We visited Springfield Illinois where Abraham Lincoln lived and had a successful law practice. We were able to take a tour of the house where he lived when he ran for President of the United States. The guide shared with us that the house was small when they first moved in and as he became more successful in his law practice he added on to his house. We then visited a replica of a little town where he lived for 9 years and was a partner in a mercantile business. We found out that he was a successful surveyor as well.
What does this have to do with the currency market? I was thinking how Lincoln learned how to do his many professions, it was by studying asking questions and practicing. That is how we have to learn how to trade, by studying, asking questions and practicing. I talk to many people that want someone else to trade for them because they think they can’t learn how to trade forex. Then there are the people that want to find a system that will do all the trading for them so they just turn it on and the money comes in. A person has to be careful about whom they get to trade their accounts because it seems that most professed money managers just manage to loose all the money. If there is am automated trading system that makes all the money and the investor doesn’t have to do anything then we have not seen nor heard about it.
My point is that the currency market is learnable but it does take a lot of study, asking questions, and practice. It is not for everyone but it can be for many if they put in the effort. This does not mean you can sit and look at charts hour after hour and get the knowledge you need to be a successful trader . It means there will be a lot of reading, listening to trainers, watching videos, and learning trading systems along with looking at the charts. It is fun and can be rewarding and it does take a lot of work. Make sure there is fun in your trading or you will not be with it very long.
Sunday, August 31, 2008
Don’t Think You’re Better Than The Market
good rule to follow is to always use good money management. The market doesn’t care if you win or lose your money. It is always moving and there is always something happening.
Some people get into a trade and let it run against them thinking it will come back. When it doesn’t come back usually one of the following two things occur:
1. They run the risk of a margin call.
2. They put more money in their account to prevent the margin call. (Not a good idea)
You also need to learn to leave your emotions out of your trading. Don’t try to beg the market to go in your direction. Because there are many people that haven’t learned to keep their emotions in check and they are begging and praying for it to go in the opposite direction that you want it to go.
Never trade with your emotions or your pocket book. Learn some good trading rules and techniques, and then follow them.
Some people get into a trade and let it run against them thinking it will come back. When it doesn’t come back usually one of the following two things occur:
1. They run the risk of a margin call.
2. They put more money in their account to prevent the margin call. (Not a good idea)
You also need to learn to leave your emotions out of your trading. Don’t try to beg the market to go in your direction. Because there are many people that haven’t learned to keep their emotions in check and they are begging and praying for it to go in the opposite direction that you want it to go.
Never trade with your emotions or your pocket book. Learn some good trading rules and techniques, and then follow them.
Think Of Trading As Points And Percentages
We talked about the amount of risk a trader has in the market now it is time to talk about how you feel about money. If you have a big attachment to money then it will cause a big emotional strain when you lose some of the money.
One of the hardest things a new trader has to learn is how to loose. Losing is part of trading. Losses need to be looked at as expenses, or cost of doing business. There is no Holy Grail or magic trading system that just has to be turned on and the money will roll in.
If you can’t change your relationship with money, then just don’t think about it. Focus instead on numbers. Think of a % of your account, risk-to-reward ratio, and points to be made as profit not as points to be lost.
Once you learn how to make points then the money will come. You can accelerate the amount of money you make with good money management once you know how to make the pips.
One of the hardest things a new trader has to learn is how to loose. Losing is part of trading. Losses need to be looked at as expenses, or cost of doing business. There is no Holy Grail or magic trading system that just has to be turned on and the money will roll in.
If you can’t change your relationship with money, then just don’t think about it. Focus instead on numbers. Think of a % of your account, risk-to-reward ratio, and points to be made as profit not as points to be lost.
Once you learn how to make points then the money will come. You can accelerate the amount of money you make with good money management once you know how to make the pips.
Trading as a business
If you take trading seriously you will think of trading as a business. Not just a hobby, or a way to get a quick rush, or a way to escape life’s problems, or a way of spending some of your extra time. You can think of trading, as a lot of things but to make the big bucks you talk and dream about, you need to think of it as a business.
Businesses have income and expenses. Most of us know that you have to spend some money to make money. When you lose, that is an expense and when you win, that is income.
Most successful business take off slowly build a good foundation then take off. All businesses have different time frames before they become successful. Many businesses have to adjust when their markets changing. By making small changes in the way they do things as they learn and grow they are staying in tune with their market.
You are much more likely to become profitable when you realize that trading is a business. Do not take it personal when you’re struggling. Do not put blame on someone or something else when you lose. Just learn how to run your business take it at the speed you feel comfortable with. Learn to trade, practice, implement, evaluate, learn to trade more, practice again, implement and evaluate. Do this over and over with each trade and watch your business grow.
Businesses have income and expenses. Most of us know that you have to spend some money to make money. When you lose, that is an expense and when you win, that is income.
Most successful business take off slowly build a good foundation then take off. All businesses have different time frames before they become successful. Many businesses have to adjust when their markets changing. By making small changes in the way they do things as they learn and grow they are staying in tune with their market.
You are much more likely to become profitable when you realize that trading is a business. Do not take it personal when you’re struggling. Do not put blame on someone or something else when you lose. Just learn how to run your business take it at the speed you feel comfortable with. Learn to trade, practice, implement, evaluate, learn to trade more, practice again, implement and evaluate. Do this over and over with each trade and watch your business grow.
Three Things That Give You An Edge
You need three things in your trading system to have the edge you are looking for:
1. Signals that give you distinct alerts for entry and exit points.
2. The ability to determine the direction of the trend, so you know which way to trade.
3. A system which allows you to time your entry. Having that can make you a lot of extra pips. It is important to know how much money you are willing to risk on each trade.
When you know how and when to get into the market and how much you have at risk, it takes a lot of the emotion and guess work out of trading. Then, if you can add a system to know where to put your stop loss once the trade is profitable, you have a good foundation to work with. This will allow you to protect your profit and help you determine how and when to add on to a profitable trade. Start with a good foundation and grow from there. There are many traders that spend years trying to find something that works, and even then they are still not quite satisfied.
1. Signals that give you distinct alerts for entry and exit points.
2. The ability to determine the direction of the trend, so you know which way to trade.
3. A system which allows you to time your entry. Having that can make you a lot of extra pips. It is important to know how much money you are willing to risk on each trade.
When you know how and when to get into the market and how much you have at risk, it takes a lot of the emotion and guess work out of trading. Then, if you can add a system to know where to put your stop loss once the trade is profitable, you have a good foundation to work with. This will allow you to protect your profit and help you determine how and when to add on to a profitable trade. Start with a good foundation and grow from there. There are many traders that spend years trying to find something that works, and even then they are still not quite satisfied.
Bull Markets | Bear Markets - Which Should I Trade?
The term “Bull Market” is used to describe when a market is going up. Therefore, the term “Bear Market” is used to describe when the market is going down. Therefore, you’d be better off not to sell in a bull market and not to buy in a bear market.
Nevertheless, there are some traders that say they like to trade the retracements. This is like trading against the trend or trying to swim up stream. Yes it can be done, but why trade the hard way for the least amount of money? Instead, you can trade with the trend or with the current and make more money with less effort.
If you sell when the market is going up or buy when the market is going down you will make less money with a greater risk of loss. I have heard people say that they like to do dollar cost averaging and they keep buying when the market is going down, with the hopes that the market will turn and come back in their favor. Some times it does come back and other times they get a margin call before the market turns and comes back for them.
It is smart trading to learn what the market is willing to give and then taking it. Do not try to get more than the market is willing to give or you will loose some or all of what you have. You are getting in tune with the market when you want what the market wants and take what the market is willing to give. Nothing more, nothing less.
The terms “Bull” and “Bear” come from the manner in which each animal attacks. The bull uses its horns and thrusts them up in the air, whereas the bear swipes down with its paws. So, if the trend is up, its a bull market, if the trend is down, its a bear market.
Nevertheless, there are some traders that say they like to trade the retracements. This is like trading against the trend or trying to swim up stream. Yes it can be done, but why trade the hard way for the least amount of money? Instead, you can trade with the trend or with the current and make more money with less effort.
If you sell when the market is going up or buy when the market is going down you will make less money with a greater risk of loss. I have heard people say that they like to do dollar cost averaging and they keep buying when the market is going down, with the hopes that the market will turn and come back in their favor. Some times it does come back and other times they get a margin call before the market turns and comes back for them.
It is smart trading to learn what the market is willing to give and then taking it. Do not try to get more than the market is willing to give or you will loose some or all of what you have. You are getting in tune with the market when you want what the market wants and take what the market is willing to give. Nothing more, nothing less.
The terms “Bull” and “Bear” come from the manner in which each animal attacks. The bull uses its horns and thrusts them up in the air, whereas the bear swipes down with its paws. So, if the trend is up, its a bull market, if the trend is down, its a bear market.
Trend and Money Management
There are many Forex traders and thus there are many things that they feel are important to do to manage their money. We have found that the trend is the most important requirement to make money using technical analysis. The tools used to measure the trend are not perfect, yet very helpful…so a trader will need to be aware of the risk in trading and protect themselves against sudden turns in the market.
When a trader decides to enter a trade he must also decide when he is going to exit the trade. The trader needs to decide when to exit the trade if it is positive and if the trade turns negative. Making the decision at which price to set your stop loss before entering a trade is a way of protecting against large losses. If the stop loss is going to be far enough away from the entry price to make the trader feel uncomfortable then there are two things that can be done:
1. Trade with a smaller lot size.
2. Do not take the trade at all. It is best to be in control of your emotions and your investment capital before you enter a trade.
One of the greatest advantages when entering a trade is that an exit point can be established at a point that if reached the trader knows that something is wrong, either with his research or the market behavior. This is one way that the risk or loss can be determined right in the beginning of the trade. Because the risk can be determined, money management principles can be applied that will lower the chance of loss. By trading in the direction of the four hour trend you will also lower the risk in trading. Being patient and waiting for the market to give an entrance signal is another way of limiting risk and managing your account balance.
Follow the trend and see how much easier and less stressful your trading will become.
When a trader decides to enter a trade he must also decide when he is going to exit the trade. The trader needs to decide when to exit the trade if it is positive and if the trade turns negative. Making the decision at which price to set your stop loss before entering a trade is a way of protecting against large losses. If the stop loss is going to be far enough away from the entry price to make the trader feel uncomfortable then there are two things that can be done:
1. Trade with a smaller lot size.
2. Do not take the trade at all. It is best to be in control of your emotions and your investment capital before you enter a trade.
One of the greatest advantages when entering a trade is that an exit point can be established at a point that if reached the trader knows that something is wrong, either with his research or the market behavior. This is one way that the risk or loss can be determined right in the beginning of the trade. Because the risk can be determined, money management principles can be applied that will lower the chance of loss. By trading in the direction of the four hour trend you will also lower the risk in trading. Being patient and waiting for the market to give an entrance signal is another way of limiting risk and managing your account balance.
Follow the trend and see how much easier and less stressful your trading will become.
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