Forex Trading Strategy - 3 Major Ways To Improve Your Trading Skills In Forex Trading
- Date: 2007-04-26 - Word Count: 634
Share This!
If you are trading forex as a beginner, or if you have been trading for some period of time but have not been a consistent profitable trader, then it may be necessary for you to take a pause in trading and to reconsider and review your forex trading strategy with the primary objective to improve your trading skills. Here are three factors you need to look into.
Develop and "over-study" your trading system
Your trading strategy should involve the use of a defined trading system. The first step in a practical trading strategy is to develop or adopt a proven trading system that will incorporate generating signals for entry and exit positions with the relevant risk management controls such as initial stop loss, trailing stop losses , risk-reward ratio requirement. There are many trading systems but generally they can be classified into systems that are capable of, from a functional purpose, trading the bottoms and the tops, trading at the outbreaks, and trading the pullbacks. But among all these trading systems, I would like to single out time-price trading or price action analysis which can be very powerful effective trading systems that you can use. Once you have developed or adopt these trading systems, over-study them. In other words, you must keep on studying how to use these trading systems and use the trading systems in a disciplined way. This is important because any deviation from following the trading signals from the system is going to work against you. The sure way to ruin is to over-ride well planned and well thought out trading action from a proven trading system.
Understand the nature of trading
In forex trading, like in any other business, there are losses and gains. Being consistently profitable does not mean there are no losses. There are times when your trades may not pan out, but once they hit your stop losses, take the trading signals and cut your losses. Understanding this is important because it keeps you level-headed so that you are able to handle losses and continue to take the trades as they come. In trading, the pressure may gets heated up especially when you are faced with a series of losing trades. But if you keep to your trading strategy, those losses will be small. When the signal works, and moves into a sustained trend, it is very usual to make a lot more profits that will cover the series of small losses which you may have sustained in following strictly to your trading system.
Have an Overall Wealth Creation Plan
Your forex trading activities should only form part of an overall wealth creation plan. In your forex trading strategy, you may use part of your trading profits to add on to your capital monthly, and also withdraw some profits for savings or as an income to "pay yourself to trade". In other words, you pay yourself as a forex trader with your profits, creating an income source as an incentive for performance. As part of your wealth creation plan, you may like to pay yourself up to 20% of the profits montly as your income or allowance. At the same time, allocate 10% fo the profits into a miscellaneous account that will pay for trading related literature, courses, seminars or software that will add on new skills to help you to trade better. The balance of 70% of the profits can be ploughed back into your trading account as additional capital.
Having a forex trading strategy allows you to have an overall perspective of whatever you are doing as a forex trader. The forex trading strategy acts as a simple guide that will allow you to grow as a trader and yet maintain a way to tap the profits from your trading in a sensible way as you develop your career as a professional trader
Develop and "over-study" your trading system
Your trading strategy should involve the use of a defined trading system. The first step in a practical trading strategy is to develop or adopt a proven trading system that will incorporate generating signals for entry and exit positions with the relevant risk management controls such as initial stop loss, trailing stop losses , risk-reward ratio requirement. There are many trading systems but generally they can be classified into systems that are capable of, from a functional purpose, trading the bottoms and the tops, trading at the outbreaks, and trading the pullbacks. But among all these trading systems, I would like to single out time-price trading or price action analysis which can be very powerful effective trading systems that you can use. Once you have developed or adopt these trading systems, over-study them. In other words, you must keep on studying how to use these trading systems and use the trading systems in a disciplined way. This is important because any deviation from following the trading signals from the system is going to work against you. The sure way to ruin is to over-ride well planned and well thought out trading action from a proven trading system.
Understand the nature of trading
In forex trading, like in any other business, there are losses and gains. Being consistently profitable does not mean there are no losses. There are times when your trades may not pan out, but once they hit your stop losses, take the trading signals and cut your losses. Understanding this is important because it keeps you level-headed so that you are able to handle losses and continue to take the trades as they come. In trading, the pressure may gets heated up especially when you are faced with a series of losing trades. But if you keep to your trading strategy, those losses will be small. When the signal works, and moves into a sustained trend, it is very usual to make a lot more profits that will cover the series of small losses which you may have sustained in following strictly to your trading system.
Have an Overall Wealth Creation Plan
Your forex trading activities should only form part of an overall wealth creation plan. In your forex trading strategy, you may use part of your trading profits to add on to your capital monthly, and also withdraw some profits for savings or as an income to "pay yourself to trade". In other words, you pay yourself as a forex trader with your profits, creating an income source as an incentive for performance. As part of your wealth creation plan, you may like to pay yourself up to 20% of the profits montly as your income or allowance. At the same time, allocate 10% fo the profits into a miscellaneous account that will pay for trading related literature, courses, seminars or software that will add on new skills to help you to trade better. The balance of 70% of the profits can be ploughed back into your trading account as additional capital.
Having a forex trading strategy allows you to have an overall perspective of whatever you are doing as a forex trader. The forex trading strategy acts as a simple guide that will allow you to grow as a trader and yet maintain a way to tap the profits from your trading in a sensible way as you develop your career as a professional trader
Related Tags: forex trading, trading system, practise forex trading online, wealth creation plan
Be sure to read Part #2 of this article Practise Forex Trading Online Part #2 to avoid the major trading flaws and start to earn consistent income trading forex or visit forex-trading.cashflowpc.biz. Your Article Search Directory : Find in Articles
Recent articles in this category:
- Internet Based Forex Buying And Selling Class
By selecting to enrol in an online forex trading class, you are placing down a flag that you are tak - Fx Instruction Classes
Getting your self efficiently into the forex trading market, without taking undue dangers, can appea - Automatic Fx Trading
Intelligent Forex trading is performed by means of custom software applications that allow for non-s - Fibonacci Technical Analysis Overview
There is a unique ratio that could be used to describe the dimensions of just about everything from - Can A Forex Broker Help You Change Your Fortune?
Forex market is a volatile market and you should expect loses along with the profits. This very natu - Is It Important To Know About Forex Before Finding Forex Broker?
If you are planning to invest your money in the forex market, then you need to understand the rules - Managed Fx - Expert Managed Forex Service Will Make Easy Profits For You
Managed FX. Know what you need to easily start making profit in your forex trading account todayDo y - Fap Turbo Review - Facts About The Fap Turbo Expert Adviser!
FAP Turbo, despite being one of the older automated Forex trading systems, has managed to remain the - Forex Autopilot System - The Best Way To Use This Forex Software!
The Forex Autopilot System is an automated Forex trading program which will allow you to trade in th - Is Forex Trading Really That Risky?
You have most likely heard or maybe even experienced the risks involved in forex trading. It is not
Most viewed articles in this category:
- The Shocking Truth About the Forex Trading Industry!
You won't have to look far on the internet to find an endless barrage of web sites promoting the gla - Forex Trading - Money Management Secret (part 2)
Adjusting your trade size on a fixed percentage isn't a good idea. That we established in part 1. No - Trading System Possibilities
So many people continue to discuss the use of common technical indicators in trading systems, withou - A Beginner's Guide to Currency Trading
I'm sure that you must have heard of currency trading. But do you really understand what it is all a - Learn Forex Trading Online - An Introduction to Fundamental Analysis
It is often said that information is the key to successful Forex trading but, while accurate and up- - Forex Trading is NOT Just for the Pros
I had a discussion recently with one of my newsletter subscribers. He brought up the topic of forex - How Indicators and Patterns Point the Way to Forex Profits
If you have done even beginning research into trading, technical indicators and charting will become - Forex Trading from Home
Forex is one area of work at home opportunities that seems to be growing a great deal. People essen - Forex Advisory Services
Forex advisory services provide personalized consulting, currency forecasts and advice for corporati - Forex Currency Trading Systems
The forex currency trading system is the system, which lets the forex traders buy one currency and s