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If you need are a newbie to this forex world, or even if you are not successful as you wish to, maybe reading this simple advices could help. Hope you enjoy it!
We use to say that no matter how good a trader can be, his/her probabilities of success in the market are only a 40 % if analysis is not equilibrated with a very good emotional balance, that let him/ her control emotions at this very special kind of work.
Of course, it’s not easy, more taking notice that you must complement this with a working method, discipline, strategy, and what else you need for your day trading.The first mistake of a novel operator, usually is to think that the market will run in the chosen direction, just because. This happens because a complete, smart, easy trading method hasn’t been developed.
In this case, to avoid worst damage, you must use stops and limits.
Another common mistake, is the lack of control over anxiety, before of after entering the market. This happens too because of an absence of a method.
And there’s where the biggest mistakes are made: the trader “follows” the price running. Most of the times, it will be near the end of the run, bringing more looses than winnings; or keep on waiting a trend change INSIDE the market (wit lots of pips lost in the middle) waiting for a miracle, or once win has been took, get inside again looking for more pips in an adrenaline rush and finally, after a lost, look for a new signal within a few minutes, to get even.
Anxiety, is responsible too of two other common mistakes in a trader: compulsion to trade or in the opposite, panic to trade. In the first case, you will eventually loose everything; in the second, you may not lost money, but surely your self confidence will be damage.
These next tips, will help you. What they basically mean is: define a strategy, follow it, and the market will be at your side
1 - You can’t predict future. We have seen lots of gurus that, with some courage and less knowledge said things like “EUR/USD, by December, at 1.1800″. Is that useful for a trader? Is that useful for any of us today? The answer is NO. The rookie, will enter the market looking for that price, and no matter how many looses it generates, he will keep on entering, until it’s too late and lost the entire account.
I’m not saying long term analysis is wrong. It’s just not useful in the short or medium term and besides… let’s say I can see that 1,1800 is right… I cannot get into the market here and now to look for that target, without understanding why is a possible target, where I can place a long term stop loss and how could I protect such a trade.
As I always say, technical analysis is not design to predict the future: you must use it to analyze probabilities, cycles, behavior, and create a working hypothesis of high probabilities. And if it doesn’t work, it has to be dismissed
You can forecast market movements, but you can not ignore the probabilities involved or force the logic when you are trading.
2 Don’t pre judge: Sometimes, with just a look over the market, you say “it’s bullish” or “it’s starting to fall”. This quick without reason thoughts, are highly dangerous, because after this you will only try to justify your first intuition, with your technical analysis. You must always base your work in a dual hypothesis: If the price goes over 1,xxxx the probability is a bull trend; but if it comes down to 1,xxxx then the probabilities are bearish. Besides, you can’t be against or in favor a specific coin just for political sympathy; leave prejudice, euphoria, love or hate: market has no feelings.
3. Be flexible: a rational, logical tough obviously is better than intuition: you will made fewer mistakes, and be ready to assume moderate losses, without feeling down, if you are rational.
4: Trust your analysis: no matter if you are a technical or a fundamental trader, the thing is, before entering the markets, you should have studied the mathematical hopes of your analysis before applying it. Don’t search for others opinions: design your system according to your trading times and needs, test it, and believe it.
5. Have a plan: thanks God, market has only two directions. The secret here, is not the tool you use, but how you use it: design a working plan, set a strategy for both possibilities, and after a while you will find your own trading tactic, that will allow you to made profits
My forex professor always told me REMEMBER: HONEST AND SMART EFFORT ALWAYS GIVES GOOD RESULTS.
with stop orders and limit orders, how do you know your broker isn’t using them to scalp your trade, after all you’re only seeing their screen and what it prints,no? this is like putting your trade on auto pilot, then you lose control and are looking at history, like here’s your trade you entered and we executed for you
and isn’t the trend your friend?
alan g thought the markets were efficient , now we we know letting money be managed is irrational
glp33
thanks for the great advice val! i’m a full time mommy to a super hyper demanding toddler and i have not much time to sit in front of the computer…i use the help of a commercial indicator, some moving averages and chart patterns, and i do agree that the emotional aspect of trading is the main factor that makes or breaks a trader…and it takes time and experience to manage that topsy turvy feelings when trading! to profit consistently, technical analysis, however good must come hand in hand with a good EQ. how many times as a new trader had we closed out a -20 pip trade before it went +50 on our favour? trading like any other profession requires grit, skills and time to learn. i sincerely believe that anyone who stick around to learn long enough will surely achieve consistent profits!
Hi Glp33. Comments are set to be moderated, however, unless some clear spam absolutely away from forex trading, i like to see them all here, and share my ideas, no matter what. You say that stop or limits orders are useless, and maybe I’m mistaken, but is the only way to be in this market, unless of course you sit in front of your machine since a trade is opened since you finally decide to close it positive or not. Do you really believe all brokers do that? Of course there cound be some, but these days the news spread like gun powder, and they dissapear as soon as thet appear. If you are not able (emotionaly talking) to close a negative trade when it moves agaisnt you, a stop is a solution. When you become to greedy and find that you lose just because that, well a limit is a solution. However, another more partial solution is using the free metatrader charts software to control if your broker price is quite reliable or not: you can have 2, 3 even 5 pips difference, but not more. If you have more, change broker quickly. And about money managed… do you have a bank account? when you give your savings to a bank, you are letting the bank manage (in a much more conservative way, of course) your money. The bank job is profitting from than money. You can find a great bank, or not. A great bank could fall apart (too many examples to even choise one)but unless you prefer buring your savings in the backyard, this is how things are in this XXI century. I will really like to hear from you again.
Regards
Val
Hi Sy! tks for your comments; I do have two demanding young girls also, yet they are learning candle patterns togheter with walking and speaking (just joking). The fact is that you say a key word: PROFESSION. An that’s right. You can made of this a profession.. but takes studies and time(How long to become a doctor, a lawyer? Home many practice needed to finally become a PROFESSIONAL?) Keep on thinking like you are, and you will become sucessful no doubts!
Regards
Val