Posts Tagged ‘trade’

Risk management is a topic that many forex traders do not take seriously enough. In fact, risk management is usually the single biggest factor that is over looked amongst forex traders and this is the biggest reason why 95% of them fail to make money over the long term. The reason that so many forex currency traders ignore managing their risk or developing a risk management plan is simply because they don’t feel like they need to. Many novice forex traders think that their system or their trading method is so accurate that they don’t need to manage their risk because they believe they will win on a very large percentage of their trades. The truth is that this is a false belief and it is simply emotional trading and illogical thinking as a result of fear and or greed. Professional forex traders know that at best they will win on 60-70% of their trades, they understand they will lose on any where between 30-50% of their trades. If you knew you were going to lose anything 50% of the time why would you not manage your risk? The simple answer is because beginning forex traders do not understand the concept of position sizing and they are trading based off emotion.

Position sizing is simply adjusting the number of lots or contracts you trade to stay within a pre-defined risk threshold while placing your stop loss at a safe spot. Let’s dig into that pervious sentence piece by piece. Many aspiring traders make the huge mistake of having a certain dollar amount in their mind that they are willing to risk before they enter a trade. They then buy or sell a number of lots that is equal to or greater than that dollar amount of risk. After that they will arbitrarily put their stop loss in mostly because they have heard you should trade with a stop loss. This is not an effective risk management technique, in fact it is basically gambling but it is exactly how, or similar to how most forex traders enter a trade.

To profitably utilize the power of position sizing you must first understand that it is absolutely necessary to have a set risk percentage that you are emotionally ok with losing on any one trade. Most traders cannot operate emotion free after losing more than about 3% of their trading account value on any one trade. As such, risking 2% or less is the recommended amount for any trader and you will be hard pressed to find any professional short-term or swing forex trader risking more than that on anyone trade, this is because they understand the importance of risk management and have already lost enough money to know they cannot control the market. So now your risk level is at 2% of say a $5,000 dollar trading account. This means you can risk $100 on any trade that meets your criteria for a valid trade setup.

So here is where position sizing, risk threshold and stop loss placement come in. Once you find a trade that meets your trading plan entry criteria you then need to find the safest place for your stop loss, after you find this level you calculate the distance between it and your entry level. Let’s say this distance is 150 pips, this means you can still only risk $100 but you must now adjust your position size down to meet your risk threshold. An advantage to forex trading is that you can trade mini and micro-lots at many brokers which basically means you have extreme flexibility in position sizing. So to meet your 2% risk percentage and maintain your 150 pip stop loss distance you can only trade 0.66 micro lots, which means you are then trading .66 cents per point. .66 x 150 = $99. It’s important to stay just under your risk margin if it comes down to being slightly under or slightly over; if you traded.67 cents per pip you then would be risking .67×150=$100.50, which is over 2% risk, you want to avoid this because it will induce an emotional reaction that will very likely snow ball into a huge emotional roller coaster of trading errors.

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Learning to trade the forex market will be one of the most rewarding tasks you ever tackle. The self-discovery and introspection that accompanies learning to trade the forex market is an extremely valuable lesson applicable to all areas of life. While you learn to trade the forex currency you will discover many things about how you handle pressure, your level of self-control, and how well you are at managing your emotions and thinking objectively. These are all aspects of becoming a professional trader that necessarily must be present in order to succeed long term.

Becoming a professional forex trader is certainly no easy task; it takes hard work, dedication, passion, and a quality source to learn from. There is much trial and error to be made while you learn to trade forex; however, the learning curve can be greatly shortened if you learn to trade forex from a quality forex mentor. Finding a mentor who is also a professional forex trader as well as a great teacher is probably the most valuable asset to the beginning forex trader. When you can learn any skill from someone who has been at it for years and been through the trial and error process you can drastically reduce your learning curve. There will still be bumps in the road, but finding an honest and genuine forex mentor can get you on the path to consistent profitability much quicker than if you suffer through all the common mistakes with no formal education.

You need to remain positive and upbeat while you learn to trade the forex market. Every forex trader, professional or amateur, experiences periods of losses. It is how your behavior after every loss and every win that determines your success or eventual demise as a trader. Probably the single most important factor in learning to trade forex is believing the fact that to effectively manage your emotions and stick around to make it to professional status, you must always manage your risk on every trade you make. Emotion management is best done by knowing how much you could lose on every trade before you enter it and being completely fine with losing that amount of money. It is really surprising to see how many aspiring forex traders do not manage their risk or even consider that they might lose on any given trade.

Learn to trade the forex currency market and you will acquire a life long skill that will continually reward you. Any professional trader you encounter will almost certainly be an extremely disciplined person and will likely be successful in other areas of life that require high degrees of discipline. Most people could use stronger discipline and self-control in their lives. If you look at learning to trade the forex market as not only a possibly very financially lucrative endeavor but also a very mentally rewarding and life rewarding endeavor it starts to take on a whole new meaning. The necessary ingredients to successfully trade the forex market are factors that will benefit you in all areas of your life. Many people lack these ingredients which is why they fail to succeed in their personal or professional lives. Learn to trade forex and you will be paving the way for monetary, personal life, and mental success that will reward you many times over.

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best training on forex ?

Forex or foreign exchange ‘fx’, unlike other major markets, never sleeps, it’s open 24/7, and is not only highly leveraged, but extremely volatile and very unpredictable.

The fx or the currency market as the ‘pros would call it’, is always moving and is always an opportunity to make serious money and of course lose it just as fast.

You should without hesitation Learn forex first and what it’s all about by first undertaking the best forex training around, and start your journey out with a solid education on this wild beast of a market we call forex.

Let a seasoned mentor or coach get you into forex trading, so you will get a firm grasp of what forex is all about and how you can seriously but safely exploit it to your advantage. Learn about indicators, charts and how to use them to make high probability trades. If you find currency markets too hard at first glance, keep searching for the best forex training website on the internet and continue to grow as an attentive market student, be a sponge and be a persistant  and of course become an ongoing learner.

You will look back at this one day and thank you’re lucky stars you selected to undertake serious training and education before commiting to currency training and speculation full time.

Of course, you are saying to yourself, why do I need to get training or help with trading endeavors when there is so much automated forex robots that can trade for me.?

we are here to tell you that currency market trading with robots is far from big time real life trading. Consider the fact that most online marketing companies sell such scam products that will not make big money and will rob you of real profits untill you go flat out broke.

The trick is to ground yourself, and look for a real human and mentor to start trading with, to start forex training and coaching yourself into making good trades and develop good habits to keep winning your trades and make profits.

the best place to start forex trading training and develop your trading strategy is one that offers simple and logical ideas which you feel are workable in the market.

good trades to all.

all the best,

The Trader

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