Trading can be stressful, not to mention frustrating, when just starting out.
Any business where you’re directly risking hard-earned money is bound to give you some anxiety, or potentially a lot of anxiety in some cases.
But it doesn’t have to be that way.
Apart from the financial risks, trading is stressful because there are a million different ways to go about it. You can scalp, swing trade, use technicals or fundamentals or both; the list goes on for miles.
Being presented with too many options can be stressful in and of itself.
I find swing trading on the higher time frames using simple price action to work the best. It delivers some of the highest probability trades I’ve ever seen in any market, not just currencies.
There’s another factor that has helped me over the years though, and that’s my process.
You see, I like to keep things simple, and the process I follow each week is no exception. Maintaining a minimalist approach to trading helps keep my head out of the clouds and my emotions at bay.
In today’s post, I’m going to share with you a simple 5-step routine that will help ease your stress levels and deliver higher probability setups.
Before we begin I have just one request—don’t underestimate the simplicity of these steps. When implemented and followed with discipline, this routine is all you need to uncover high probability setups month after month.
Read on to learn how to reduce stress and increase your trading profits.
1. Identify Key Support and Resistance
The first thing you should do when opening a new chart is draw your key levels. These can be horizontal areas, trend lines or a technical pattern such as a channel or wedge.
Doing this will provide you with a blueprint of what to do next. Without them, you’ll quickly find yourself chasing the market, which is the opposite of what you want to do.
You always want to wait for the market to come to you. So once you have these levels marked, it’s just a matter of sitting back and watching to see how the market reacts when it gets there.
Here are a few key points to keep in mind while performing this exercise.
Start with the daily and weekly time frames
Whenever you’re marking support and resistance levels, it’s a good idea to begin with the higher time frames. A top-down approach will allow you to identify the most important areas and disregard the rest.
The problem with using an intraday time frame such as the 30 minute or 1 hour is that you get bogged down by insignificant levels. There are too many price spikes caused by the news and other volatility-inducing events that can distract you from what’s important.
Once you have an accurate “big picture” view from the daily and weekly time frames, you can move down to a 4-hour chart to fine tune as necessary.
Adopt a minimalist approach
If you have 30 or 40 viewable levels on a chart, you won’t be able to place a trade.
I’m a huge advocate for maintaining a favorable risk to reward ratio where the profit is at least twice the reward. In fact, every setup I take these days must have a three to one profit to loss ratio or better.
You can’t do that if there are only 20 pips between each level on your chart.
Of course, there’s no way I can tell you a correct distance between key levels, as every currency pair is different. However, if there’s less than 100 pips between the horizontal levels you’re drawing, chances are you are overdoing it.
Remember, we want to identify the “key” support and resistance levels so we can use them to identify favorable setups and set profit targets.
Never force a level to fit
If an area of support or resistance isn’t obvious, it probably isn’t worth having on your chart. This goes hand-in-hand with my previous point about adopting a minimalist approach.
Also, by only paying attention to the most obvious levels you stand a greater chance of finding quality setups. It’s no secret that the reliability of a candlestick pattern starts with the support or resistance level at which it forms.
2. Maintain Your Watch List
One of the best ways to reduce stress levels and find more profitable trades is to maintain a watch list.
Think of it as your playbook for the week ahead. It’s where you will create your plan of attack for each week including the currency pairs you’re watching, levels of interest, and even your bias toward a particular market.
Without a watch list, you have no compass to guide your efforts. A new trading week begins and you’re free to trade whatever catches your eye first.
That’s what most Forex traders do and it’s a huge mistake.
You’re the only one responsible for your trading. No boss is going to tell you when and where to trade or how much to risk; it’s all on your shoulders.
Because of this, it’s imperative that you have a plan before the start of each week. Personally, I like to update my watch list on the weekends at the same time I’m writing the weekly forecast for the new week.
Once you have a watch list in place, the next goal is to actually follow it.
How many times have you strategized for hours over the weekend only to do the complete opposite on Monday?
I know I have. That used to be a terrible habit of mine many years ago.
I found that adopting a low-frequency approach was the key to overcoming habits like this. By “low frequency” I’m referring to the number of trades taken within a given period.
Once you understand that it only takes one good trade each month to make a considerable return, you won’t feel pressured to abandon your plan for the week.
After all, it’s usually the fear of missing out that causes us to take trades we have no business taking.
3. Check in Periodically (And Keep It Brief)
This is where so many traders fall off the wagon. They draw their key levels, update their watch list and then when the market opens, they sit and stare at their screens for hours on end.
There’s a reason why I only check my charts a few times each day—it helps keep me on the sideline when there’s nothing to do.
Moreover, each of those two or three chart sessions is only five or ten minutes long.
I spend no more than 30 seconds on each chart. Any longer than that and it becomes all too easy to begin seeing what my subconscious wants me to see—something to do with my money.
As much as I’d like to believe that my subconscious has my best interests in mind, experience tells me otherwise.
If you’re thinking I’m only able to find setups in five or ten minutes because of my ten plus years trading currencies, you might be surprised. Once you draw your levels in Step 1, it doesn’t take much time to know if you should act or stay on the sideline.
For those of you trading the 4-hour and daily time frames (which I favor), there’s no need to check your charts more than three or four times per day. After all, there are only so many 4-hour candles in a 24-hour session.
So there you have it. Check in a few times each day when the 4-hour candles close and especially each daily close at 5 pm EST.
But above all, keep your analysis sessions as brief as possible. The longer you sit in front of your screen staring at charts, the more likely you are to overtrade and ultimately waste money.
4. Update Your Trade Journal
You can’t expect to improve your trading performance if you aren’t tracking and measuring the results.
This is your chance to not only keep track of your performance but to make note of what you did well and what can be improved. That’s vital information to have, particularly in such a solitary business where you are the only one standing between winning and losing.
The method you choose to keep track of these details is up to you. It could be something as simple as a notepad or as complex as an online application.
Personally, I built myself an online trading journal years ago that has a built-in diary of sorts where I can take notes on market activity. I liked it so well that I decided to give members free access for life.
Whatever you choose, it needs to be something that is convenient and easy to update. If it’s not easily accessible, you aren’t likely to keep it updated.
Last but not least, try to make it a process that takes no more than 15 minutes. Even those with incredibly hectic schedules can carve 15 minutes out of their day to update a trade journal.
5. Wash, Rinse, Repeat
The last step is to take what you’ve just completed and do it all over again next week. Establishing a routine like this is an excellent way to add structure to your trading, which will inevitably help foster profitable habits.
Unless you plan on adding new assets to your list, you won’t have to complete the first step at the start of each week. However, I do recommend that you periodically assess the accuracy of your key levels and modify them as necessary.
You will also need to add new support and resistance levels as the markets on your list progress. The good news is that you won’t need to do this often if you’re utilizing the 4-hour and daily time frames.
One reason trading is such a difficult endeavor is because of the freedom we’re offered as traders. Nobody is around to tell us what to do and we can “work” whenever it pleases us. We can also buy or sell as much as our account will allow.
All of that sounds great until you add greed and fear to the mix. That’s when this limitless environment becomes dangerous.
A simple routine like the one above adds a heavy dose of discipline to an otherwise lawless world. It will help keep those unwanted emotions at bay and allow you to trade what you see, rather than what you want to see.
Trading Forex or any other market doesn’t have to be complicated. The five simple steps above will help to prevent overtrading and allow you to take higher probability setups.
You will also notice an almost immediate drop in your stress levels after implementing this routine. You’ll no longer feel the need to sit in front of your computer searching for setups for hours on end. Instead, you simply sit back and let the trades come to you.
If you want to succeed in this business, you must have a plan of attack. Your watch list should outline precisely what you’re looking for each week including specifics about the setup, key areas, and potential targets.
A great way to prevent overtrading is to limit your screen time by checking in periodically throughout the day. Also, try to keep each session as brief as possible. By limiting the time you spend staring at your charts, you are less likely to pull the trigger on subpar setups.
Do you think this Forex trading routine will help you reduce stress and increase profits?
Let me know what you think in the comments below.
Sounds all too familiar – greed,fear, spending hours looking at the charts…
Thanks for your guidance. I must keep them in mind and discipline myself.
Peggy, you aren’t alone in that, trust me. Too much screen time is one of the most common pitfalls among Forex traders. Spending that time studying is one thing, searching for setups when there’s nothing worthwhile is quite another. Glad this post helped in some small way.
Great article. Part of the process is learning patience, and your words help greatly. Many thanks. Steve
Thanks, Steve, and you’re welcome.
Let me plz provide your pin bar strategy course details.
Thanks Justin for everything.Since l have joined to your comunity and bought course my trading is much better.Many thanks
Thomas, you’re very welcome. Pleased to hear you’re starting to find some success after joining the community.
hi Thomas please peovide me ur email ID
Simple but great rules every trader must abide by, i called it master key for reducing stress .million thanks
You’re welcome. Simple is always better in my humble opinion.
Excellent article. You are my mentor. But, as forex trader, Greed and Fear always with me. I am trying to get rid of them. God Bless You.
Thanks, Yasir. Glad you enjoyed it.
You are blessing to forex traders, and I appreciate your support and resistance guide lines. God bless you.
My pleasure, Hakeem.
you are very VERY CORRECT AND MATURED APPROACH TO TRADING,THANKS
this is very true justin. Thumbs up for sharing these powerful steps.
Cheers, Sandile. Thanks for commenting.
Well said Sir….It will be very helpful for beginner like me …
Always happy to help.
I really appreciate the way you simplified approach to this business in this five steps. I ventured in this business about a year and some months now trading by my self after a brief training that did not handed any knowledge of value of what it takes to even place a trade and when to get out from one. I have burn out my account many times because of over trading and bad trading decisions, how I wish I knew all you outlined here, it may have made the difference in the way I do things and my result may have been worthwhile. Thank you for making this available to people like me.
Anytime, Shadrach. Let me know if you have questions.
Thanks. A lot
The artical is very helpfull.
Please explain me key support and resist level and how can we draw on chart please guid me
You’re welcome. The lesson at the link below explains how to draw support and resistance.
5 steps very well presented by Justin Bennett.
please an indonesian
Informative and helpful article. I can already spot my mistakes.
You’re welcome. That’s great to hear.
That’s very informative, Dont you have a trendline pdf that can be printed out
Yes, you can find the PDF at the link below.
This routine will really ease me the stress of always sitting and staring on the system. And please is the open time on each candle stick real time? I want to know in other to enhance intervals at which I check on my trade on the 4h frame.
Thanks my mentor
You’re welcome. I’m not quite sure what you mean by “real time”.
Thanks for the plan as for me and my experiencce this plan when followed, makes trading much easier especially the emphasis on periodical check up to avoid overtrading, thanks indeed
Indeed.,this article is very very helpful for me to trade in the forex market. Thanks lot.
Pleased to hear that. Feel free to reach out with any questions.
I am absolutely impressed and motivated with the advice given by you….i am a beginner trader and my goal is to atleast make just enough to live from per month as a beginner. Stress levels are high hence i am working on finding a stratergy that will work for me. I like what you mentioned aboit the highs and lows, it is something that i am currently using as direction into what to do when i open my charts.Please share more info via email that will assist me in becoming a succesful trader.
That’s great to hear, Channan. Let me know if you have any questions.
Really useful, thanks. I’m guilty of planning at weekends then not following through and also spend too much time looking at charts. This will help me avoid those intra day trades where I inevitably lose money
Planning all weekend and then not following through on Monday is a common occurrence. I know I was guilty of it years ago. I found that by giving myself a limit of say two trades per week, I was able to focus on the favorable trade ideas and forget the rest.
Hi, Dear justin, good aritcle, gradually your good ideas help us in improving trading strategies and trading habits. Your free webinar 7 secrets of consistent forex profits improved more than expected.1. identify trend 2,price action trading mean —identify/looking potiential bull and bear 3. support and resistence level 4. trendline.5..channel/wedge 6. risk and reward ration and 7. finally trigger. Thanks
I’m pleased to hear that the webinar helped improve your trading. It’s all simple stuff, but incredibly powerful at the same time.
Where are details to join please?
Hi Roy, you can register here: https://dailypriceaction.com
But screen time does not mean you must trade you may be just trying other styles because on my case I have demos because you live account may be full of open positions so you can not add any so this means you practice other currencies using a demo account.
Absolutely. As I’ve mentioned in other articles, there’s a big difference between studying price action and scanning for trade setups. The former doesn’t require you to put on any trades, at least not in a live account.
Totally agree. Specially the need to follow your plan. If you spend a time of your weekend doing analysis and making a plan, ignoring it is like wasting your weekend time doing that work. Respecting your plan is respecting yourself. And that’s very important in a 1-person job like this one.
So helpful. Am learning everyday
Could not be more true, Justin.
I fell into the trap of over-checking my charts yesterday and ultimately overtrading.
I was working from home and got drawn in to taking a couple of trades on lower time frames that I should have left well and truly alone.
I got over-confident and it ended up costing me dearly (a familiar story..?) and I’ve now undone much of the good work put in over the past few weeks.
A timely reminder to stick to the plan and another lesson learned.
Thanks for the article, I’ll catch up with you in the forum.
Apart from all this, one other important thing that traders should adhere to is to do the homework. Traders should always check in on the possible trade setups by comparing the price action of the previous weeks. This can help them identify the right setups and make successful long term strategies that usually last no more a week or two. This is highly beneficial as traders can make the best of a growing or a declining trend without having to wade through the market noise. To know more about such strategies, get in touch with WesternFX!
Cám ơn bạn,mình sẽ đọc nó mỗi ngày để ghi nhớ và thực hành,mình đang cảm thấy rất tự tin
Great post there Mr Justin. I had a relieved after reading the above steps because it is the opposite I used to do. Thanks a lot .
How do i identify the key resitance and support?
Great stuff. Thank you. The problem most traders have is over-complicating things.
Wow….very professional,thanks Justin.
Thanks to Justin for his lessons, I feel really comfortable watching the charts and the commercials as well.
I would like to point on one thing I think is it very important.
FOMO – Fear of missing out is one of the greatest obstacles that prevents trader to become profitable. This status of mind is not only in Forex present. It is wide spread in all area of our lives.
Thanks for pointing this out to us because it is important to remember together with all other what was written.
It been few day know BT what I see on his post about price action , I salute
Thanks for stopping by.
i just like the way you trade my friend
Glad to hear that. Thanks for commenting.
Thnx Thomas te knowledge that tat u gave us about forex
Thanks ,Justin, I think this is the most important article I read, so simple and make a lot of sense .
So, till now, you must have understood the need to learn trading, both in practice and theory. So, it is right time we must look into some best ways to learn forex trading.
like self education forex trading seminar, individual trading etc….
This is the most important article for forex trading. Forex also known for Foreign exchange which is the largest financial markets globally. There are millions of people who have benefitted through trading forex.