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How to trade in difficult trading conditions

In this weekly video:
00:24 – Tough trading conditions
00:57 – Part of the bigger picture
01.35 – Don’t force trades
03:20 – US Non-Farm Employment Change Data

How do we trade the Forex market when the conditions are not great for trading? Let’s talk about that and more, right now.

Hey, Forex traders, it’s Andrew Mitchem here, the Forex Trading Coach video and podcast number 236.

Tough trading conditions

Right now, the market conditions are horrible for trading. Not particularly friendly. Results overall are not great right now. Three weeks ago I was reporting how conditions were fantastic, were making some excellent trades, excellent returns, and since then, the last two weeks, the last week of July, first week of August, I personally found, and so many thousands of other traders all around the world found the conditions are not great, and we’ve had a couple losing weeks. That happens, that’s part of trading, but right now, when you’re in it, it’s not easy.

Part of the bigger picture

Let’s talk about that, because it is a part of the bigger picture of being a successful trader. You have to accept the good times, and you have to accept the bad times. What can we do about that? Well, first of all, we can kind of expect that these conditions will be happening right now. We’re in the northern hemisphere summertime, so a lot of the banks, the big institutions, their staff are on holiday, the volumes within the Forex market have been reduced. There’s some volatility, yes, but the conditions are not great, and it’s been fairly hard trading conditions. I personally have found there have not been that many what you call A-grade trade setups.

Don’t force trades

The danger of that is you then start forcing trades to happen, and you feel like you should be trading all the time.

A number of things you can do to counteract that. One, make sure that you have low risk per trade, and always have low risk per trade. Number two, try to have multiple factors all backing up the trade at the same time. I was on a webinar with my clients just yesterday and we were talking about the trades, and some of these trades were hand-picked. We were trying to look at what would have been the best trades over the last week, and some I’ve taken, some clients have taken, and some were just hand-picked to be this is the perfect trade. If you waited for this, this would have been what we were looking for.

Now, those kind of trades, we were finding five, six, seven, eight, nine, sometimes ten things all in the favour of those trades, the profitable, winning trades. When we were looking at trades that people had taken or I had taken that lost, there were things there that were a little bit doubtful. When you have that indecision, when you have those doubtful factors with a trade in these conditions, and you know that every year, end of July through August is going to be tough because it just is every year, when you have these conditions, you have to be really quite strict with your trades. You have to have these multiple things all showing at the same time. Give yourself the best possible chance of that trade to be profitable by putting lots of factors all in the favour of the trade at the same time. That really is the key there. It’s making sure you don’t trade overly, like don’t trade too much, don’t force trades. If there’s a little bit of hesitation, a little bit of doubt of what you see in that trade, don’t take it.

US Non-Farm Employment Change Data

Today as an example, with non-farm employment change, non-farm payroll day, I’ve seen four trades that I was about to trade on the daily charts and post for clients, but I’ve said no to all four of them. One, it’s non-farm payroll day, but two, there are a few factors there. Yesterday we had the rate announcement out of the UK, and that’s affected the pound. It’s dropped a lot. Is that purely a news reaction, or is that technically now a sell-off in the pound coming? There’s a few doubts in my mind there, because the pound has been really strong up to that point. Put that together with non-farm payroll day, and it’s like, there’s a few things here I’m not overly comfortable with. Therefore, yes, technically they’re good-looking trades, but I’m not taking them. I know we’re in these tough market conditions. Look at the bigger picture, ride out August, and then wait for conditions to come right again, and then get back into profitable trades. High reward-to-risk trades, but low risk per trade.

That really is the bigger picture key. It’s a learning lesson. It’s quite tough when you’re in that little bit of a lull when the conditions aren’t great, but overall you have to look at the bigger picture and accept that you do get dips. You don’t get a straight line in your return equity, so this does happen from time to time. Ride it out, be patient. Wait for the good trades, the good times will be soon around the corner.

This is Andrew Mitchem, the Forex Trading Coach. Have a great weekend. I’ll see you this time next week.

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