Anybody who wants to be successful with forex trading needs to be very clear about their currency trading strategies. And when I say 'successful' here, I don't only mean people who make lots of money but anybody who makes any kind of profit overall, because provided the system and strategies are sound, a small profit can always be scaled up.
A forex trader's strategies should be written down in the form of a plan. It is not sufficient to carry them around in your head because it is too easy to change the rules any time you feel like it. They need to be written down and placed on the desk in front of you and reviewed constantly.
The currency trading strategies that need to be written into this plan include all aspects of the forex system that is used. This includes the signal(s) to open a trade, the position size, the stop loss and the profit target when you will close a successful trade. Depending on your system, these may be the same for every trade or they may vary according to the signal. If they vary, be sure to write down exactly what is different and under what conditions.
In addition, it is important to have goals for your forex trading. Here I'm not talking about profit targets in monetary terms. Most beginners and some experienced traders do set themselves a monetary target such as $x in 3 months, doubling their funds every 6 months, or whatever, but these targets are not true goals and often, they are counterproductive.
Yes, we hear a lot about the importance of goal setting but having that type of financial goal over a certain time can actually harm your trading. It can have the opposite effect and make you lose money. The reason being the time pressure. This adds more stress to forex trading which, less face it, is high enough already.
Imagine a situation where you have set a target of doubling your money every 6 months. Say 5 months has passed and you are not close to that goal. You have made profits, but you have only half of your target. You are clearly not going to reach your goal unless you start taking huge risks - risks that might wipe out all the profits you have made so far and perhaps deplete all of your funds.
In forex trading, it is important to accept that any profit is good profit, and not set yourself up for failure by specifying that you have to make a certain amount in a certain time. Instead, set goals that are broad. For example, set a goal that you want to master the use of a certain indicator within the next 2 months, or read and test the system described in a certain book or ebook. When you set this type of goal, your currency trading strategies are much more likely to lead you to success. Small steps to achieve big gains!
Showing posts with label currency trading systems. Show all posts
Showing posts with label currency trading systems. Show all posts
Thursday, February 25, 2010
Wednesday, September 30, 2009
Top Currency Trading Systems
There are many currency trading systems out there. You could probably find hundreds or even thousands on the internet and in books. So how do you pick out a good one?
This is one of the most important questions when you start out as a forex trader. Anyone will tell you that psychological factors are vital in making a successful trader and it is true that it is very important to have discipline and the ability to apply your system consistently. But you must have a system that is capable of returning a profit in the first place.
Now you probably do not want to spend years in demo accounts trying to reinvent the wheel and design your own new system from scratch. So given all of this variety of systems set out in forex books, ebooks and video courses available online, how can you find a reliable system that will have a good chance of making you money?
One factor that you should look at when you are considering different currency trading systems is the success rate of the trades. Usually the publicity will tell you this, or you can ask.
Theoretically a system with a low success rate could be just as profitable, depending on the amount of money gained and lost on the trades. However, a high success rate is important for two reasons. One is that this is a good sign that the system works well in most market conditions. No system has a 100% success rate but something over 80% is achievable. If you put this into practice consistently, and perhaps avoid the very worst market conditions such as a choppy market, you should have a good chance of getting a profitable result.
The second reason that most traders work better with a high success rate is that it increases our confidence in the system. This helps us to keep motivated to apply the system consistently.
For the same reason, it is important to make sure that the system will give you enough trading opportunities to keep you satisfied that you are trading actively. That may sound crazy but if you only have one trade a week you will start looking around for other possibilities and probably take chances with your trading that will lead to losses.
Plus of course you need to be sure that it will only involve you in a level of risk that you are comfortable with.
The best currency trading systems are usually provided by someone who is a professional trader and using the system to make money themselves, so look out for information about the person's trading experience, and check that they will offer support if you have questions.
This is one of the most important questions when you start out as a forex trader. Anyone will tell you that psychological factors are vital in making a successful trader and it is true that it is very important to have discipline and the ability to apply your system consistently. But you must have a system that is capable of returning a profit in the first place.
Now you probably do not want to spend years in demo accounts trying to reinvent the wheel and design your own new system from scratch. So given all of this variety of systems set out in forex books, ebooks and video courses available online, how can you find a reliable system that will have a good chance of making you money?
One factor that you should look at when you are considering different currency trading systems is the success rate of the trades. Usually the publicity will tell you this, or you can ask.
Theoretically a system with a low success rate could be just as profitable, depending on the amount of money gained and lost on the trades. However, a high success rate is important for two reasons. One is that this is a good sign that the system works well in most market conditions. No system has a 100% success rate but something over 80% is achievable. If you put this into practice consistently, and perhaps avoid the very worst market conditions such as a choppy market, you should have a good chance of getting a profitable result.
The second reason that most traders work better with a high success rate is that it increases our confidence in the system. This helps us to keep motivated to apply the system consistently.
For the same reason, it is important to make sure that the system will give you enough trading opportunities to keep you satisfied that you are trading actively. That may sound crazy but if you only have one trade a week you will start looking around for other possibilities and probably take chances with your trading that will lead to losses.
Plus of course you need to be sure that it will only involve you in a level of risk that you are comfortable with.
The best currency trading systems are usually provided by someone who is a professional trader and using the system to make money themselves, so look out for information about the person's trading experience, and check that they will offer support if you have questions.
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