THE SECRETE OF SUCCESSFUL FOREX TRADERS
THE SECRETE OF SUCCESSFUL FOREX TRADERS New Page 1 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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