I get a lot of emails from new traders who want to know what the best markets are. But that’s not exactly what today’s lesson is about. If you want to know which markets I think you should start with, click here. Today’s lesson is about why you should have a favorite market to trade on. In other words, one market that you know very well and trade in more often than others.
Being a Jedi Master in one market can help you become more of a specialist, and the people who make the most money in life are specialists (think surgeons, lawyers, pro athletes etc.) You don’t have to trade on just one market, but I suggest focusing on a few markets and having one that you like best. For example, since I live in Australia, the AUDUSD is my favorite currency pair. I know more about what makes it move and how it moves than other pairs, since I know my home country and how it works better than others. If you live in the UK, it makes sense that you might like the GBPUSD.
Let’s talk about some of the other major benefits of trading in your favorite market:
Becoming an expert in a certain market
If I told you I knew someone who was a master at trading the AUDUSD, would you not think that person was better at trading the AUDUSD than someone who trades 15 other Forex pairs? I think you’d like it. We all know that practice and repetition are the keys to being wildly successful at anything, and it’s clear that someone who is a master of the AUDUSD market has practiced and focused on that market much more than a trader who trades 15 other Forex pairs.
A brain surgeon doesn’t learn 10 different things in school and then become a brain surgeon. He or she goes to medical school and focuses on brain surgery. If they didn’t, they wouldn’t be brain surgeons. A professional golfer doesn’t try to also become a professional tennis, basketball, or football player, does he or she? We have to spend most of our time on something if we want to be wildly successful at it. This is a fact of space, time, and being human.
So why do so many people think they can study and trade successfully in 20 different markets?
It makes sense that the more you work on something, the better you will get at it. The main reason you should have a favorite market is because of this. You don’t have to trade on just one market, but you should have one that you know better than any other. This will also let you know when the market is choppy and not worth trading and when it’s trending or in some other profitable state.
Helps avoid over-trading
I’ve said this before, and I’ll say it again: when you’re analyzing the markets, the fewer variables you have to deal with, the better off you’ll be. Focusing on one market and having a favorite market naturally keeps you from trading too much or analyzing too much.
In the long run, most traders lose because they trade way too much. Obviously, you’ll trade a lot less if you focus on one market instead of twenty. If you know a lot about the price action and dynamics of, say, one Forex pair, you will also know more about the market as a whole. Many Forex pairs are linked to each other, so if you know a lot about one pair and how it moves, it will help you understand the other markets you follow better.
I’ve written articles about why less is more in trading, the sniper approach to trading, and what crocodiles can teach us about trading, among other things, and the idea of having a favorite market as your go-to market fits in perfectly with the ideas I talk about in those lessons.
Helps keep us from over-thinking.
Having a favorite market also helps you keep your mind clear and stay on task. It makes the market easier to understand and stops too much thinking about it. If you try to look at too many markets at once, you’re likely to feel overwhelmed and confused. This usually leads to making a bad trade and losing money.
My advice is to pick a favorite market and build your business on that. Every day, that’s where you start your analysis. Then, if you want to add a few more big markets in the future, you can. But I really think you should start by getting to know one market well at first. I don’t think there’s ever a good reason to keep an eye on a lot of markets. I only keep an eye on about ten markets regularly, and as I said above, I have a favorite Forex pair, a favorite commodity, and a favorite stock index. I think you should eventually do the same.
Helps you manage risk properly
Traders who are too focused on analyzing a lot of different Forex currency pairs often end up with too much debt because they trade in too many pairs at once. This is a very risky thing to do, especially because different currency pairs often go together. There is no “safe” way to trade in more than one FX pair at the same time unless you are willing to split your overall 1R risk among the pairs you are trading.
Having a favorite market, especially a favorite Forex market, can help you keep your risk under control in this way. If you usually only trade one pair, you are less likely to overextend your account by trading more than one pair at once.
Lessens the urge to trade
Suppose you only ever look at one pair. Of course, you don’t have to do this, but let’s imagine it for a minute. How much do you think the market would tempt you less if you only ever looked at one chart and that was the only market you ever looked at? As I said above and have said many times in other articles, most traders lose money because they trade too often. If you limit the number of markets you look at, you will be much less likely to be tempted to trade too much and therefore much less likely to lose money needlessly.
Conclusion
Try focusing on just one Forex market for a few months. Pick the one you feel most comfortable with and know the most about, and really get to know it.
Of course, you need to know how to read a price chart and price action patterns before you can trade successfully in any market. The main goal of any new trader should be to become “intimate” with the price action of one market. Once you know how to do well in one market, you can add more.
“If you don't find a way to make money while you sleep, you will work until you die.”
- Warren Buffett
HIGHLY RECOMMENDED BROKERS
MOST POPULAR FOREX ROBOT
Number One Robot for Forex Trading.
Based on Price Action and Trend Analysis with Artificial Intelligence.
Works Best with EURUSD & XAUUSD.
You can use this EA on Multiple Accounts with Life Time Premium Support.
MyFXbook, FxBlue & Live Trading Verified.
Monthly Expected Profit is 20% to 200% with very Less Drawdown.
check daily trading result
We will post our trading result daily on our channel. Please join our channel for daily updates.
