While the idea of successfully trading on whims and hunches might sound good, the reality for most traders is far from that. Every trade you take inherently has some element of risk. Managing these risks in a sensible way will certainly help to keep you in the game longer.
Your trading failure or success will largely be determined by your mindset. As a trader, you have to be disciplined. This is one of the most important aspects of trading wisdom we regularly hear. Prior to the opening of the market, ask yourself what is happening in the world? Are foreign markets up or down? When are earnings or economic data due? For many traders, it is prudent to wait until the report is issued before taking taking the trade.
Smart traders are also meticulous record keepers. If they place a winning trade, they want to know specifically how and why. More importantly, they want to know the same details upon losing, in order to avoid an unnecessary repeat. Take note of details i. Waiting for the right trading opportunities to appear requires patience. Entering and exiting a trade at the right moment requires patience. There is no point in obsessing over a high winning percentage; instead you need to focus on cultivating your trading skills and seeing the bigger picture.
A robust work ethic means taking essential actions to move forward and get better, regardless of whether you want to or not. Regardless, both examples of over-trading have the potential to be extraordinarily harmful to your trading account.
This figure will be determined on your risk tolerance and trading style. If in doubt, risk less and live to fight another day. Learn from those who are more experienced than you and surround yourself with talent. By keeping an eye on how veteran traders invest, you'll begin to understand how they think and make crucial trading decisions.
Invest time upfront in finding a trading partner for whom you can be accountable to. Becoming a successful trader involves sticking to your proven edge. And that means being consistent. Sound trading decisions are the product of continual self-awareness. You must be conscious of your own thought processes in order to evaluate 1 how they affect your view of the financial markets, and 2 how potential bias weight your decisions.
The market is rarely going to give you exactly what you want. You need to be a self starter, you need to want to seek information for yourself and want to figure it out for yourself not be spoon fed from someone else. You have to seek out the wisdom yourself and have an entrepreneurial mindset. The best traders are seeing out trades and taking those trades before the rest of the market has realized its good value. Knowing how to interpret the information flow is critical because information is everywhere, wisdom is not.
I took the same mentality and spent a lot of time training, focusing on the process more than the result. So when obstacles, challenges or tough moments came, my goal was simply to find a solution, no matter how long it takes. I think this allowed me to survive the corrections and drawdowns in my performance mental or monetary that most give up during. So before I traded each day, I always made sure my mindset and brain were in an optimal state.
I reversed this equation, and spent more time on my mindset than anything else. Hence I think by sharpening the axe enhancing my mind-state before trading each day improved my developmental process tremendously. The process should provide signals that you react to. You must decide whether or not to take that signal. Second, you have to be prepared to make decisions based on the process. For me, this means marking my charts with buy, sell, and reaction levels.
Since the market levels are based on a process that I trust, I can make the decision quickly and confidently. Finally, you must exercise the discipline to follow the process and do the work required so that you are prepared. Always stick to my trading constitution 2.
Live a well-balanced life 3. See every trade as a learning experience. This allows me to see the picture clearly and sleep well at night — both of which are critical if you want to be successful.
This acts as a wonderful qualitative filter for screening positions and prevents me from overtrading. You have to know that taking a loss is a part of the game and you need to embrace it. To turn the question around a bit; I have conversations with aspiring traders everyday and the three things that are commonly regularly missing for them are:. You have no business trading without a trading plan. I trade with my business partner Boris Schlossberg and the ability to discuss and swap ideas is invaluable.
If you dont have a GoodPlan, you are a GoldMember others plan. After that,stick to your plan as to the letter, be in control. However, it never fails to surprise me when I speak to some students to find out that only a handful actually follow this golden rule. A trader can use one or a combination of these strategies in his trading portfolio, depending on his personality. A trader needs to have a journal that specifically records all trades, including strategies used and reasons for executions.
Four human characteristics of fear, greed, hope and ignorance will always rear its ugly head in every trade. The most difficult emotional interference in trading occurs when long-standing emotional patterns and conflicts spill over into handling the risk and uncertainty of trading. I would say, record keeping Journal , patience avoid trigger fingers and keeping track on what the big players are doing.
This one is probably the most important of them all, every morning, before I start looking for trade opportunities I do my analysis and try to choose the currency pairs that have the clearest conditions of them all.
Trading successfully is not about trading every day, but about trading when the odds are in your favor. Every morning I tell myself that its alright to lose, its our raw material, we can always learn something from our losses. Instead, I try to follow it, if I see the market going up, I look for long opportunities, if I see it going down, a look for short opportunities.
For years I have tried to become a successful manual trader with no luck. I found that a number of psychological factors draws me back and I got to do something to change this.
That is why I tried fully automated trading using my own trading strategy and rules. Obviously it took me months to create a winning trading robot, but once I did that I soon realized that a fixed take profit level was a game changer in my trading.
So using fixed profit levels is my 2nd habit. Many traders try to catch and squeeze every pip there might be in a trend, but believe me, no one will ever be able to buy at the bottoms and sell at the tops consistently.
When I simply switched to use fixed take profit of pips I found my trading robot to make consistent profit month after month after month.
Obviously that is not the best world-class trading rule, but it made difference for me. The 3rd habit is a consistency. For two years in a row my trading robot doubled my account, but this year, , it is not doing well. This was a big lesson to me which costed me hundreds of pips and thousands of dollars.
The mistake I made is that I began to change trading rules and improve my strategy after a few losing months. I did that on my first trading account and it is in a drawdown at the moment. However, my second account, which still runs the same unchanged strategy, has already recovered from the drawdown. For two years my habit of being consistent with my trading rules paid off well, but unfortunately I cannot say the same about the trading results in I was not consistent with my trading rules and that was a big mistake.
Easier said than done. Took me many years to get there and I am always finding more. Which mainly means close the ears when surrounding will try to take you down.
Everyone loves a good tip, right? Have a Trading Plan As the old saying goes in this industry: Follow a Forex Trading Strategy While the idea of successfully trading on whims and hunches might sound good, the reality for most traders is far from that. Develop a forex strategy. There is no "one" strategy that is better than the other. Keep a Clear Mind Your trading failure or success will largely be determined by your mindset. Exercise Discipline As a trader, you have to be disciplined.
A lack of discipline will result in trading errors. And if you make to many errors Do Your Research Prior to the opening of the market, ask yourself what is happening in the world?
Keep a Trading Journal Smart traders are also meticulous record keepers. Developing your currency trading plan will take time. Developing skills will take time. Basically, forex trading equals patience.More...