A single mistake could spell the difference between winning and losing a trade.This is why its important that you develop the habit of thoroughly planning your orders.Here are four steps you can follow to build good ordering habits:
Identify your entry, stop loss, and profit levels
trading ordersI wont go into the “whys” of a trade since everyone has their own methods for determining directional bias, time, and volatility expectations.
After you‘ve made your fundamental and technical analyses, you’ll be ready to mark your entry and exit levels.
Your entry and profit levels dont have to be set in stone as you adjust to what the market is giving to you, but you have to be firm on your stops; you can use a chart stop, time stop, or volatility stop to determine trade invalidation points.
Once you have your entry and exit levels, you can check your reward-to-risk ratios to see if the trade is worth taking on.
Use proper position sizing
Proper position sizing is THE single most important skill that traders could have. Without it, youll end up taking trades that are too big or too small, either blowing out your account or underutilizing a high performing trading method.
Typically, risking a max of 1% of your account per trade is recommended for new traders to avoid ruin, but that will change as your skills grow.
Using a position size calculator, you can match your ideal risk per trade together with your entry and exit levels to give you the exact number of units that you should work with.
Of course, you could always round them off (as long as you stay within your max risk) to make your trade journaling easier or if your broker isnt flexible with their position size offerings.
Determine the type of order you need
The term “order” refers to how you will enter or exit a trade. Be sure that you know which types of orders your broker offers.
As traders get more experienced, more sophisticated trade management tools such as good ‘till canceled (GTC), good for the day (GFD), one-cancels-the-other (OCO), and one-triggers-the-other (OTO) should be thrown into the mix (if a broker offers them) to better manage a position while you’re away from the computer.
Make sure you read up and practice using them A LOT before going live with them.
Monitor your trade
Your involvement in your trade doesn‘t stop with placing orders. Whether you’re a day, swing, or position trader, you have to keep close tabs on price action and market drivers to see if your initial trade idea has been invalidated.
With time and experience youll learn to identify which reports are just noise and which ones require trade adjustments.
Whats important is that you find a balance between being flexible to the changing market conditions and sticking to your original trading plan.
Remember that perfection in performance isn‘t a perfect win percentage–it’s about doing all the right things, the right way, at the right time and avoiding as many mistakes as possible.
So try to make a habit of accurately placing your trade orders and double-checking them every time. The forex market is unpredictable enough; dont make it harder on yourself to be successful with execution mistakes! (Source:Babypips)