Trading Forex is an exciting way to make heaps of money, however as with all business opportunities only some people are successful. Today there are many good trading systems being offered online, so why isn't every one making heaps of money. The answer is simple, there is more to trading than placing a trade.
I have researched the different behaviour of those who have maintained a successful trading career and those who have similar trading systems but have not been able to sustain a trading business and have written down the tips and strategies that will help you take your trading to the next level.
This information is not only beginner Currency Forex Trading advice but is also important to any one Trading.
Beginner Currency Forex Trading Tip 1: Money Management.
Before anyone starts trading it is important to understand how the laws of probability work. If you know that your system will give you a 60/40 win ratio long term (and this is a winning system) your wins might be mixed in with the losses, however it could happen that your first 4 out of 10 trades lose, this could compound to your first 40 out of 100 trades losing.
How many traders would still have any capital and be prepared to go on to win the next 6 or 60 trades? This explains the need to limit your trade to 1% of your capital, this will give you 100 trades before losing your capital.
Many Traders after a losing trade think that doubling up on the next trade is the easiest way to get back on track. This is NOT the answer. Let me explain Recovery of Lost Capital. To give an example, if you start off with $10,000.00 and lose 20% you have lost $2000.00, leaving a balance of $8,000.00. At a quick glance it is easy to think you need to win 20% of your capital back and you will be even. However that is not the case. You actually need to win 25% of your remaining capital ($8000) to be even. As the % of loss against the original capital increases so does the % required to be even increase. At 50% loss of the original capital $10,000 your remaining capital is $5000.00 and you need 100% of that remaining capital to get back to $10000.
($5000 + $5000 = $10000).
Remember if you have more than one trade open at the same time, although each one might be only 1% of your capital, your actual risk is 3% ( 1% + 1% + 1% = 3%). Having a risk management plan will keep you trading and being able to accumulate excellent profits.
Beginner Currency Forex Trading Tip 2. Psychology and Mental Skills of Trading.
All Traders have access to similar information but only 10 -20% are successful and able to achieve sustained profits. Even knowing the above tip is not enough it comes down to you, the Trader. Winning Traders all have the following attributes. Discipline, Patience and Confidence.
You must have the Discipline to plan your trade in advance both where you enter the trade and where you exit, stay with your system and do not break the rules of your trade and don't get emotionally involved with the market and what is happening.
Confidence plays a large part in successful trading. You must believe in yourself and your ability to analyse the market otherwise it is too hard to make the right decision.
It is very tempting to rush into a trade, be patient, wait for the system to tell you when to trade, and don't try to make the signals fit your system. Remember the market is open 6 days a week 24 hours per day and the moment to trade will happen. Short term traders can be very tempted to trade against the short trends due to frustration, unfortunately the results are usually poor.
Trading must be seen as a business with a plan, goal and strategies.
I hope this information helps put you onto the path of being a successful Trader.
Lyndsay is a successful entrepreneur, author and forex trader. Discover how you can get the best proven forex system and start trading successfully today. For the #1 forex system available check out http://www.best-fx-trading.com/
I have researched the different behaviour of those who have maintained a successful trading career and those who have similar trading systems but have not been able to sustain a trading business and have written down the tips and strategies that will help you take your trading to the next level.
This information is not only beginner Currency Forex Trading advice but is also important to any one Trading.
Beginner Currency Forex Trading Tip 1: Money Management.
Before anyone starts trading it is important to understand how the laws of probability work. If you know that your system will give you a 60/40 win ratio long term (and this is a winning system) your wins might be mixed in with the losses, however it could happen that your first 4 out of 10 trades lose, this could compound to your first 40 out of 100 trades losing.
How many traders would still have any capital and be prepared to go on to win the next 6 or 60 trades? This explains the need to limit your trade to 1% of your capital, this will give you 100 trades before losing your capital.
Many Traders after a losing trade think that doubling up on the next trade is the easiest way to get back on track. This is NOT the answer. Let me explain Recovery of Lost Capital. To give an example, if you start off with $10,000.00 and lose 20% you have lost $2000.00, leaving a balance of $8,000.00. At a quick glance it is easy to think you need to win 20% of your capital back and you will be even. However that is not the case. You actually need to win 25% of your remaining capital ($8000) to be even. As the % of loss against the original capital increases so does the % required to be even increase. At 50% loss of the original capital $10,000 your remaining capital is $5000.00 and you need 100% of that remaining capital to get back to $10000.
($5000 + $5000 = $10000).
Remember if you have more than one trade open at the same time, although each one might be only 1% of your capital, your actual risk is 3% ( 1% + 1% + 1% = 3%). Having a risk management plan will keep you trading and being able to accumulate excellent profits.
Beginner Currency Forex Trading Tip 2. Psychology and Mental Skills of Trading.
All Traders have access to similar information but only 10 -20% are successful and able to achieve sustained profits. Even knowing the above tip is not enough it comes down to you, the Trader. Winning Traders all have the following attributes. Discipline, Patience and Confidence.
You must have the Discipline to plan your trade in advance both where you enter the trade and where you exit, stay with your system and do not break the rules of your trade and don't get emotionally involved with the market and what is happening.
Confidence plays a large part in successful trading. You must believe in yourself and your ability to analyse the market otherwise it is too hard to make the right decision.
It is very tempting to rush into a trade, be patient, wait for the system to tell you when to trade, and don't try to make the signals fit your system. Remember the market is open 6 days a week 24 hours per day and the moment to trade will happen. Short term traders can be very tempted to trade against the short trends due to frustration, unfortunately the results are usually poor.
Trading must be seen as a business with a plan, goal and strategies.
I hope this information helps put you onto the path of being a successful Trader.
Lyndsay is a successful entrepreneur, author and forex trader. Discover how you can get the best proven forex system and start trading successfully today. For the #1 forex system available check out http://www.best-fx-trading.com/
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