Though this is an issue often glossed over, learning to control one's emotions while trading the forex markets is more critical to success than even finding a good trading system.
Many new traders in the quest for a personal comfort zone go through several trading systems and phases in the effort to find the 'Holy Grail' of trading. Those who are fortunate to try out some genuinely good systems, especially price action-based systems.
Another good philosophy to cultivate is to think of your trades in terms of cash gained or lost, not pips gained or lost. Often I see forex signal services, trainers and traders talking about making 500 or 'x' number of pips in a month, etc. While this is essential in that it helps in account-keeping, it is also necessary to think in terms of money gained or lost. This would enable you be more cautious and more judicious with your precious capital. It would also force you to think of how many pips you have to risk to gain a certain amount: you should always go for trades that would gain you at least as much as you risk, if not two or three times more.
It may be advisable to begin trading live as soon as possible so as to learn to control your emotions, or at least to make your demo trading simulate how you would trade your live account as closely as possible. Fortunately many online brokers now offer 'nano' accounts that allow you to start trading with as little as one dollar ($1)! The fact is that a lot of people forsake reality while trading their demo accounts, without thinking of conditioning their emotions and thought processes to the ups and downs that would inevitably come with losing and winning real money in the market. It does not matter how much paper money you accumulate in your demo account, how you act with your real account is where the tire meets the road. That is where you would know for yourself if you are self-accountable, if you can obey and keep to your trading plan, and whether you really are cut out for forex trading.
The best way to start off is after test-running a trading system on a demo account and ensuring you can profit consistently on it (consistently meaning anything from a few weeks to months), you can put $10 to $100 on a trial live account and see if you can succeed with that before you trade larger amounts. Of course, if you have traded live earlier you would not need to start with such small amounts.
Babatunde Adejumo is a medical practitioner with a strong side interest in the foreign currency markets, which he has been studying for several years 'with the same passion he attacked his books with in medical school'. He believes anyone can learn and succeed at forex trading without undue reliance on lagging indicators and black box systems, as he teaches on his website http://www.tradeforexnaked.com/. His price action-based forex trading system as well as a detailed Mentoring course are readily available on his website.
No comments:
Post a Comment