{"id":150460,"date":"2019-06-28T10:00:59","date_gmt":"2019-06-28T14:00:59","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=150460"},"modified":"2019-06-28T06:49:41","modified_gmt":"2019-06-28T10:49:41","slug":"how-to-improve-your-trading-decisions-weighting","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/06\/how-to-improve-your-trading-decisions-weighting\/","title":{"rendered":"How To Improve Your Trading Decisions: Weighting"},"content":{"rendered":"
June 28, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

A common factor in the decisions traders make is paying attention to the right decisions that maximize profitability.<\/p>\n

Not only is it important to make the right decisions, but it\u2019s important to make the right decisions about the right things. Because there is so much information coming from the markets, no single person can process it all. So, we focus on certain areas of interest.<\/p>\n

We do the same when it comes to decisions. As a trader, you constantly have to be evaluating the market and making choices about your trades. The thing is, psychologically, we are predisposed to put more emphasis on certain decisions than others. Some are more important, obviously, but do we always focus on those?<\/p>\n

Maximizing Profitability over Number of Trades<\/strong><\/h2>\n

The human brain is not a machine. It has emotions. It has instincts. And the subconscious is\u00a0always<\/em>\u00a0there.<\/p>\n

One of the most common elements of humans is to be adverse to risk. It\u2019s a well-known fact that markets don\u2019t like risk. And that\u2019s because they are composed of humans!<\/p>

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Therefore, we tend to focus on decisions that are perceived\u00a0to involve risk \u2013 that is, when we open a trade \u2013 and discount decisions that are not so evidently associated with risk (such as setting stop losses). This leads us to care more about how many trades we have instead of looking at the market in terms of profitability.<\/p>\n

Finding the Right Balance<\/strong><\/h2>\n

When we care more about certain decisions, we will put more effort into them. The problem is this can come at the cost of ignoring other decisions that are just as important. But, because they are perceived to be the opposite of risk \u2013 for example, closing out a trade \u2013 we often don\u2019t make as good a decision simply because we subconsciously don\u2019t feel it\u2019s as important.<\/p>\n

Often this inadequate prioritization of our decisions is because of hidden risks. For example, deciding to jump on a trade without checking the economic calendar.<\/p>\n

You see a good opportunity, so you focus on what\u2019s happening in the market. Checking the news, or the economic calendar is not an important decision because you don\u2019t make or lose money by doing it. However, you might make a great technical analysis decision on a particular trade, but it ends up going sideways because there was an event on the economic calendar that caused the market to react differently.<\/p>\n

It\u2019s Always Personal<\/strong><\/h2>\n

Finding the best balance for which decisions are most important depends on your trading style. But, if you are aware of the fact that you need to prioritize your decisions in a way that isn\u2019t necessarily common sense, you can optimize your decision process to suit your trading.<\/p>\n

One of the ways to get a handle on this is to make a decision flow chart.<\/p>\n

When you have a moment that you\u2019re not focusing on the markets and trying to make a decision with all the information jumping at you, work out\u00a0every decision you make in the process of deciding to trade.<\/strong><\/p>\n

This will help you visualize your \u2018decision tree.\u2019 You will see which are\u00a0actually<\/em>\u00a0the most important, and which aspects of your trading you are not putting enough focus on.<\/p>\n

Divide and Conquer<\/strong><\/h2>\n

You\u2019ll be surprised to learn how many decisions you make even before you start to trade, ones you aren\u2019t even aware of.<\/p>\n

If you weren\u2019t paying enough attention to remember, how focused were you on that aspect of your trading? There might even be decisions you should be making, but you just aren\u2019t. Maybe you aren\u2019t objectively deciding where the best stop loss is, because you\u2019re too eager to jump on the next trade.<\/p>\n

Record each decision you make in a given trade, and then see how much attention you pay to each step, and compare it to how much each one impacts your profitability.<\/p>\n

Are your trades getting stopped out a lot?<\/strong>\u00a0That might not be a problem of entering the wrong trades, but of\u00a0setting the wrong stop loss<\/a>.\u00a0Want to improve your profitability?<\/strong>\u00a0How much thought are you giving your take profit levels?<\/p>\n

Bottom line is to weigh each one of your trading decisions in accordance with how much they affect your profitability, as opposed to how hard they are.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex A common factor in the decisions traders make is paying attention to the right decisions that maximize profitability. Not only is it important to make the right decisions, but it\u2019s important to make the right decisions about the right things. Because there is so much information coming from the markets, no single person […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-150460","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/150460","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=150460"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/150460\/revisions"}],"predecessor-version":[{"id":150471,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/150460\/revisions\/150471"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=150460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=150460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=150460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}