Forex Trading,Some Points to Take in Consideration

Here are some important points you need to take in consideration while creating your trading system.

1. Always be skeptical about your own ideas, focus only on results. Sometimes is easy to track trading opportunities, what is hard is to capitalize on them and make money from them. The performance of any trading system should be measured with actual trading (either demo or an account with limited funds).

2. Sometimes you lose even when you have followed your system to the rules. Losses are part of the game, there is no possible way to avoid them, and we need to learn to lose. So if you have followed your system 100% and took a loss, celebrate it! The only way to stay ahead of the game is by rigorously following your system.

3. Sometimes while trading large positions you can lose control of your emotions. Don't be overly aggressive with the market and follow a well planned money management technique. It should tell you what you are going to risk on your next trade.

4. Try to understand why your system works, this way you will develop the required confidence in yourself and your system.

5. There will always be some “indicator” that could have kept you out of a losing trade. But remember your system is not designed to win all your trades, but to win most of them.

6. When you finally created your system, describe it in simple and logical terms. If a 15 year old kid is not able to understand it, then something is wrong with it.

7. Use only 2-3 indicators: one indicator to identify the trend and one or two indicators or variables for entries and exits. The more indicators you use, the more complicated your system becomes. Most of the time “the simpler the system the better performance it will have”. Also use non-correlated indicators, do not choose two indicators that are supposed to measure the same market condition.

8. Test your system over large data samples (over 50 trades) and in various market conditions, this way you can see under what conditions your system works better.

9. If you decide to trade several currency pairs, try non-correlated pairs. For instance, if you trade long the Euro and long The Pound, your are likely to get the same result on both of them, elevating your risk if the market goes against you.

10. News trading? Determine whether you are going to keep your trades open during important news announcements. If you are trading for the short term you are likely to keep tight stops, and an important news announcement might hit your stop loss level.

11. While you are in a trade, open your mind to every possibility, sometimes you don't see or ignore evidence against your trade.

Forex Trading Mistakes - Not Being Aware of Humane Nature

 So far, we have learned that trading should be undertaken similarly to any other business. There are losses as in any other business (like inventories not sold), but at the same time, it is also important to understand that trading itself is like no other endeavor. Some attitudes that could have given great results in any other task in life could have disastrous effects when it comes to trading. Some of them are listed below.

Fight! Till the End

Since we were kids, we are all taught to fight as hard as we could and do everything in our hands to achieve the desired results or get what we want.

When it comes to trading, the results could be far different. This is commonly named in the trading environment as “marrying one position”. Once you enter a position, you are convinced that it is a winner. Just as you got in, the trade goes against you and you might think “it has got to go somewhere first”. As it keeps going against you, you are still convinced that the trade is going to be a winner. Then you will probably think “operators or money makers are trying to scare us”. As your trade keeps going against you will keep telling yourself “hold it, hold it”. Then you realize the trade has gone too far. This makes it hard to take the loss, and you will probably say “I will wait to get break even, it probably wasn’t a good trade after all”. And the next thing you know is boom! Margin call....

The best thing to do in order to avoid this happening to us is to follow our trading system. Remember, the first time you violate your rules, could also be the last time you trade.

Trial and Error

This is a common practice in many tasks of life. And often it is the only way to get the desired results. Like in the scientific arena in some of the most important findings, scientists actually weren’t looking for what they found. It was the result of trial and error.

In the trading environment, doing this in a real account, will lead you to wipe out your trading funds. You cannot start trading your real account trying different indicators, patterns or systems to see if it gives you the results you are looking for, or if the system fits you.

You need to find what systems/indicators suit you before and not after you start trading your real account.

100%

Since kids, we were taught that we should try as hard as we could to achieve an A or an A+ (100 or 90%) on our grades. Getting those results was proof that we understood any given subject. And of course some of us got a little present as an incentive to keep trying hard.

In the trading environment, this could give us the wrong idea that having a system that is right 70% of the time is an average system, when in fact is an excellent system.

This kind of thinking could lead us to an eternal search for more accurate systems (the aforementioned Holy Grail).

FACT - These kinds of attitudes might make perfect sense in any other endeavor but they complicate our trading careers. For this reason, we need to open our minds to every possibility, even if it doesn't make sense in other areas.

Success in Forex = Learning + Practicing + Update Knowledge

Forex Trading Mistakes, Lack of Discipline

Discipline is a very broad word when it comes to trading. But it all comes down to one sentence, if you have the discipline required to be a good trader, your chances of success in this business will get higher, if you don't, you need to work on it so you could reach your trading goals.

It requires discipline to develop your trading system. Most of us are eager to enter a trade when it all begins. But if you don't develop the guidelines to follow on each trade, I am afraid the trading adventure will end sooner than you think. It requires time, effort and hard work to develop the system.

It requires discipline to follow your trading system. As stated before, there are no better decisions than those made by following your system. Take for instance the following scenarios:

1. You followed your system and made a winning trade.

OUTCOME: You will gain confidence in yourself and your system

2. You followed the system and lost the trade.

OUTCOME: Losses are unavoidable, you followed you system and it will give you confidence in yourself, because you know losses are part of this business.

3. You took a trade with no signal from your system and lost.

OUTCOME: You made a mistake and it turned out as a negative experience. You will now think it twice before entering the market with no signal.

4. You didn’t follow your system and didn’t take a signaled trade that turned out a winning transaction.

OUTCOME: Confidence in yourself will drop substantially.

As you can see here, mistakes are to be valued in terms of the decision made, not in terms of the money made or lost. We will develop more on this later on.

Discipline is also required when it comes to your working environment. To establish your working hours, to organize yourself, etc.

FACT - Discipline is a must in the Forex business. We will elaborate further on this subject in the following lessons.

Success in Forex = Learning + Practicing + Update Knowledge

Forex Trading, Not Having a System

 Some traders make trading decisions without any methodology or system. Imagine yourself on a trip in which you intend to drive to the west coast. If you don't study the route to take, where to rest, or you don't even know what cities or villages you are going to pass by, you will probably end up in the east coast, or on the north border, but most importantly you won’t know in the middle of your adventure if you are on the right path. On the other hand, if you know the route to take, villages and cities you are going to pass by, you will know you did something wrong should you drive into an unknown village. At this point, you will review your route, turn around and get on the right route.

The same goes for trading, if you do not use a system or methodology you won’t know what you are doing wrong until it is too late and your trading account is in great danger.

You cannot get into a trade because you think or believe the price is going to go up or down. You need a plan of action, a trading plan that will get you in and will guide you through each trade.

Imagine a trader at the end of the month; her trading account is up, the best month ever. Then she decides to go back and review all the trades made during that month. When looking at the trades she realizes there is no possible way to replicate those results because all of them were entered without any system what so ever, in a word, randomly. In other words, she got lucky. The same goes when everything goes wrong, she will not be able to discover what she is doing wrong because she is not following any system.

The most important thing about having a system is that all the rules that govern it were made when there was no money at risk. This way you are sure that every decision taken based on the system is in your best interests. These decisions are not clouded by psychological factors (fear, greed, hope, etc.) that are present when real money is at risk.

FACT - You need a system or methodology.

This will help you realize whether what you are doing is right or wrong. It will also guide you through each trade. We all make mistakes occasionally, but recognizing them gives you a chance to study, learn from and work past them. Remember, the only way to get consistent results is by strictly following your trading system.

Success in Forex = Learning + Practicing + Update Knowledge

How To Be Successful Forex Trader - Looking for Excitement

 Some other traders are attracted to the Forex market or any other financial market because of the excitement that is to be and be named a trader. And to tell you the truth, it is very exciting. But if this is the main reason you were attracted to the Forex market, or more precisely, this is the reason you are still trading or interested in trading the Forex market, sooner or later you will discover the most expensive adventure you have ever known.

At first, it is all excitement, but as the time goes by, and traders get more involved in the trading process, they realize it is not as easy they thought it would be. All the excitement calms down, and it becomes an obsession. At this phase, only the 5% of all traders, the ones that are consistent profitable, still think it is exciting.

Believe me, there is nothing less exciting than losing money month after month. This happens to around 90% of all traders.

I am aware most of us think trading is exciting, and there is nothing wrong with that, as long as it is not the main reason you are still trading or intend to trade.

There are many other exciting adventures that are way cheaper than trading. Analyze it, because trading, if treated this way, could be a very expensive adventure.

FACT - Yes, trading is exciting, but this should not be the main reason you are trading or intend to trade. Do some thinking on it, otherwise, you will find out the hard way as many have done.

Success in Forex = Learning + Practicing + Update Knowledge

How To Be Successful Forex Trader-Looking For Easy Money

Unfortunately, most people are attracted to the Forex market for this reason.

All because of the publicity of:

• Some brokers showing or rather trying to show how easy is to trade and make money almost instantly in the Forex market
• Signals providers offering the best signals that will make you rich instantly and reach the financial freedom every trader is looking for by showing you the secrets of the big dogs.

Is it easy to trade?

Yes, it is true, everyone can do it, putting on a trade is only one click away.

Is it easy to make money?

Yes, I will have to agree with this one again, it is easy to make money. No knowledge of even what a constitutes a currency is required to make a winning trade. What they don't tell you though, is that it is even easier to lose a trade (because of the spread).

What is important here is that you cannot earn a living trading that way. In order to make a living trading the Forex market, you need to be consistent, and believe me, this is no easy task. To be a consistent profitable trader means that over several periods of time a trader makes money. Just 5% of all traders achieve this goal. Therefore, it is possible, but in no way easy.

Is it possible that a signal provider could make a trader rich? I don't think so. There are no certainties in this business; in fact, no one (signal providers) will ever care if you lose money. The only person responsible for losing money following someone else’s advice, will be you. Because you are the one who is actually executing the trades.

There are no short cuts; no one will ever make you rich but yourself. How do we achieve this? Working hard, this is the only way you can succeed as a trader.

Besides, what would you get by following someone else's advice? Nothing, following blindly someone else's advice would not give you the knowledge, the experience and nothing else good at all. Because you do not know the reasons behind any trade, you don't even know if the signals come from a system. You might make some money if the signals are good. But let me ask you another question… Do you intend to rely on one signal provider for the rest of your life? I don't think so.

So at the end, you will lose precious knowledge and experience that you could have gained by trading on your own, and most importantly, you will have lost time.

And what about the big dogs’ secrets?

Again, there are no secrets, the only truthful secret is that there are no secrets, but please keep this between you and us J 

FACT - There is no easy way to become a consistent profitable trader. There are no shortcuts, and the only way to get there is through hard work, self-discipline, patience, understanding the market, experience, taking only calculated risks, and more characteristics that we will learn throughout the course.