little setting they see.
Don’t get me wrong. I believe that to be a successful trader, you also need to be a risk taker.
But there is a big difference between making thoughtful trading decisions and practicing proper risk management and blindly risking your money in every little setting.
This shotgun approach isn’t just damaging your account, it’s also bad for your mental health. A typical scenario looks like this:
After losing a trade, you look at a new setup and decide to go with it, thinking it will be a winner and offset your losses. Shabam! The market flips and the trade loses. Now you’ve just done more damage to your ego and account!
Instead of spreading it too thin, why not specialize it first?what are these Niche deal is about.
Regarded as one of the greatest mixed martial artists of all time, Royce Gracie used his mastery of jiu-jitsu to defeat other fighters. It’s all about finding what you’re good at, what you’re good at.
To define your niche in trading, you should consider at least four factors. By identifying them, you are more likely to match your trading with your trading personality.
currency pair
Each pair has its own behavioral tendencies, and it’s important to match your personality with the behavior of the pair you plan to trade.
For example, if you like trading with risk sentiment in mind, and you like volatility, then crosses such as EUR/JPY and GBP/JPY will probably work for you.
time frame
How much time can you spend trading? Which trading sessions are active during trading hours? Can you thrive in a fast-paced environment? Can you make decisions on the fly? Or do you need a lot of time and preparation before tackling a trade?
These are the questions you need to answer to determine your ideal duration and define your area of expertise.
trading framework
With years of experience, there are successful traders who base their decisions solely on intuition and intuition. Therefore, making a quick trading decision may not yield good results for your account unless you have done and confirmed everything.
To understand and anchor market behavior, you need to develop a framework that makes sense to you. And with this framework (chart patterns, moving averages, trendlines, etc.) you can make better trading decisions.
trading strategy
This basically addresses how to trade the market framework once you understand which behavioral trends make the most sense to you.
For example, if you’re good at recognizing consolidation patterns, you should decide if you’re most comfortable playing breakout setups or range reversals.
Some people are more comfortable trading in ranging markets, while others like to ride the trend. Some traders prefer working with numbers and statistics to charts and candlestick patterns.
Keep in mind that your goal when trading a niche is not to close the door and limit yourself. On the contrary, we do so to grow as traders.
It helps you overcome the pitfalls of overtrading and sets you up for expanding your horizons in the future. So once you define your niche, your corner of the sky, the sky knows no bounds.