Things That May Block Your Trading Success
Here are some reasons why traders lose in the currency market:
1.Traders allow their emotions, greed, hope and assumption to take over their trading. This is probably the most difficult thing for a trader to do is to eliminate those things while in the Forex business.
2. Lack of Education. One of the worst things is for a new trader to have some immediate success. this gives them a false since of skill and confidence. After a couple trades they figure they have figured it out and trading the currency market is easy. They have not even taken time to go through any class or school such as Babypips School. They have not gained the proper education and put in the time practicing. Always get your education first, and education never stops.
What Size Of A Demo Account Should I Practice With?
I was speaking with a good friend the other day; about demo trading versus live trading, and how to make the transition smooth. He mentioned that he had not yet started trading live, and that he had been offered by a broker a free demo account with an initial balance of fifty thousand dollars. He stated that when he did go live it would not be with that amount. He then asked “Was this a good way to practice trading the platform?”
This is my feeling on the subject. When a broker advertises “Open up a free demo account” with a large dollar amount attached I think it is poor form. This gives the beginner and anyone unable to trade with that large of a dollar amount right off the bat a faults sense of security. I think it is premature and greedy on the part of the broker.
Is Your Money Safe?
In today’s world the question ‘Is your money safe?’ is a very valid question. We wanted to share with you the latest video from Terry Savage at the MoneyShow.com. We found that it offers some great advice for how to keep your money safe and some great resources to understand what you need to know. Click on the link below and watch it, then come back and tell us what you think and other ideas you know of to keep your money safe.
We strongly recommend taking the time to research the ideas presented in the video, if you have any questions let us know.
Market Guessing Game
I found this amusing. I was asked to go to this chat forum and see what they were saying about the market. Here are four of the comments I saw.
Hi, I join the tread started by ……. and ask you guys the same question about GBPUSD the coming week, any views on where we are going?
My strategy when the market opens above 1.8950 i will set long because the market opens above the resistance
It’s very risky now.
It might have bottomed near term at 1.8834/36 and managing to rally beyond 1.90 again. And if someone expects this, he may not be wrong because stochastic made a positive cross, a doji plus a bullish candle but that’s not too enough.
Someone else might come.. and say no, It’s going down. and he also has good reasons. Why? GBPUSD almost touch the 1.8967-65 resistance, and it might be a place to find plenty of sellers. Also the bullish candle didn’t close above 1.8953 bearish candle open. rather closed at 1.8946
Another Way To Stay In Control
I once heard a trader say that after he made some money in his account he would take out the original investment. Then he was only playing with money he didn’t originally have making the losses not hurt as much. It became easier to make money because he had taken the pressure off himself.
By doing this he was better able to stay in control of his emotions and not get caught up in trading the money. He was just trading period. He was better able to follow the rules and not get caught up with the placing of the stop loss, getting out early, letting the news bother him and listening to others. He could just concentrate on trading.
Find a way to forget the money and just think about the mechanics of trading and see what a difference it makes. When you are trading your demo account you don’t get as involved with the money, you can concentrate on following the rules and you make money and wonder why you cannot make money when trading your live account.
Just relax and read the market. Trading will become fun again.
When You Should Go Back To Demo Trading
I just read an interesting article about when to stop trading live and go back to demo trading.
Go to demo when you have lost 9% of your account. Trade on the demo account one week for every 2% of your account that you lost. We all know that it is better to have some money to come back to when you start to trade live again.
There is more to the article but this is what struck me as being of up most importance. It gives us a set point at which to stop trading live. There is no guessing it is straight forward.
Once you have figured out what you have done wrong by going back to basics, you can start trading live again. I thought this would be a good simple straight forward approach on how to get you back in the game.
I think you could even set the loss % to maybe 5% when you are first learning and have just started to trade live. It is better to protect your capital rather than have to save up again. Be cautious and conservative and you will be around as a trader long enough to become successful.
How Much Of My Account Should I Risk?
When a trader first starts to trade there are many things to learn like:
1. How to use the platform
2. Which trading style I should use
3. Which indicators should I use
4. What time frames best meet my life schedule
5. How much money should I trade with
6. How much should I place on each trade
7. How much of a loss should I take
There are many other things to consider when trading but the one I want to address here is how much money you should risk in the market at one time. Here is one formula of how to calculate the amount of money you may want to trade at any one time.
You should trade with no more than 5% of your account on any one trade. i.e. $2000 account x 5% = $100. Divide The 5% or in this case the $100 by 50, which is the amount of margin you will be using in a mini account. This gives you 2 lots per trade.
This is only a formula, be sure to trade on the side of caution.
Which Is Best: Trading on Offense or Defense?
We have all been told that we should only trade with money we can afford to lose. This does not mean to be wild and care free with your trading money. So we do not want to think of our trading account as money you can afford to lose. We just have to know that we can lose this money and not affect our life style. You want to be stingy with this money and try to keep it and guard it with all the skill we have.
Playing offence is important but you will keep and make more money by playing defense with your money. Before making a trade you should always think defense and check the risk before you place the trade. Once you have the risk figured out and you are willing to accept that level of risk you need to figure out the number of lots you will trade. It is best to think about how much you will lose rather than how much you will gain. When you approach trading defensively first, then money management will have a higher priority in your trading decisions.
TEN: Must Have Trading Tools
A trader must see the big picture in trading to survive and prosper. If you only look at the small time frames you are only seeing the foothills of a tall mountain. It is necessary to look at the larger time frames and trade in the direction of the larger trend.
If a trader is going to be in the currency trading business very long they must look at the current trade as only one of many trades. This will help to get out of a bad trade without the emotions.
Keeping a trading journal and using the trade tracker are two of the things that will improve your trading more than anything else. It can be hand written, or on a computer but keep a trading Journal. It is not important to have good grammar and spelling. You can record all the dates prices and facts about the trade but be sure and record your thought and feelings about the trade. Why you took it and why you got out. You can do this on the trade tracker. This exercise will put you on the right track faster than anything else. It will uncover your strengths and weaknesses. You can guarantee that you’ll see a pattern in your behavior. There is probably something you are doing consistently that’s causing negative results. Once you know what you are doing wrong you can correct it.
NINE: Balanced Life Trading
Trading is all about making money. If you are doing it for any other reason then you are doomed for failure. You need to trade from good old mechanical thinking, which is a mark of a good trader. You get a signal you make a trade you get another signal you exit a trade. Large profit, small profit, or small loss it is all part of the process in becoming a good trader.
Now you need to meet people, get out and do things, find other interests. Remember what you did before you started trading. Spend time with your family, friends, and anyone that does not deal with trading. When you have a life other than trading you will be a better trader.
This will help you keep emotions, fear, and greed out of your trading. You will have more fun and be in a frame of mind to make more money by seeing and acting on the proper signals.
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