There is an old saying that says you should “let your profits run”. In regards to this there are two schools of thought. One: this is good advice and it should be followed. Two: it is better to be consistent and follow your system and take several trades out of the long run. The down side of letting the winners run is that you lose perspective of what is average. The really big winners do not come along that often. By staying away from all of the big moves and stick to your trading plan you will not become confused as to whether it is a big move or an average move. By sticking to your trading plan then you can keep your mind and your capital free to make the most of several trades over the life of the larger trade.
A good method of trading is to be consistent in the way you trade even though you will take small losses once in a while. By trading the same way every time, you will have a better chance of seeing your account grow on a steady bases. When you do this, you are freeing up time and money that can be spent on other average trades—trades with which you are familiar and know how to handle without panicking. In the end this should prove itself more profitable.
All the above information just means that you need a reliable system with as many positive trades as possible. It would be better if the system gave signals to enter trades from indicators rather than candlestick movement. The system should also work on any currency pair and in any time frame. This holds true for when the market changes and moves in a different way. It is our opinion that once you become a good trader you will know how to trade the big moves and make additional trades for smaller numbers of pips as well as adding on to the big move to maximize profits.
We feel that there is only one thing worse than not using a stop loss and that is setting the stop to close to the entry price. We really get frustrated when we set our stop the market moves against us, stops us out then moves in the direction we had originally planned. There is an art to setting stops you need to be far enough away to let the market breath yet close enough that you do not lose too much. Setting a stop to close can be the result of fear of losing too much, not having a clue where to place the stop or just thinking you need to cut your losses. Inexperienced traders place there stops where many other traders are placing stops for example near the low of a move. Their evaluation of the market can be correct but with a poor timing on the entry and setting the stop to close they are taken out. When the market starts to move in the original direction the trader gets back in close to the place they had entered in the first place.
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.
If some news is coming out and you cannot control the outcome then the extra risk may not be worth taking the trade. If you are not sure what the risk is, then it is better not to take the trade because you are increasing your chances for a loss if you do take the trade.
There are traders that make livings by making large gains with large losses.Then there are traders that make a living with small gains and small losses.
Which ever style a trader uses they must be aware of what they are doing and keep the size of the wins and the size of the losses in relation to one another.
There are traders that lose money month after month, and the reason is that they always rush into trades without studying them carefully and seeing which way the trend is going or waiting for any sort of retracement before entering the trade.They see a breakout on a currency pair and put in orders to buy, once the order is filled they spend the next hour complaining that they bought the high of the move.They always seem to buy when the currency has had a big run up in 10 minutes.
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.
Everyone needs to find the time of day that is best for them be it emotionally, time restraints, or alertness (when you are not tired of fatigued).Once you find that magic time for you then build your trading around your schedule not what works for others.
Once you have the time to trade, decide which style you will use.Day trading, swing trading, position trading.This will take some looking into, your emotions and personality, for sure.Once you have figured this out the time frames you will trade will be obvious.For day trading use small time frames, (5 minute and 15 minute) for the longer time trades (swing or position) use the larger time frames (1hr or 4hr or larger).
You are responsible for your success or failure as a trader. You’re in charge of your trading, not the platform, not your broker, not your trading group Just you. If something goes wrong you are the one that has to figure what to do to get out of any given trade.
One of the best things a trader can do is be aware of their feelings, be aware of how you are reacting to things when they have gone right or wrong. Traders have to learn how to coach themselves. By keeping the trade tracker a trader can see what they are doing right and what they are doing wrong after only a few trades. Having a “winning day” or a “Losing day” is not the issue at all. It is how a trader is performing on the job.