Quick Guide:How to kill the odds of trading forex ?
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It is one of the hardest jobs in the world to make big money. And trading forex is not one of the easiest ways – despite what many new traders believe. Many traders fail, and they empty their trading accounts before they learn how to exploit the forex market to their advantage.
Although there are also traders who are successful in forex trading, their numbers are small compared to the majority of losers. Many times, traders are not aware that they have the power and might to shift the odds to their favour, that they can dramatically increase their chances of success if they want to.
The main reason why many traders get defeated by the market can be attributed to their lack of knowledge.
In this 21st century, where the buzzword is knowledge, it is not just a matter of working hard, but also a matter of working smart. Knowledge is the key that can open many doors – if you have an intimate knowledge of how something works, you can then come up with ways to exploit what you know to your advantage. This applies to forex trading as well. Not only must you know and understand how the forex market works, you also need to understand your own emotions and other people’s emotions. You need to know how to identify high probability trade setups and how to manage your money wisely. For every transaction in the forex market, there are winners and losers. Your goal is to make more overall profits than losses over a period of time, and to emerge an overall winner. My approach to consistent trading success lies in three main pillars, or the 3Ms: Mind, Money and Method.
Out of the three Ms, I find the Mind component to be the most crucial to trading success. It is often said that we are our own worst enemy. In forex trading, I couldn’t agree more with that saying. Human beings are emotional creatures, and most of our decisions are guided more by emotions than logical thinking. Our mind is capable of playing tricks on us; we can get seduced into unfavourable situations by our emotions. Emotions can work for us or against us. Sometimes they can save us from landing in a pile of sticky mess, but sometimes they can land us in it. We can also turn the tables around by playing tricks on our mind, making it believe whatever we want it to believe. Both internal and external battles can be fought and won through the optimal harnessing of the Mind’s power.
Sure, every one wants to succeed in something, but do you have the desire to want to succeed in forex trading? First of all, this field is not for every one, for you must have the passion for it. If you just want to try your luck, or dabble, in trading, you will just end up among the majority who lose their money. You must have the deep desire to want to accomplish your goals, because without this desire, your thoughts will not materialise into action, and it is action that could transform your goals to reality. To be a successful trader, you must be highly self-motivated, have a concrete plan of action, and not be afraid of failure.
To be really good at anything, you need skills and knowledge in that field. A huge amount of time, effort and money is required for a trader to attain consistent success in forex trading. Despite the availability of forex trading-related resources on the internet, and in the bookstores, traders can find it quite daunting to learn about trading on their own as they do not know what there is to be known. If you do not wish to pay large tuition fees to the market, or if you wish to shorten your learning time, you may want to consider online trading courses or physical seminars.
forex trading.
I recommend that you check out those which are offered by skilled and practising instructors.
Note: Be wary of signing up for courses or seminars that are full of hype, for they can be very misleading.Avoid those that give you the impression that you can attain consistent profits after two days of intensive learning, or those that require you to purchase expensive software.While there are some shortcuts to gaining knowledge via courses or seminars, there is no substitute for honing your trading skills in the market.
Every one makes mistakes, and mistakes are inevitable. Got a trading loss? Then whip out your trading log to record what your mistakes are and what you have learn from that losing trade. Always have something positive to take away from your losses, and treat it as a learning experience. Don’t dwell on your losses. Know that there will be other trades coming your way.
Are you willing to take sole responsibility for your trading decisions?
You read some market analysis, and then trade according to what the analyst is saying. That trade turns out to be a loser, and you turn around to blame it on that market report. It is too easy to shuffle blame on others, and say “It wasn’t me/my fault.” It is fine to read about other people’s opinions about the market, but make sure that you do your own analysis of the market, which you will gradually learn to do so with confidence if you are still relatively new to forex trading. It is dangerous to blame losses on other people, the forex market, or the stars, for you are the only person responsible for pulling the trigger. And if you blame others you will never be able to find out how you can improve.
Every trader has emotions of fear and greed; there is no way you can avoid feeling these emotions, unless you want to adopt the drastic measure of removing your
AMYGDALA –
which just happens to be a very important part of a human’s brain. Since there is no way of banishing these emotions for good, the best thing to do is to control these emotions, instead of letting them control the way you think and act.
Face and control your fears
Since greed can be categorised as a kind of fear, which is the fear of missing out, I will discuss the primary types of fears relating to trading, and how they can be overcome. The first step to preventing fears from ruining your trading performance is to recognise the various forms of fear that is connected to trading. And once you recognise the type of fear you are experiencing, the easier it is for you to handle that emotional obstacle so that you can trade better. That is the key to emotion-free trading. It is not about pretending that those fears do not exist, but how you handle them that matters.
Why is it that many profitable positions turn into losses, and winning strategies result in losses instead of profits? I strongly believe that once a trader has honed his or her trading skills, the ultimate factor that will affect his or her overall profitability is money management skills. Money management is all about managing the possible risks, and it is the defining factor that separates winners and losers in forex trading. Novice traders think of how much they can harvest from the market; experienced traders think of how much they can lose to the market. Many traders are so eager to trade to make big money that they completely overlook money management. Poor money management also explains why so many traders get wiped out by the market. The first goal of money management must be to ensure long-term survival in the market, because if you don’t survive to trade another day, you can forget about profits altogether. Money management is about fully optimising your trading capital. It allows you to be proactive in managing risks, and to cope with trading losses – which are part and parcel of the game. It is an essential tool to ensure that you will have more than enough to last another day in the trading game. It is possible to have a trading system that yields 90% accuracy but still end up losing if the trader does not handle his or her money and portfolio properly. No matter how good a trading system may be, there will be times when you will experience a series of losses. Success comes to those who have set down rules for money management, and have the discipline to follow them through their trading.
Preserve your capital
The shining light that attracts all traders to the forex market is the prospect of being able to grow their money by tapping into the online trading platform as their own in-house money tree. In almost any field, it is true that most people are drawn to short-term benefits, but are myopic when it comes to long-term planning. Trading is no exception. When risk capital is put aside for trading, you are hoping that this amount of money could be transformed into a much bigger amount; otherwise, what would be the point of risking it? But if this capital runs out, what can you bank on to make your desired profits?After all, money begets money. Hence, preservation of capital is the key to ensuring a trader’s long-term survival in the market, for, without survival, there can be no wealth generation.
Although there are also traders who are successful in forex trading, their numbers are small compared to the majority of losers. Many times, traders are not aware that they have the power and might to shift the odds to their favour, that they can dramatically increase their chances of success if they want to.
The main reason why many traders get defeated by the market can be attributed to their lack of knowledge.
Mind
Out of the three Ms, I find the Mind component to be the most crucial to trading success. It is often said that we are our own worst enemy. In forex trading, I couldn’t agree more with that saying. Human beings are emotional creatures, and most of our decisions are guided more by emotions than logical thinking. Our mind is capable of playing tricks on us; we can get seduced into unfavourable situations by our emotions. Emotions can work for us or against us. Sometimes they can save us from landing in a pile of sticky mess, but sometimes they can land us in it. We can also turn the tables around by playing tricks on our mind, making it believe whatever we want it to believe. Both internal and external battles can be fought and won through the optimal harnessing of the Mind’s power.
DO YOU HAVE THE MENTAL STRENGTH?
A trader’s mindset is the most important ingredient of success. Whether you are new to trading currencies or a forex trader who has some experience, here are some questions to ask yourself:
Do you really have a strong desire to succeed in forex trading?
Sure, every one wants to succeed in something, but do you have the desire to want to succeed in forex trading? First of all, this field is not for every one, for you must have the passion for it. If you just want to try your luck, or dabble, in trading, you will just end up among the majority who lose their money. You must have the deep desire to want to accomplish your goals, because without this desire, your thoughts will not materialise into action, and it is action that could transform your goals to reality. To be a successful trader, you must be highly self-motivated, have a concrete plan of action, and not be afraid of failure.
Are you prepared to devote a lot of time and effort into picking up trading skills and knowledge?
To be really good at anything, you need skills and knowledge in that field. A huge amount of time, effort and money is required for a trader to attain consistent success in forex trading. Despite the availability of forex trading-related resources on the internet, and in the bookstores, traders can find it quite daunting to learn about trading on their own as they do not know what there is to be known. If you do not wish to pay large tuition fees to the market, or if you wish to shorten your learning time, you may want to consider online trading courses or physical seminars.
forex trading.
I recommend that you check out those which are offered by skilled and practising instructors.
Note: Be wary of signing up for courses or seminars that are full of hype, for they can be very misleading.Avoid those that give you the impression that you can attain consistent profits after two days of intensive learning, or those that require you to purchase expensive software.While there are some shortcuts to gaining knowledge via courses or seminars, there is no substitute for honing your trading skills in the market.
Are you willing to accept losses as part of trading?
Every one makes mistakes, and mistakes are inevitable. Got a trading loss? Then whip out your trading log to record what your mistakes are and what you have learn from that losing trade. Always have something positive to take away from your losses, and treat it as a learning experience. Don’t dwell on your losses. Know that there will be other trades coming your way.
You read some market analysis, and then trade according to what the analyst is saying. That trade turns out to be a loser, and you turn around to blame it on that market report. It is too easy to shuffle blame on others, and say “It wasn’t me/my fault.” It is fine to read about other people’s opinions about the market, but make sure that you do your own analysis of the market, which you will gradually learn to do so with confidence if you are still relatively new to forex trading. It is dangerous to blame losses on other people, the forex market, or the stars, for you are the only person responsible for pulling the trigger. And if you blame others you will never be able to find out how you can improve.
Fear and greedFear and greed are the two dominant emotions that affect not just the state of our mind, but also the currency market. In fact, the fluctuations of these two emotions are the main drivers of the currency market. There are, of course, other emotions that exist in the market such as disappointment, regret and so on, but fear and greed are the principal forces that tilt the scales of supply and demand of currencies. When traders feel overly optimistic about a country or its currency, they become consumed by the great hope that the currency would appreciate in value against another currency. They are then guided by this hope and greed to buy the currency pair now so that they could hopefully sell it at a higher price in the future. Greed then grows into euphoria, as traders continue to buy and buy, thus taking currency prices to newer highs. However, since currencies always move in pairs (when one currency in a pair goes up, the other goes down), fear is also an equally strong emotion that guides the currency movements. When people are buying a currency with great hope, they are also selling the other currency in the pair with great fear. On the other hand, when currency prices go down, fear and greed are also the main drivers of the move. All in all, fear and greed are behind the steering wheel of the currency market.So, while you must learn to recognise these emotions in the market, the problem comes when you allow them to distort your logic when it comes to making trading decisions, as most of these decisions will turn out bad, and are likely to cause you to regret your actions later.
Every trader has emotions of fear and greed; there is no way you can avoid feeling these emotions, unless you want to adopt the drastic measure of removing your
AMYGDALA –
which just happens to be a very important part of a human’s brain. Since there is no way of banishing these emotions for good, the best thing to do is to control these emotions, instead of letting them control the way you think and act.
Face and control your fears
Since greed can be categorised as a kind of fear, which is the fear of missing out, I will discuss the primary types of fears relating to trading, and how they can be overcome. The first step to preventing fears from ruining your trading performance is to recognise the various forms of fear that is connected to trading. And once you recognise the type of fear you are experiencing, the easier it is for you to handle that emotional obstacle so that you can trade better. That is the key to emotion-free trading. It is not about pretending that those fears do not exist, but how you handle them that matters.
Money
Why is it that many profitable positions turn into losses, and winning strategies result in losses instead of profits? I strongly believe that once a trader has honed his or her trading skills, the ultimate factor that will affect his or her overall profitability is money management skills. Money management is all about managing the possible risks, and it is the defining factor that separates winners and losers in forex trading. Novice traders think of how much they can harvest from the market; experienced traders think of how much they can lose to the market. Many traders are so eager to trade to make big money that they completely overlook money management. Poor money management also explains why so many traders get wiped out by the market. The first goal of money management must be to ensure long-term survival in the market, because if you don’t survive to trade another day, you can forget about profits altogether. Money management is about fully optimising your trading capital. It allows you to be proactive in managing risks, and to cope with trading losses – which are part and parcel of the game. It is an essential tool to ensure that you will have more than enough to last another day in the trading game. It is possible to have a trading system that yields 90% accuracy but still end up losing if the trader does not handle his or her money and portfolio properly. No matter how good a trading system may be, there will be times when you will experience a series of losses. Success comes to those who have set down rules for money management, and have the discipline to follow them through their trading.
Preserve your capital
The shining light that attracts all traders to the forex market is the prospect of being able to grow their money by tapping into the online trading platform as their own in-house money tree. In almost any field, it is true that most people are drawn to short-term benefits, but are myopic when it comes to long-term planning. Trading is no exception. When risk capital is put aside for trading, you are hoping that this amount of money could be transformed into a much bigger amount; otherwise, what would be the point of risking it? But if this capital runs out, what can you bank on to make your desired profits?After all, money begets money. Hence, preservation of capital is the key to ensuring a trader’s long-term survival in the market, for, without survival, there can be no wealth generation.
About Kuldeep Nikam
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