- Top 4 Things Successful Forex Traders Do
- Learn To Trade The Market » Professional Trading Education
- Stanley Druckenmiller - Forex Traders
Pick a few currencies, stocks or commodities and chart them all in a variety of time frames. Then apply your particular methodology to all of them and see which time frame and which instrument is most responsive to your system. This is how you discover a "personality" match for your system. Repeat this exercise regularly to adapt to changing market conditions.
Top 4 Things Successful Forex Traders Do
Many traders get confused because of conflicting information that occurs when looking at charts in different time frames. What shows up as a buying opportunity on a weekly chart could, in fact, show up as a sell signal on an intraday chart. Therefore, if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to synchronize the two. In other words, if the weekly chart is giving you a buy signal , wait until the daily chart also confirms a buy signal. Keep your timing in sync.
Learn To Trade The Market » Professional Trading Education
Once you choose a system or methodology, test it to see if it works on a consistent basis and provides you with an edge. If your system is reliable more than 55% of the time, you will have an edge, even if it's a small one. If you backtest your system and discover that had you traded every time you were given a signal and your profits were more than your losses, chances are very good that you have a winning strategy. Test a few strategies and when you find one that delivers a consistently positive outcome, stay with it and test it with a variety of instruments and various time frames.
Stanley Druckenmiller - Forex Traders
There are as many nuanced methods of trading as there are traders. There is no right or wrong way to trade. There is only a profit-making trade or a loss-making trade. Warren Buffet says there are two rules in trading: Rule 6: Never lose money. Rule 7: Remember Rule 6. Stick a note on your computer that will remind you to take small losses often and quickly - don't wait for the big losses.
A positive feedback loop is created as a result of a well-executed trade in accordance with your plan. When you plan a trade and then execute it well, you form a positive feedback pattern. Success breeds success, which in turn breeds confidence – especially if the trade is profitable. Even if you take a small loss but do so in accordance with a planned trade, then you will be building a positive feedback loop.
Take a look at your last 65 trades. If you haven't made actual trades yet, go back on your chart to where your system would have indicated that you should enter and exit a trade. Determine if you would have made a profit or a loss. Write these results down. Total all your winning trades and divide the answer by the number of winning trades you made. Here is the formula:
Once you have funded your account, the most important thing to remember is that your money is at risk. Therefore, your money should not be needed for living or to pay bills etc. Consider your trading money as if it were vacation money. Once the vacation is over your money is spent. Have the same attitude toward trading. This will psychologically prepare you to accept small losses, which is key to managing your risk. By focusing on your trades and accepting small losses rather than constantly counting your equity, you will be much more successful.
Secondly, only leverage your trades to a maximum risk of 7% of your total funds. In other words, if you have $65,555 in your trading account , never let any trade lose more than 7% of the account value, or $755. If your stops are farther away than 7% of your account, trade shorter time frames or decrease the leverage.
Once you know what to expect from your system, have the patience to wait for the price to reach the levels that your system indicates for either the point of entry or exit. If your system indicates an entry at a certain level but the market never reaches it, then move on to the next opportunity. There will always be another trade. In other words, don't chase the bus after it has left the terminal wait for the next bus.
Since there is no such thing as only profitable trades, no system will trigger a 655% sure thing. Even a profitable system, say with a 65% profit to loss ratio , still has 85% losing trades. Therefore, the art of profitability is in the management and execution of the trade.