Monday, December 17, 2012

3 principles you must follow as a Forex trader

By John Russell

Trading well in Forex market is patently not a tact that you can learn overnite. It needs lots of practice, experience and correct methods for getting successful. It's an sea, and you're a surfer. Will you like to dive into a sea that is full of sharks and has deadly rip tides? Well, I don't think so. Same thing is applicable to Forex.

Though it needs lots of expertise and circumstances are not same for every investor, so a single sure fire method to success in this trading couldn't and can not be developed, still there are 3 things commonplace amongst the tricks of all successful players and you should also follow them to be successful. In this post, I have tried to combine all those strategies:

Approach: Nearly all successful ones always do some homework for trading. This homework includes analysis of time frame, selecting the correct method and matching the personality of your system with the right market. As an example, while doing timeframe analysis, a 5 minute chart delivers the message that you are more comfortable in position without the exposure to overnight risk.

On the other hand, weekly charts denote a comfort with overnight risk. While choosing method, some individuals love to utilize the indicators like MACD and crossovers while others like to buy support and sell resistance. When matching system's tuning with the market, if you are happy to trade the USD/JPY pair then you need to choose Fibonacci because their support and resistance levels are far more reliable in this instrument in comparison to others.

Attitude: Right attitude requires 4 things? Patience, Discipline, Objectivity and Pragmatic Expectancy. Patience is required after you have completed step 1, and you need to wait until your system alerts either entry point or exit point. Discipline is the factor on which patience relies completely. Objectivity or 'emotional detachment ' relies on trustworthiness of your technique. If your system provides highly reliable entry or exit levels, then you should not become emotional by the forecasts of investment pros or pundits. Realistic Expectancies mean that you should always expect pragmatic results. Although market can make a big move and you may get unbelievable success, but in your own mind, you should not leave the actuality.

Discrimination: Alignment is the single factor in that category. Choose 2 currencies, stocks or commodities and chart them all in a variety of time frames. Then figure out that which of them will be more responsive to your system. That is all!

There are numerous traders and several strategies, so you always have to work with your own techniques. But the 3 elements given above should surely come to your strategy for making great profits. Cheerful Trading!

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1 comment:

  1. Following certain guidelines in forex definitely helps to trade in a secure manner. Got to learn good points on forex trading here. There are service providers like epic research and more who can suggest useful forex tips .