Wednesday, October 24, 2007
Thursday, October 11, 2007
MAJOR TIPS FOR SUCCESS IN FOREX DAY TRADING
1. Taking Responsibility For Your Actions.
This means taking charge of your destiny and most people simply cannot accept this responsibility.
They want the comfort of having someone to hold their hand and blame if thinks go wrong.
Problem is if you don't accept responsibility, you won't win - no one else will make you rich in Forex trading, you're all on your own.
2. You Have To Create a Set of Rules to Survive
The market which you confront is all powerful, it moves as and when it wants - it's always right and you can only be wrong .
Again, this causes major psychological problems for traders - we all hate being wrong, but in this instance you have to accept the market is right ALL the time, if you don't you will run loses and the market will destroy you.
Most traders get frustrated and break their rules, or create a new set as they lose and end up chasing their tail. If you create rules you must have the discipline to apply them and most traders simply lack the mindset to do this.
3. The Work Ethic Does Not Apply
Most people try and overcome losses with a higher work rate.
After all the more you put in the more you get out. They assume if they acquire more knowledge or trade more often, their profitability will increase but the markets won't reward effort.
You get your reward for being RIGHT and that's it in forex trading, not the effort you put in.
4. Forex Traders Need To Be Anti Social!
We don't mean you have to be rude to anyone - but you need to keep yourself to yourself and stay away from the pack and its opinions when trading forex.
Remember 95% of forex traders lose!
We find this uncomfortable.
After all, were pack animals and since stone age times we have sought comfort and belonging with others of our species. When we go against the majority opinion, we feel uncomfortable, as were simply not used to it.
Operating in the forex markets is far harder than many people think and most traders are simply unprepared for the mental problems that it confronts them with.
You will hear often that it is mindset more than method that contributes to success in the markets and its true.
If you have ever wondered why traders find it so hard to trade with discipline, this article may have helped you see why and given you an insight into what you need to do to achieve currency trading success.
This means taking charge of your destiny and most people simply cannot accept this responsibility.
They want the comfort of having someone to hold their hand and blame if thinks go wrong.
Problem is if you don't accept responsibility, you won't win - no one else will make you rich in Forex trading, you're all on your own.
2. You Have To Create a Set of Rules to Survive
The market which you confront is all powerful, it moves as and when it wants - it's always right and you can only be wrong .
Again, this causes major psychological problems for traders - we all hate being wrong, but in this instance you have to accept the market is right ALL the time, if you don't you will run loses and the market will destroy you.
Most traders get frustrated and break their rules, or create a new set as they lose and end up chasing their tail. If you create rules you must have the discipline to apply them and most traders simply lack the mindset to do this.
3. The Work Ethic Does Not Apply
Most people try and overcome losses with a higher work rate.
After all the more you put in the more you get out. They assume if they acquire more knowledge or trade more often, their profitability will increase but the markets won't reward effort.
You get your reward for being RIGHT and that's it in forex trading, not the effort you put in.
4. Forex Traders Need To Be Anti Social!
We don't mean you have to be rude to anyone - but you need to keep yourself to yourself and stay away from the pack and its opinions when trading forex.
Remember 95% of forex traders lose!
We find this uncomfortable.
After all, were pack animals and since stone age times we have sought comfort and belonging with others of our species. When we go against the majority opinion, we feel uncomfortable, as were simply not used to it.
Operating in the forex markets is far harder than many people think and most traders are simply unprepared for the mental problems that it confronts them with.
You will hear often that it is mindset more than method that contributes to success in the markets and its true.
If you have ever wondered why traders find it so hard to trade with discipline, this article may have helped you see why and given you an insight into what you need to do to achieve currency trading success.
Wednesday, October 10, 2007
FOREX PITFALLS TO AVOID IN TRADING
1. Relying On Someone Else For Success
Many novice traders think they can buy success from someone else and while there are plenty of people who can help you - they can't give you success, only you can do that.
If you buy a system from someone else, make sure you know the logic it's based upon, if you don't, you will lack confidence and won't be able to follow it with discipline.
2. Day Trading Works
More novice traders try forex day trading than any other method and their duped by hyped advertising and sales copy however:
Day trading doesn't work, never has and never will - all short term movements are random - period.
3. Forex Markets Move To a Scientific Theory
Many people think there are ways to beat the market and they believe in the people selling systems that have found the scientific formula for market movement.
There is a huge business in selling courses based upon - Fibonacci, Gann and Elliot wave but they don't work - why?
Because if markets moved to a scientific theory, we would all know the answer in advance and there would be no market!
4. You Need to Predict to Win
If you predict where prices are going to go you will lose - why?
Because predicting is simply hoping or guessing and the market won't reward you for this, instead it will destroy your equity. Rather than trying to predict, use momentum indicators to confirm price momentum has turned your way before trading.
You will trade the reality on your forex charts and be trading with momentum and the odds will be on your side.
5. Markets Move to Supply and Demand Fundamentals
Yes they do but trying to follow and trade them is impossible - why?
Because we live in a world of instant communications and fundamental news is instantly discounted in the price, so you cannot win using it you are playing catch up.
Furthermore, while the fundamentals are important they don't move markets - people do.
Learn this equation:
Supply and Demand Fundamentals + Investor Psychology = Market Movement
You need to be aware of this equation and remember humans are motivated by emotion so prices don't always go the way you or I think.
The easiest way to get around this is too simply to follow action on forex charts and let price action tell you where prices are going.
6. Online News Sources Are Useful
Good stories - but as we have seen fundamentals discount instantly. Also what you are seeing on the news is peoples opinions, very convincing and more often than not wrong.
If you want to keep your emotions out of trading don't listen to the news.
7. Leveraging Is The Key To Making Profits
Yes it is but be careful not to over leverage. You can get 400:1 from many brokers! but use it wisely not rashly.
Most traders simply leverage up to far don't make this mistake - 10:1 for most traders is ample.
8. You Don't Go Broke Taking a Profit
If you don't run your profits you won't cover your losses. Many traders try so hard to avoid risk they actually create it, by giving themselves no chance of winning. Don't make this mistake, take calculated risks and run your profits and dont snatch or tighten stops to quickly!
9. The More I Put In The More I Will Get Out
Not true at all - you don't get rewarded for effort in forex trading, you get rewarded for being RIGHT about your trading signals.
Don't work hard for the sake of it - it wont help you!
10. Confidence and Discipline Are Easy
There anything but to acquire them takes a deep understanding of the method you are following (this is why if you follow someone else you wont make money) and also a deep understanding of your emotions, from this understanding comes self control na discipline.
So there are your 10 forex trading mistakes, there are more but these are the main ones that contribute to 95% of forex traders losing their money.
Many novice traders think they can buy success from someone else and while there are plenty of people who can help you - they can't give you success, only you can do that.
If you buy a system from someone else, make sure you know the logic it's based upon, if you don't, you will lack confidence and won't be able to follow it with discipline.
2. Day Trading Works
More novice traders try forex day trading than any other method and their duped by hyped advertising and sales copy however:
Day trading doesn't work, never has and never will - all short term movements are random - period.
3. Forex Markets Move To a Scientific Theory
Many people think there are ways to beat the market and they believe in the people selling systems that have found the scientific formula for market movement.
There is a huge business in selling courses based upon - Fibonacci, Gann and Elliot wave but they don't work - why?
Because if markets moved to a scientific theory, we would all know the answer in advance and there would be no market!
4. You Need to Predict to Win
If you predict where prices are going to go you will lose - why?
Because predicting is simply hoping or guessing and the market won't reward you for this, instead it will destroy your equity. Rather than trying to predict, use momentum indicators to confirm price momentum has turned your way before trading.
You will trade the reality on your forex charts and be trading with momentum and the odds will be on your side.
5. Markets Move to Supply and Demand Fundamentals
Yes they do but trying to follow and trade them is impossible - why?
Because we live in a world of instant communications and fundamental news is instantly discounted in the price, so you cannot win using it you are playing catch up.
Furthermore, while the fundamentals are important they don't move markets - people do.
Learn this equation:
Supply and Demand Fundamentals + Investor Psychology = Market Movement
You need to be aware of this equation and remember humans are motivated by emotion so prices don't always go the way you or I think.
The easiest way to get around this is too simply to follow action on forex charts and let price action tell you where prices are going.
6. Online News Sources Are Useful
Good stories - but as we have seen fundamentals discount instantly. Also what you are seeing on the news is peoples opinions, very convincing and more often than not wrong.
If you want to keep your emotions out of trading don't listen to the news.
7. Leveraging Is The Key To Making Profits
Yes it is but be careful not to over leverage. You can get 400:1 from many brokers! but use it wisely not rashly.
Most traders simply leverage up to far don't make this mistake - 10:1 for most traders is ample.
8. You Don't Go Broke Taking a Profit
If you don't run your profits you won't cover your losses. Many traders try so hard to avoid risk they actually create it, by giving themselves no chance of winning. Don't make this mistake, take calculated risks and run your profits and dont snatch or tighten stops to quickly!
9. The More I Put In The More I Will Get Out
Not true at all - you don't get rewarded for effort in forex trading, you get rewarded for being RIGHT about your trading signals.
Don't work hard for the sake of it - it wont help you!
10. Confidence and Discipline Are Easy
There anything but to acquire them takes a deep understanding of the method you are following (this is why if you follow someone else you wont make money) and also a deep understanding of your emotions, from this understanding comes self control na discipline.
So there are your 10 forex trading mistakes, there are more but these are the main ones that contribute to 95% of forex traders losing their money.
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