15 Rules Of Becoming A Great Forex Trader #3

This is third part of great Forex trader series. Today we are taking about third point which is “Never turn a winner into a loser.” What that simply means is that you should let your profitable trade become a loss in your book.

How can we do that? We can do that by trailing the stops. When market moves in your favor 5 or more points. You should update your stop to your entry point. As the price keep on going in your direction you should keep increasing your stop in the direction of the trend.

You should always move your stop in the direction of your trade. What it means is that if you are long on a given trade you should increase you stop. If you are short on your trade you should decrease your stop. Not the other way around.

When I started trading Forex I did not trail my stop due to which my profitable position become loss.  Because the market reverse after a significant increase or decrease. So you should learn about conserving your profits so that you can keep your profits.

You can learn more about placing stop and different types or stop and basics about technical analysis in

Technical Analysis of Stock Trends Robert D. Edwards. I have read this book many times I learn something new every time.

15 Rules Of Becoming A Great Forex Trader #2

This post is part of the great Forex trader series today we are going to discuss on why it is important for your trading success that you “Always lower your trade size when you’re trading poorly.” 

 

When the trades that you are making are not profitable and you have more than expected losing trades then you should with your given system. Then you should reduce your trading lots to minimum that your broker can allow till you start to make profits again.

 

This will help you to reduce your draw down and reserve your capital for future trading. When you start to make profitable trades systemically start to increase your trade size again.

 

What I do is when my capital is 10% lower than the starting amount I started the month with I reduce my trade lot to 1. When I have a profitable week then I increase the lot to two.

 

If I have two consecutive profitable weeks then I start taking 1% on every trade that I make. I also make it necessary that every trade that I make should have a risk reward ratio of more than 1:1.5 or higher.

 

That is it for today tomorrow we will discuss about Never turn a winner into a loser. See you tomorrow.

If you want to become a good trader I highly recommend reading Come Into My Trading Room: A Complete Guide to Trading (Wiley Trading) by Alexander Elder

 

Why Having A Trading Plan So Important For Trading Success

It is very important to have a trading plan if you want to succeed in your trading. Here is something that I learned while trading with my trading plan.

 

A Disciplined Way For Trading

 

It gives a structured way to trade the market of your choice. There is no reason not to trade if your system is giving you a signal to buy or sell.

Even then you are not trading then it is not the problem with the system but in you psychology.

 

A Structured Way To Trade

 

A well-defined plan give you structure to trade so that you can find the not important things that you are doing while trading and focus all your attention on what is most important like the Pareto principle.

 

Improve Your Profitability

 

If you focus on the most important and trade with a structured system you will become more profitable.

 

Give You Clear Idea Were You Were Wrong

 

When you analysis what trade you have made with your system in past you can determine where you were wrong and correct it.

 

Consistency

 

A system makes you consistent in your trading which is the most important thing of all.

 

If you do not have a trading plan in place this thing will not come to your trading and you will never become a professional trader.

 

Fear of Loss and Trading

When you are trading if you have a constant fear of loss then it will be very hard for you take trade. And if you do not make trades and then market go into your direction you feel the loss again because you have loss the opportunity to make profit.

 

How to overcome fear of loss?

 

Master your trading method

You should master one method at a time. So that you know when you are entering a trade you are certain of your position.

Always place stop loss before your trades

Place your stop loss before placing your trade. So that when trade goes against you, you get out of the trade automatically.

 

Ask yourself what is the real reason behind your fear?

Do you really know what make you fear? If not then find out and get over it.

 

When do start to feel fear?

At what stage of trading do you think your fear start to kick in like when you see a trade and then the market start to go in another direction. Or when price bounces at you stop level.

You need to find out the source of fear and then eliminate it. Fear is caused by lack of knowledge when you have knowledge there is nothing to fear.

Fear Of Loss And Trading

When you are trading if you have a constant fear of loss then it will be very hard for you take trade. And if you do not make trades and then market go into your direction you feel the loss again because you have loss the opportunity to make profit.

 

How to overcome fear of loss?

 

Master one trading method

You should master one method at a time. So that you know when your are entering a trade you are certain of your position.

 

Always place stop loss with your trades

Place your stop loss before placing your trade. So that when trade goes against you, you get out of the trade automatically.

 

Ask yourself what is the real reason behind your fear?

Do you really know what make you fear. If not then find out and get over it.

 

When do start to feel fear?

 

At what stage of trading do you think your fear start to kick in like when you see an trade and then the market start to go in another direction. Or when price bounces at you stop level.

You need to find out the source of fear and then eliminate it. Fear is caused by lack of knowledge when you have knowledge there is nothing to fear.