Forex Trading: 3 Easy Steps To Make Consistent Gains

« GBP/USD Bucks Trend - Bloody Day | Home | EUR: Is This Trend Sustainable For the Long-term »

Forex Trading: 3 Easy Steps To Make Consistent Gains

By Benny Nardino | April 13, 2008

Many have been caught up in the euphoria of forex trading and how easy it is to make money from it. Forgive my naiveté if I did not share the say sentiments. Could you imagine it that easy? It’s like saying I’ll make good surgeon without training in two years. Good butcher I might. Why? If it was that easy how come everyone else would have been doing it. Let me ask you another question, “Have you ever seen an astute surgeon, adept in his/her job who learnt and gained his/her experience within a year?”

Let’s say you found one would you entrust your life into his/her hands for any operation? Here’s another one, ‘If your boss knew you only had six months of training in your current job do think she would hire you? Let’s be honestly realistic. If you said NO to any of these questions, why should you feel so confident to constantly donate to the forex market? Why hire yourself to trade for yourself without the right training yet? Do you understand why you did? I don’t understanding it either but this is one of the major reason people lose money trading the forex market.

The forex market is a huge market with great volatility and leverage but it also require skills and ingenuity. It is a job of clock precision and timing, understanding and above all experience. A wise man once said experience is your greatest teacher - but the question is “Can you afford it?”

Forex trading is a job of discipline and routine. The demand is even greater in forex trading. One might argue that you need that experience. This is why caution is the name of the game if you are just starting out. You cannot gain experience from emotional overdrive. Many who have ventured it, came into the marketplace pitched their skills against some of the sharpest minds without control. They got burnt, ended up with lost capital and changed business. Perhaps if they knew what I am about share with you it might have helped. Here are my three principles I never leave home without, (I call it PEL.):

(i). Preparation;

(ii). Execution and

(iii). Learn from Mistakes.

Most people often overlook these areas and yet they are the most important prerequisite to any winning trade. Be it forex or any other financial market as I found out. This is why you need to gain the necessary skills you need. The rest is simply pursuing your dream and learning as you go along.

Preparation

When I first started out trading this was one of the most difficult area to handle. It was a case of winning then lose again. If you are experiencing this don’t feel despondent about it. Most winners in forex trading today went through it. The only this is keep this to bare minimum.Like every other project before you start you do research.

Forex is no different. Find out what have moved that pair in the past. Where is it today or now? Then you project and device your strategy into the future. Whatever your trading method, the process starts with your goal and your map to reach it - strategy. Learn to do this the night before and this refreshes your mind on your trading morning. With a daily practice fresh insights and broad coverage of knowledge of your chosen market will begin to develop your confidence and perspective. Important note: before moving to point (ii). ensure you have your possible entry and exit strategy ready.

Define your contingency plan before you start and establish what timeframe to trade. Decide in advance how actively you should manage your open positions. The pros watch every tick and act on short-term swings. Part-timers scan a few web sites and learn everything they need to know. Your own efforts should fall somewhere in between.

Execution

Trade execution is the meat of the whole exercise. It’s the reason we do research and all the routine stuff. To what end is point i). if the trade was never placed? Without actually placing the trade it is nothing but analysis paralysis. Trade execution is everything. Timing is crucial to every winning trade. You could do your homework right and with wrongly timed trade take a losing position. It has happened to me many times. The overriding factor to overcoming this is doing lots of practice trades and especially charts reading and analyses. Very vital.Use quicker timeframes for entries and slower timeframe to exit your trading position.

Watch out for mini-reversal patterns and trading indicators. It your trade move twenty pips in favor, move your stop to your entry level. A further gain twenty to thirty pips gain should trigger stop move again. My philosophy is, “Fifty pips everyday pays my kids college education.” Anything beyond that is a bonus.On the contrary, cut your loss early. In any trading position, if you have doubts over your position cut your loss to trade another day. Keep a trade journal. These are your decision lists as to what your motivations were before pulling the trigger. You will see the importance later. Build on these moves and you will swell your account in no time.

Learn About Yourself.

Your daily progression starts when you begin to analyse your trades. It tells you a whole lot about yourself. In point i). you were encouraged to keep tour trade journal. Why is this important? Your end of day forex trading analysis is as important as your early research. It helps you to examine and judge your motives before our trades were taken and the results afterward.

Trading is result oriented. You trade because you want to win and produce results worthy of your expectation. If you are not realizing that yet, learning about your choices and enhancing your new found fame would help.Your trade journal is your key to making that discoveries. Use it. Check your mistakes relate them to your price charts.

Evaluate other specialists comments then relate them to your own decisions. This could only change your perception and understanding. When you master this, you will soon begin to realize that each trade is an opportunity to adjust your forex trading strategy which thus improve future trading results. I used to resent loses. I soon realized that it happens to everyone. But do you know what’s interesting, you learn more when you experience painful loss. When this happen to you the pain of losing becomes the fuel to study your mistakes more and more. This could only make you a better trader.

What am I saying? Is it better to lose than win? Certainly not. The pain of losing is a warning that something is broken. Don’t fight your losses. Use it to your own advantage. You could only do this by keeping records of your decision before and after trades.

You enjoyed these posts right? Get your Auto Delivery Here!

Sphere: Related Content