can use trade filters to specify what they consider to be the most favourable conditions for . When the criteria for the best market conditions are met, the trader is alerted and can look for the best opportunity to open a . This effectively filters out any bad trades and only the best trades get executed.
Why filter trades?
With any , knowing when not to enter the marketWhat are value stocks? A value company is a company that app... More is just as important as knowing when to do so. Some traders may be overly aggressive or conservative, and this can have a detrimental effect on their trading success.
Setting filters and aiming to define the best market conditions for your strategy can lead to a more consistent approach and more profitable trading scenarios.
Types of trade filter
Trade filters can include a range of criteria such as time of day, areas and .
For example, you may choose to avoid entering the market during certain times of day, only enter when there is a strong or , and avoid trades that don’t offer a satisfactory risk to reward ratioThe risk to reward ratio measures the amount of profit a tra... More.
You can set personal filters so that you do not trade when you are stressed or anxious, and not in the right emotional frame of mind.
Take care not to over-filter
Over-filtering, i.e. setting up so many filters that the likelihood of conditions matching the specified criteria is extremely low, can constrain a trader so much that they have hardly any trading opportunities left at all. It therefore a good idea to make sure that the filters that you put in place when designing a trading strategy are .
To learn more, you can learn about technical analysisWhat are the principles of technical analysis? Technical ana... More and trading psychology:
