In this brief Forex trading lesson I want to give you five
quick-tips to become a better trader now. I am not saying that you will
instantly make money if you do everything discussed here, but I am saying that
from my own personal trading experience, the five things listed below will make
your journey to successful Forex trading a lot easier and quicker:
1) Only risk money that you can TRULY afford to lose
Perhaps the number one thing you need to understand about
Forex trading is that you really should never trade with money that you are
totally comfortable with losing. In my experience, beginning traders often fund
their trading accounts with money they should not be trading with. I have even
had some of my students tell me via email that they’ve funding their trading
accounts with credit cards because they had no cash. This is just not the right
way to get started trading the markets.
You need to approach the markets from a totally objective
and calm mindset, and if you are using money that you shouldn’t trade with, you
are naturally going to get emotionally over-attached to every trade. So, my
first tip to become a better trader is to make certain that you’re only using
money that you are 100% OK with losing in the markets, and be sure that you are
100% OK with losing the amount you have risked on any one trade, because any
trade could end up a loser.
2) Stop trying to control the markets; instead control
yourself
Next, you need to stop trying to force your will upon the
markets and instead learn to control yourself. Traders who over-trade and
over-leverage, or who meddle with their stops and targets after entering a
trade, are indirectly just trying to control the market. What many traders
don’t understand is that you cannot control the market, it’s impossible; the
only variable you can control in trading Forex is yourself; your own thoughts
and your own behavior are the only things you can control in the market. Until
you fully accept this fact and actually begin to control yourself instead of
the markets, you will not make consistent money. The markets do not know you
are alive and they do not care, that’s not meant to be harsh, it’s simply true.
3) Learn to trade the daily charts first
The daily time frame is my number one time frame to trade
and I consider it my “anchor chart” because I base the majority of my trading
decisions off of it. I feel that time frames under the 1 hour chart are simply
too noisy and full of “random” price movement to be effective. Many traders get
caught up in a game of trying to “figure out” what is going to happen by
looking at 15 minute, 5 minute, and even 1 minute charts. What they are really
trying to do is control the market again by believing they are going to somehow
figure out what’s going to happen via looking at more data or more price bars,
while forgetting that lower time frames are inherently less accurate than
higher ones. In my opinion the daily charts give the best combination of trade
setup quantity and accuracy, and I’ve been successfully trading off the daily
charts for years.
4) Learn to trade with the trend first
I am always somewhat surprised at how many traders try to
fight the dominant daily trend of the market by trying to pick tops and
bottoms. It has been proven time and time again that trading with the trend is
the most profitable and highest-probability way to trade, yet amateur traders
all over the world try in vain to fight the trend. If you want to become a
better trader right now, perhaps the thing that will help you the quickest is
to simply learn to trade with the trend and stop trying to pick major market
tops and bottoms, because it really is a fool’s game.
5) Learn and master an effective Forex trading strategy
All traders need to have a high-probability trading edge to
enter the market with; otherwise they might as well just enter randomly. The
problem with trading strategies is that many of them are too complicated or are
too inflexible to be worthwhile. I have always used and been a proponent of
trading with simple price action setups because I feel they provide the most
accurate and simple trading strategy to navigate the markets with. Whether you
trade with price action or another strategy, you need to make sure your trading
strategy makes logical sense and is not too complicated and also that it really
provides you with a high-probability edge in the market.
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