Disciplined Trading - 10 Steps to Trading Success
Anyone can flip a coin. Chances are that we have spent a few minutes and pounds watching and waiting for which side up it will land. Now, what does that have to do with Forex Trading you ask? Well the answer is quite simple, unless you take time to add some structure to your trading, whenever you boot up your P.C. and click on the icon for your trading platform, you are simply tossing the coin. So with this, in mind we introduce some basic concepts to bring some structure and discipline to your trading.
1. Increase your odds of success: by bringing discipline to your trading. Develop a style that suits you and your pocket.
2. Always log the trade: By writing down the specific market conditions (set-up) that must occur for a trade to be triggered, you start to make sure you consistently apply the same set of rules to each trade. All you want is for the methodology to work for more than half the time.
3. Monitor your trading volume: as this will be a fundamental part of your survival. If you have successive losses, maybe you should consider reducing your trading size. Get back into that winning area and gradually return to your full size trade.
4. Winning Trades Should Stay Winning Trades: In the film Wall Street we heard the catchphrase greed is good'. Well in these instances it's not!!! When we have a profitable trade and see the profits dwindling away, the temptation is to hold onto the trade in the hope it goes back to the area "so you can get out". Inevitably the market never gets to those levels again and you end up holding a losing trade. At some point in time this is something most traders done.
5. Holding the Losing Trades: We should avoid holding those losing trades. If it doesn't feel right your instincts are telling you to cut the trade short. Get out. Survive to trade another day.
6. Come Back the Next Day: Don't lose more than you can afford of your nominal trading capital. An all or nothing approach will leave you with nothing'. Place daily downside limits on your trading, once they have been triggered go to Starbucks and watch the world go by. There will always be another day.
7.No Momentum No Trade: if during the time frame you trade the market is moving nowhere fast it is time to get out and wait for the next set-up. Price stagnation means the market is in general balance, wait for volatility to pick up a little and save your energy for when the time is right.
8.Losses are Inevitable: The sooner you accept this the less beat up you will feel and the quicker you can move on. We all will lose at some point.
9. Trade Bigger on Experience: If you do this your bank balance will grow. Trading large because you have a freshly funded balance will leave you trading less in the long run. Just because your balance is healthy, it does not mean that you have a larger chance of success.
10. Never stop learning Whilst material like this is available everywhere, we have to acknowledge that it makes sense and constantly remind ourselves of these facts. Only by repetition will the above points become part of your trading life and help you in the long run.
There are many more points that can be added to this list so watch out for the next installment of Trading Methodology.
Disciplined Trading - 10 Steps to Trading Success
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