One of the most important pieces of the puzzle of becoming a consistently gainful Forex merchant is a Forex trading strategy. Yet for many merchants, designing a Forex trading strategy can seem like something of a cryptic, or perhaps something that they “will make ultimately”… Ice 9 Technology Review
Many merchants are involved trouble and causes them to blow out trading accounts because of this lazy type of thinking. To success in the marketplaces is a function of discipline, and most people purely don’t have enough self-discipline to decide if they are trading expressively or objectively. This is where having a defined forex trading strategy comes in; a trading strategy will act as a conductor which will keep you on the disciplined trading path.
Having a written out pre-defined trading strategy means you are making an exertion to hold yourself responsible to something, this is required to forex trading success because No one to be responsible to as a marchant. You have just yourself to be accountable to when trading the marketplaces and it can be really difficult to do the BEST THING FOR TRADING ACCOUNT OF YOU when it goes against everything you FEEL like you want to do. This is all the point of having a forex trading strategy; to have a physical notice of what the best thing for your trading account is at any given time…
The more you move and fight by over-analyzing market variables the more trading account of you is going to bear, this is one of the biggest psychological paradoxes and hurdles that merchants need to surmount before they can recognize their full ability as marketplace technicians. This fact is immediately related to the concept that patience in Forex trading is rewarded by the marketplace. One of the best and most important features that any forex merchant can have that is patience. Because when you are trading with a high accuracy you are naturally going to enhance confidence of you, being patient and waiting for only the “best” price action setups will really improve not only win rate of you but also confidence of you,
This is all well and fine as long as you can administer to retain patience of you like your winning percentage improves. Although this may seem a bit counter-intuitive at first, one of the biggest reasons is really that many merchants fail to make money reliably and end up repeating the same cycle of boom and bust in the marketplace. The psychology behind this process revolves around the feeling of euphoria or over-confidence that often hits merchants like they become more accurate in their trades, which is almost always a result of having patience long enough to wait for a string of high-quality setups.
Being able to realize this feeling of euphoria or over-confidence and steadily and intentionally over-ride it by walking away from trade station of you for a period of time is the best medicine to repair this emotional trading mistake that so many merchants make. There are a number of other plans you can use to persist intentionally aware of the potential of euphoria to sabotage all trading success of you. “Before being aware of euphoria winning trades”, or “I had a winning trade, so do not stop being patient just if you need to create note cards and post them on trading desk of you that say things like”, than by all means do it. The period right after a winning trade or a series of winning trades is the precise point in time that separates the amateur merchants from the pros. Pro merchants are always intentionally awake to how they are feeling and whether or not sensations of them are influencing their trading activities.
One of the best ways to not let sensations influence trading activities of you is to have a defined trading strategy that illustrate in actual terms what you will do in any given market scenario. They aren’t actually assure where to start or how to write one, so many merchants do not try to have a trading strategy. It actually does not need to be extremely long or complex to be efficient. Basically the point of a trading strategy is to keep you honest with yourself because if you don’t do it no one else is going to. And this is precisely the problem most merchants have in the marketplaces, no one to be accountable too if you lose all money of you, except yourself. You aren’t trading for your boss or someone else, unless you are a prop merchant, but most merchants don’t make it that far because they cannot even be accountable to themselves first.
So what exactly does a high quality trading strategy need to include? Well it doesn’t need to be super complicated, the MOST important aspect of an effective forex trading strategy, like stated previously, is that you can somehow compel yourself to ACTUALLY USE IT. To tape it up somewhere that you will observe it all of time you do business, to read it everyday. In my opinion, I have written trading strategy in a note book only to never open the note book again. Don’t do this, don’t write it down in a note book, if you need to, input it on your computer and print it out, after that place it on your trading desk, hang it on your fridge, whatever it makes so that you READ IT EVERYDAY.
So what are the critical elements of a trading strategy?
- To describe entry strategy of you.Whether you are coming in the marketplace off a reversal pin barorganization in the direction of the trend or off a bounce of a moving average, whatever you use to go into with make sure you can describe it and that you know what establish a HIGHQUALITY or PERFECT A+ entry from one that is lesser in quality or perhaps a B or C entry.
- To describe the danger to compensate scenarioon any potential trade organization before entering it. Also, assure you have a thorough understanding of Forex position sizing.
- To adapt the location sizeon the trade to meet the required stop-loss distance, NEVER adapt the stop-loss to meet a craved location size, this = GREED.
- To know what exit strategy of you is BEFORE coming in the business, if you are not exiting on a pre-setrisk rewardorganization, than make sure you don’t tell yourself that you will just “figure it out” like the business expands, this never works. Because you are never going to be more objective than when you are not in a business, it is the best time to show all trading parameters.
- After the business is over,assure trading strategy of you contains an activity or some obligatory thing that you do after you have exited a busineaa, whether it was a winner or a loser. The duration of time right after a business is one of the most, if not the most, expressively sensitive period for merchants. Feelings of vengeance, frustration, and disappointment can cause you to jump right back into the marketplace on a whim, with no real setup present, clearly this is likely to cause you even further psychological harm because you will likely lose even more money, and the cycle will go on.
Winning trades also need a duration of inactivity once they are closed out. To feel over-confident or “in control” of the marketplace is very easy after a string of winning trades. Although what happens next is that merchants often come in a business on a whim again (see it here), this time they are at even greater danger because they are feeling euphoric and they make a decision to danger more than usual, just to watch all their recent profits evaporate in the blink of an eye.
This article has give you with the reasons WHY you need to have a Forex trading strategy and some well ideas about what you need to consist of in trading strategy of you. Although there is no particular way to make a good trading strategy, but the 5 concepts included in this article are a great starting point. Feel free to insert any of your own ideas or concepts presented in my forex trading course to the skeleton introduced here. The whole point of a trading strategy is to keep you accountable and to go on the track of objective thinking, just remember that. As MOST of the time this will back-fire on you, you should NEVER decide to trade while you have a trade open. It is the best time to decide trading of you when you are not in any business, this is done by creating a logical Forex trading strategy that acts like guide of you to the marketplace, and this is really the only efficient way to consciously make an effort at eliminating emotional trading mistakes.