One of the most common mistakes new Forex traders do, is that they have no trading strategy. Because of the many appealing characteristics (24 hours, trade both short and long, leverage etc) most of the new traders entering the market are eager to prove themselves in an often egoistic approach. Egoistic in that they believe that they can become very profitable and make a fortune in the short term, but soon enough they end up with a bad psychology which at the end accelerates their loosing pattern. In fact, the most successful Forex traders are people recognized for their humility and discipline , humbleness and trading within their means, patience and calmness.... These qualities are acquired through experience and accepting some simple realities of the Forex market.
The first step towards becoming profitable in the Forex market is to devise a trading strategy/plan. Creating a trading strategy is of paramount importance and is actually very easy.
To create a successful trading strategy, traders should address the following considerations:
1. Reasoning of the trade: Why buy or sell? Which pair?2. Timing of the trade: Why now? Before economic news releases or after? Day or night?
3. Trading objective: What is the take profit target? What is the stop loss?How do you determine ?
4. Money management.
5. Documentation and analysis of the results.
Please go to this link to get more explanation and elaborations on the above Five (5)sub-headings :-
http://docs.google.com/fileview?id=0B74IMi--bRpKOTZmNDEyNjMtNjdmYi00NGFhLTk2NzEtMjg
3Y2JkOWQ3NDZk&hl=en
And go to this link to view an example of TRADER Trading Log...
http://docs.google.com/fileview?id=0B74IMi--bRpKY2QxOTE4YzctZjgxOS00OTRhLTkwYjAtNzcwNDFmNmFiMWUx&hl=en
Please follow up on my Part 2 in this series............
HAPPY TRADING...
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