Mixed signals in forex can definitely make things … complicated! Know what I mean?
When you get mixed messages from multiple different indicators or different time frames of the same trading instrument, which one do you follow? Despite our deepest desire to understand, mixed messages trip us up. What can we do about it?
In searching for answers to that question, I found myself on a “dating advice” website which outlined 10 ways to deal with mixed signals relating to the opposite sex. It’s kind of hilarious but this really happened, so I’ll do my best to show you how similar trading is, and just how much you have to gain when you see mixed signals in forex charting.
- Don’t jump to conclusions.
Price moves with ebb and flow. If the market moves against you, look for evidence of failure to progress in that opposite direction. For instance, if you were selling into a range pattern and price went up, it doesn’t necessarily mean it’s immediately going into an up-trend.
- Take off your blinders.
Don’t be blinded by your desire to see what we want to see. Applying it to trading … easy. Before you do anything in trading, look earnestly for evidence of the opposite market move and see what you find.
- Don’t take it personally.
The market’s mixed signals have nothing to do with you, so stop being embarrassed about it. The market is not out to get you. There is no shame in “stop-and-reverse,” in fact it’s sometimes your best move! You were buying, now you’re selling. Nothing personal about it.
- Back off.
When you have a strong bias for direction you’re more likely to miss the “signals” pointing to the opposite direction. Hang onto your opinions loosely when it comes to price action.
- Believe what you’re told.
The market is always either in a trend pattern or a range pattern. There is nothing else. If price is within the parameters of your range pattern, expect range market behavior, even if you get other mixed signals.
- Don’t be demanding.
Just because you’re ready to trade doesn’t mean the market is ready to move. Hmmmm… sounds familiar, doesn’t it?
- Make sure you’re not contributing to the confusion.
When mixed forex signals make you second guess your trade, ask one question. “Why did I take this trade in the first place, and does that reason still exist?” Ok, so that was 2 questions. If the answer is yes, just give it a little time and see if the confusion calms down on its own.
- Be aware of over-analyzing.
Ok, now, hold on. This is getting a little too personal. That’s kind of like telling a stressed out person not to feel stressed out! It sounds good, but is it really possible! No. (Or, maybe I’m just being defensive! I wonderrrr…) Anyway, if you think you might be over-analyzing the situation, have an end-all parameter, and go with it. For me, it’s the pattern. If price is in a trending pattern, I expect trend behavior. If price is in a range pattern, I expect range behavior. Sometimes that quells your inner over-analyzer.
- Bolster your self-confidence.
Can you think of a reason to be confident when you have a losing trade draining money out of your account, and you also now see mixed signals and you fear you might be trading in the wrong direction? I have 100 tricks to deal with this, but I’ll just tell you one for now. Imagine looking back on the chart, when the trade is over and price went to your profit target as expected. You would feel great for hanging in there with it. You could also recall the time you took the loss right before the market turned in your favor and went to your would-have-been profit target. Either way, when you remember why you were in the trade in the first place, it’s an invitation for confidence to join you.
- Know when to walk away.
Take a walk or even a weekend! Get out, get a change of scenery and you’ll change your emotional state too. It doesn’t mean you don’t love what you do! If mixed signals are getting the best of you, get away and come back with your best version of yourself.Mixed signals in forex are going to happen, but the good news is we don’t always have to assume the worst. Albeit nerve-racking, sometimes mixed signals can serve you well.
- Don’t jump to conclusions.