Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.
Forex trading system: Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.
Price behavior: They have incorporated price behavior into their trading systems. They know price action has the last word.
Money management: Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.
Trading psychology: They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.http://theforexlibracode.com/
These are, among others, the most important factors that influence the success rate of Forex traders.
We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results? It is different from trader to trader. For some, it could take a life time, and still don’t get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it’s not something you can do in a short period of time.
Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.
You can generate enormous profits in Forex trading. 12 helpful recommendations will make you closer to this goal. A solid trading plan and awareness about typical errors will contribute to your success.
The below list provides you with basic recommendations in this task.
1. Develop your trading plan
When a trader expects upraise of market, he usually says something like: “I think than EUR/USD will reach $1.3000. On which level shall I buy?” My reply is – “What is your risk in a trade?” In other words, “Where will you leave if you are not right?” Often a trader is taken aback with the reply. It never occurred him that he could be wrong or at which level he must place Stop.
Most part of traders never have a plan. It means they do not know what to do if they are found to be wrong or right. Big profit on paper turns into big loss in real life because they do not know when to leave.
Crucial point is to develop your trading plan before you enter a trade. This plan accounts for the following:
Know how and where you are going to enter market
Know which amount of money you can risk with
Know how and when you leave if you are wrong
Know how and when you leave if you are right
Know how much you would get if you are right
Protect your trade with Stop Loss if market moves the way you don’t expect
Understand about when market reaches your target
2. Use money management strategy
Money management is the risk control through protective Stops either hedging which balances profit and loss.
You are supposed to have target profit and know your chances to be right or wrong as well as to control risk through protective Stops. It is better to trade with the order in which you can lose 1000 $ if you turn to be wrong and make a profit in the amount of 500 $ when a trade brings profit 8 times from 10 than to make a profit in the amount of 1 000 $ or lose only 500 $ in the trade which works only in 1 case in 3.
Develop and test your money management strategy to solve this issue. It is a wide topic, but the key thing you must know is to know your chances for profit as well as a proper profit/loss ratio.
3. Put protective Stop Loss orders
This error is caused by a poor trading plan and bad money management strategy. Once you enter a trade, put protective Stop orders – and they must be real, not imaginable. Too often, traders use imaginable orders just because such orders worked in past, whereupon they saw market moves in their direction. If you put Stop order in a wrong place, it means you conduct a fallacious technical analysis.
4. Close profit-making trades on time.
A widely spread mistake among Forex traders is that they take minor profits and let their loss grow. It is a usual result when you’ve no plan. After 1-2 loss trades you will probably take minor profit on the next order even if this order could bring you a big profit that would make up for your past damage.
Traders allowing their loss to grow are met even among professionals. You enter a trade and do not know when to leave it. Once you start to lose, you let this damage grow in your hope that market will roll back – a rare case.
Use protective Stop Loss orders you define prior to making a trade.
5. Hold position for a reasonable period of time http://forexlibracodes.com/
If a trader is not able to take profit on the level defined before, this mistake is often made. Market allows to take profit before it takes more profit back.
Nevertheless, if you already have the profit on your balance, you still try to make out the last cent of it. If market reaches your target and you still stay in the market, you just overhold your position. That’s it!
The only exception is when price strongly moves to your direction. Move your Stop to the target or use Trailing Stop.