THE SECRETE OF SUCCESSFUL FOREX TRADERS
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THE SECRETE OF SUCCESSFUL FOREX
THE SECRETE OF SUCCESSFUL FOREX TRADERS
THE
SECRETE OF SUCCESSFUL FOREX TRADERS
Taking control in the
management of your money in today’s world is perhaps one of the most important
financial imperatives facing us all. This check lists should serve you well and
keep you from becoming a victim of the market and false media information.
RULES OF
BECOMING A SUCCESSFUL TRADER
·
Trade With A Plan: In other to become a successful
forex trader you must set objective before you ever get into any trade.
Define all out comes. Not only what you will do when it goes right,
Determine the amount of capital you are willing to lose and conversely define
when you will take profits. Letting the market take away your profits by holding
on to a losing trade is not a good strategy. Write out a trading plan and follow
it.
·
Screen Your Trades: To select trading vehicles you
must you must have predefined method based on price momentum and trend. Don’t
guess what the future is going to be, trade the current trend direction. Your
method must consider your individual time frame and risk tolerance.
·
Always Look At A Chart: Never go into a trade
without looking at a chart. Never trade against the trend. Buying
and selling decisions are technical in nature, at times fundamentals will tell
you when to buy or sell a trade but you shouldn’t depend solely on them because
we have the impulsive and corrective wave make sure you always look at a chart
for entry and exit timing decisions.
·
Stay With A Trend: Your Probabilities
of success are far greater if you stay with a definable market trend.
Statistical these trends provide better profit potential with a lower amount of
risk. A good rule of thumb method is to watch a 25 day exponential moving
average of the close; this moving average represents the intermediate trend of
the market. A 14 day exponential moving average represents short term trend. The
use of these two moving averages should yield excellent results in keeping you
in the trend. If you perceive the trend is beginning to change you should act
accordingly by taking profit or placing stops to protect your capital and
locking in a profit.
·
Use Money Management techniques: Determine th
probable dollar losses of your trading plan or investment style based on your
trading record for the current year, then device a way to generate income
through passive sources. Cutting a loss quickly is the best money management
you can have. Too many times traders fall in love with a particular trade,
holding on as the stock begins to decline. If you are going to hold a trade over
night, never risk more than 3-5% of your available capital. If you are going for
day trade, an excellent rule of thumb is to only risk 1-2% of your capital in
any one trade.
·
Buy And sell with Confidence: Many times you won’t
feel quite right about a buy or sell decision. If this feeling persist after you
have done all your research and have followed all the rules to this point, don’t
take the trade. Too many times individuals try to rationalize a decision. Don’t
try to find a good reason for making a bad decision. Your decision must be a
confident one.
Don’t buy or Sell on Hot Tips: More money has been lost
on hot tips than in the US treasury. Why this exaggeration, it does make the
point clear. If some one tells you about an investment or trade, research the
recommendation before you put your more into it. Most novice investors and
traders to tips every day. Please don’t fall for the story no matter how good it
sounds. Always use technical analysis to make your buy and sell decisions, and
buy or sell based on facts.
·
Do Not Dollar Cost Average: If your timing decision
was wrong on an aggressive trade, don’t make the problem worst by trying to buy
a trade that is going lower. The probability is that you will only compound the
loss. I call this techniques disaster cost averaging. Don’t go
long until the trend is evident. Dollar cost averaging is good for your broker,
but if you continue this techniques, the broker you will become
·
No One Wins 100% Of The Time: many people enter the
trade focused only on the profits and do not consider the losses. If you think
for one minute you are going to win one hundred percent of the time, you are
wrong. Losing is just part of the cost of doing business. Your goal is to make
sure you control the risk and not blindly put your money at risk, like a buy and
hold investor. You must come to the realization that you will never learn how to
win until you first learn how to lose. How you handle loss psychologically is
truly the difference between the amateur and a professional. Professional trader
don’t react the same way as an amateur to loss. When a professional trader
losses, he or she simply says next. They don’t take the loss personally.
·
Always Use Stops: The proper use of stops will
protect profits and limit your losses. Look at stops as profit and loss
assurance. When you enter a trade, you place a stops to limit the loss incase
the trade goes against you. When the trade becomes profitable you use them to
lock profits. Anyone who would argue against risk control by discouraging the
use of stops is a fool indeed. In effect they are saying you should put your
capital at unlimited risk. Does this make sense to you? Of course not, but that
is exactly what a buy and hold investor does all the time. Most investors do not
use stops because they are afraid of being stopped out. This is a psychological
problem of not wanting to be wrong or having to admit to yourself you lost on a
trade. It certainly isn’t based on logic or strategy.
·
I Don’t Have Time: Make the time or suffer the
consequences. If you are too busy to manage your money. Take a look at your
portfolio and if you lost half of your money without knowing it, you can
congratulate yourself on being too busy. Was it worth it? Probably not. It
doesn’t make much sense to work yourself to death and have nothing to show for
it. Your must take time to educate yourself and take control of your future.
·
Be Patient And Let Time Be Your Friend: Making money
safely takes time. the only time to hurry is where you are in trouble
NOTE: EVERY DAY IS NOT A TRADING DAY. Only trade when the sector,
market, and the correlation stocks are in trend. Just because you want to trade
doesn’t mean you should. Only trade when the probability is in you favors and
let the market come to you. Always remember the market is going to do what
it is going to do and what you want is irrelevant. Don’t become addicted
to the action, you are not an action junky, you are a high probability trader,
profits are made the old fashion way, one trade at a time. Be patient and make
time be your friend instead of your enemy.
·
Learn From Your Mistakes: The most successful
traders and aggressive trader learn from their mistakes, many even go as far as
writing it down what went wrong and analyzing the problem. Mistakes can be
costly so use them as learning experiences and don’t make the same mistake
twice. Unfortunately a large number of people are doomed to make the same
mistake over and over again. This behavior is a sign of emotional reactions to
price momentum and the absence of any well thought out strategy. Most people
fail in the market not because of technology or a lack of information, but
because of emotional reactions and never learning from their mistakes and the
mistakes of others.
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