Forex Trading Strategy - 3 Major Ways To Improve Your Trading Skills In Forex Trading

(by Peter Lim)

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.

Be sure to read the related article " Practise Forex Trading Part #2 " of this series to discover how you can apply a good forex trading strategy, avoid the major trading flaws, and start to earn a consistent income trading forex. Click "Practise Forex Trading Online Part #2" to read this related article now, or go to http://forex-trading.cashflowpc.biz for more free information.

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Forex Trading 101 – 10 Essential Tips For Novice Traders

(by Sacha Tarkovsky)

If you are new to forex trading you know that 90% of traders lose their money quickly, so you need some tips on how to join the 10% that make big consistent profits.

Here are 10 essential tips to increase your chances of making big profits from forex trading.

1. You need to rely on yourself

Many novice traders think they can buy success.

If you think you can buy success from someone else for $100 or so, you are mistaken.

Think about it – If you could a lot more traders would win than do!

Rely on yourself, do your own research and homework and come up with a system that you are confident you can make money with.

2. Avoid day trading

Day trading is popular, but the fact is it doesn’t make money, as it’s based upon flawed logic.

You cannot predict volatility in short time periods so don’t try.

Do it and you will lose.

If you don’t believe me then ask any day trader for a track record of real profits and you won’t get one.

3. Get a method your confident in

This means a simple method and for novice traders one which is based upon technical analysis.

A simple method will be easy to understand and more importantly, it’s a fact that simple methods work better than more complicated methods.

Why?

Quite simply, their less likely to break in the face of brutal market conditions.

Just a few indicators you understand and are confident in. are all you need

If you want a methodology to base your method on:

Base it on “breakouts”, most of the world’s top systems are based upon this methodology and you should consider it.

4. Discipline

If you have a method you must execute the signals with discipline.

As you will have devised the method yourself and it will be simple to understand, you will be able to acquire discipline.

Keep in mind, if you can’t execute a method with discipline you don’t have a method at all!

If you are using a technical method don’t be tempted to listen to the news.

Why?

Because you will hear lots of convincing stories that are probably wrong.

Remember, that experts in the media tell good stories but their more often than not wrong.

It’s a fact that:

Important market tops form on very bullish news and market bottoms form on bearish news – SO ignore it!

5. Money management

This is a major problem for most novice traders.

You need to protect what you have and run longer term trends.

You must take a risk!

Don’t be tempted to place your stops to close and MOVE them to quickly - you will be stopped out continually.

Most novice traders try to restrict risk, but actually end up creating it by ensuring they will be stopped out.

6. Have realistic aims

Most traders think trading is easy but of course it isn’t.

If you consider that the top traders in the world make 50 – 100% per annum then you will see that getting rich over night is not an option.

You need to set realistic objectives and be patient.

7. Work smart not hard

You don’t need to work all hours of the day, or acquire vast amounts of knowledge.

Once you have a method you are happy with, your trading should take less than an hour a day.

There is no reward for how much effort you put in.

You only get rewarded for getting market direction right.

8. Forex trading looks easy

But, if it was easy, 90% of people would not lose there money quickly.

Be humble and accept that the market is all powerful and you need to work smart to make money.

9. Patience

Many novice traders think that they need to trade all the time in case they miss a move, but this is a recipe for loses.

You need to be patient and wait for the right opportunities to come along.

10. Perseverance

If you are in a losing run (and don’t worry this will happen) you need to persevere and maintain your discipline.

Wait for the losing run to end and keep your emotions in check.

TO be successful at forex trading you need to work smart and acquire the right knowledge and then apply it with discipline.

If you can do the above forex trading can build you serious wealth over the longer term

Good luck!

FREE ESSENTIAL TRADER PDF'S AND MUCH MORE

On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at http://www.net-planet.org/index.html

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