Forex traders who need to be consistently profitable know the importance of tracking the rights and wrongs of the trades that they take.

Unfortunately, the impact of the trades that they DON’T take is simply too often ignored.

Traders aren’t any strangers to missing good trade opportunities. At one point or one other we’ve encountered setups that we didn’t take despite the fact that they so clearly fit our biases and methods. All too often, those missed trades also are inclined to be winners.

There are many explanation why we fail to catch good pips. Steve, for instance, could have chosen to remain within the sidelines after losing a trade or two.

Tony might have been distracted by one other trade while Peter lacked the arrogance in pulling the trigger because his biases didn’t match along with his friends’.

Meanwhile, Natasha has met her each day quota and has stopped trading while Clint simply didn’t have enough balance for one more trade.

While there are good reasons for missing trade opportunities, not taking valid setups also can cost you in the long term.

First, you’re slowly damaging your account by not taking perfectly good setups. The chance costs could add up and also you won’t even understand how much potential profits you’ve lost unless you’ve tracked them on a journal.

For mechanical traders, not taking all of the valid trades would create discrepancies between your backtested results and your actual performance. You would lose confidence in your system before you even give it a probability to succeed in its full potential.

Missed trades also can make a dent in your trading psychology. In the event you make yourself consider that it’s okay to not take trades after a losing streak, then you definitely’re falling into the recency bias trap.

Losses are a part of trading and the outcomes of your previous trades shouldn’t influence your decision-making skills in your future trades.

Last and possibly probably the most dangerous impact of missed trades is its tendency to steer traders into taking revenge trades.

Traders who miss an excellent opportunity are tempted to “make up” for it by taking a less-than-ideal setup and possibly trade more aggressively while they’re at it. As I’ve noted before, revenge trades can kill your account one trade at a time.

So how are you going to minimize your missed trades? Listed below are 4 ways:

1. Journaling

It’s hard to deal with an issue in case you can’t see it. What made you hesitate? Were you distracted? How often did the pair go your system’s way? What could you might have done to avoid missing those sorts of opportunities?

Logging in your missed trades on a trading journal could show you how to discover your triggers and push you into sticking to your plan in the longer term.

2. Set alerts and orders

In the event you don’t have the time to look at your charts otherwise you’re not around when good opportunities often pop up, then consider setting price alerts or using entry orders on your trades. You would even step it up by designing a straightforward mechanical system in your platform.

3. Decrease your position sizes

In the event you miss most of your good trade ideas since you lack the arrogance to take them, then you definitely might want to diminish your position sizes. This fashion you’ll lessen the pressure of trading for money.

After all, practicing good risk management techniques also can go a great distance at boosting your confidence.

4. Take a look at the large picture

ccept that losing is as much a part of trading as winning. One or two losses won’t matter in case you trust your system and also you have a look at the large picture.

Getting used to losses is the one way that you just’ll have the ability to give attention to the method as a substitute of profits.

Traders shrug off missed trades just because they don’t see its impact. Unlike the losing trades that they do take, missed trades aren’t often logged within the spreadsheets with the goal of minimizing them. Unfortunately, you may’t improve on what you may’t see.