Select your strategies for FOREX trading
The first thing you should do is select one of the main Forex market strategies. There are only 4 of them symbolically named with animals:
• Bulls: Are traders who prefer trading on upward market.
• Bears: Are traders who prefer trade on downward market.
• Pigs: Are traders without any strategy who just follow their own avarice. They gamble quickly and in irregular ways usually pig traders go smash very fast but there are always more pigs waiting to take their place.
• Sheep. Traders of this type are hesitant persons who deal out of fear. They play in disorganized ways but calmly. Usually “sheep” hesitate until the last moment, supercharging the situation in the market. They start trading too late even if a trend was clearly defined.
If you have read the previous chapter carefully and paid attention to the advice given, you will know to select your strategies from the first two types of strategies. Then start trading with a demo account or trade with micro-lots so as to test different strategies before finding the one you are most comfortable with. You shouldn’t try to use both tactics until you have celebrated a couple of wins. Also remember that self-confidence is one of the features of greed that most often leads to loss.
“Please pay attention to this part and don’t let to your emotions to act as your trading adviser. Never act greedy and act out of caution, Which is based on wisdom, rather than fear.”
Build your trading system
The most important Specifications of a personal trading system is the application of money-management rules. This will help you to control the instinct to gamble. Even if you think the whole world is headed to hell in a hay cart and the indices are going to nosedive in the biggest bear market known to humanity, stay your hand – don’t put everything on one trade or even half your savings. Always trade the same amounts and make them sensibly sized – maybe 10% max. Success usually comes through slugging it out for the full 10 rounds, rather than making one knockout punch in the 1st and walking off with a fortune.
The exchange market is a kind of ocean. A wave throw you up and you become happy like a trader is happy when the currency he has bought rises up. When a wave strikes your eyes and makes you obstruct, you become scared and angry like a trader who bought a collapsed rate. You should remember that your emotions are only yours and live inside of you. The ocean is independent and heartless as is the Forex market.
It is important for you to understand that when in troubled times, your emotions will try to motivate you to blindly obey the crowd or to fight against it, to run away with fear or to crave for profit. You should remember that you can’t effect the crowd. You can only manage your own actions.
The main Specifications of a good strategy
Now that we have introduced the importance of self-control we can intensify our description with some details that are essential to complete the picture:
• Try to make a commitment to Forex trading for the long-term – make it your purpose to be a successful trader, else you might be better off quitting this venture altogether.
• Never stop learning.
• Use your own set of instruments based on your personal preferences. Nobody can ban you to from using wave analysis and fundamental analysis in combination, for instance, or maybe you would like to use some unusual methods of technical analysis instead.
• Check the activities of instruments and strategies chosen on demo accounts using small amounts of money. You must more to train on demo account there for you will be able to stand out in real trading.
• Be focused on the practical result and not to the weight of explanations of the methods selected.
• Describe the exact part of money from your account in percentage terms which you will allow yourself to risk in your trading. Professionals prefer to bind their individual orders to not more than 2% of their account capital. So if you have $300000, for instance, you would risk a maximum of $6000, and if you have $1000 the maximum sum you would risk will be only $20.
• Firstly, your main mission will be to maintain your capital so you can trade Forex for a long period of time, purchase experience and understanding. Your second goal might be to step by step increase your capital. Your third aim might finally become to make a “big kill,” that is, a significant profit on one or a few trades. But again, this kind of strategy usually leads to bankruptcy.
Professionals simply analyze the result of a potential deal so as to decide whether to organize it or not. You don’t have to be able to forecast the future in order to gain profit in the Forex market. It is enough to collect information about the price action and find out who is driving the market – the “bulls” or the “bears”. After you have worked out which is the main group you can estimate the possibility that the tendency will keep going and then decide whether you should make a trade or not.
Written by learn forex division
FxErvin