Trading With Purpose In Forex
TRADING WITH PURPOSE IN FOREX.
One thing I have learnt over the years is that when we fail to plan, we plan to fail. This fact brings us to our day’s topic, trading with purpose. Trading forex gets very interesting when one makes profit. Making profit in forex demands dedication, a good understanding of how the system works and money management ability. All these boils down to planning, one must always have a trading pattern or plan to be able to cope with the sensitive nature of forex trade.
To become a good and purposeful trader one must do some basic thing which are as follows, adequate research, identify a trading range for each day, build a good trading system, develop self control and of course have a good money management system. This topic is multidimensional in nature and we can’t exhaust it today, the key thing is that after reading this article you will certainly have a better understanding of how you can trade purposefully. These are the basic steps to become a purposeful trader.
RESEARCH: Prior to the time I became a forex trader, I didn’t really enjoy reading that much, but when I saw that I couldn’t really go far in forex without inculcating the habit of reading, and doing some good research work, I made my weakness my strength. Before ever I start for the day’s trade, I make out good time to read articles concerning the currencies I am trading, I’ll check the fundamental news for the day to enable me plot my trading strategy for the day. I do all these before I start trading and I must say here, that it pays to know the current state of any currency you are trading before taking a position, either a buy or a sell. I come across traders that claim they trade with only technical analysis, I put it to you that trading without having an idea of the strength and weakness of the currency you are trading is not a smart way of trading when you want to trade purposefully.
DEFINE A TRADING RANGE: This is a very important step to take before starting your day’s trade. Trading without a range limits your ability to make sound decisions, it limits your ability to determine a good entry and exit points. Without a trading range a trader can easily fall victim of the “no man’s land syndrome”, this is a situation where a trader enters a trade at price levels far from the trading range, which most times results to great loss, when the position goes against the trader. When such thing happens we say the person is trading in a “no man’s land”. To avoid these problem traders should first determine a trading range before taking any position. You can use the following indicators to determine a trading range for the day, week etc. Pivot points, Fibonacci levels and trend lines. When you have determined your trading range with any of these indicators, you can then tread within the area determined by your indicator, as your trading range. Every trading range has support and resistance levels made visible by the indicator used. Please be mindful of your support and resistance levels in the trading range because price action reacts to these levels.
TRADING SYSTEM: This is the process of combining different indicators to gives a clear direction of the trend. We have three types of trend, uptrend, down trend and consolidation. Trading in the direction of the trend is the key to successful trading. For a trading system to qualify as successful, it must be able to identify the different trends. As I earlier said trading system or strategy is a combination of indicators to identify the direction of the trend, to build a trading system, one must be able to study different indicators individually, identify how they react to price actions and most importantly identify their individual roles. The following are the basic roles indicators play in forex, identifying trends, identifying the strength of the prevailing trend and showing overbought and oversold areas in the platform. We can select indicators from the trading platform or import external or customized indicators. The next step is to run a back test to determine the best time frame to use and how the indicators reacts to price action in the different time frames. Note that a good indicator should trigger the same signal in at list six time frames. Remember to choose your indicators in these three categories first, its ability to identify direction or trend, its ability to determine the strength of the trend and ability to determine overbought and oversold positions. Visit www.elbonfx.com for a successful trading system that guarantees 250 to 300 pips per week.
MONEY MANAGEMENT: this factor has sent so many traders packing. Besides the lack of knowledge of this aspect of forex to some traders, greed is another factor that makes people to ignore the rules that surrounds money management in forex. For the fact that forex is a very easy way of making money online most people dive in with all they have and would want to pick the whole money at once, the truth is that without out money management, one can ruin a $100,000 account in one day. Money management in forex takes my mind to free margin, used margin, lot size and capital. These are the words you will come across when it has to do with money management, simply put money management in our context is the ability to manage ones account by mapping out a certain amount for trading and setting aside a part of your capital with the broker, in case an open position goes against you. Forex trade has to do with price movement of currencies per time, in as much as we can predict or determine trend direction, the fact still remain that there could be draw downs (a situation where price movement change direction for a while before heading to its previous direction) even with the best trading system a draw down can give a margin call to an account without a good money management system.
About the Author
My aim is to contribute my quoter here with my articles which i am sure will go a long way to help forex traders to understand the trade better, please don’t hasitate to contact me via email if there is anyway i can help you. My email address is noble@elbonfx.com.
Technical Analysis Video Ebook Free Stock Market Trading Lesson Part 2
|
|
Information Dashboard Design: The Effective Visual Communication of Data $19.90 Dashboards have become popular in recent years as uniquely powerful tools for communicating important information at a glance. Although dashboards are potentially powerful, this potential is rarely realized. The greatest display technology in the world won’t solve this if you fail to use effective visual design. And if a dashboard fails to tell you precisely what you need to know in an instant, yo… |
|
|
Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance) $45.30 This outstanding reference has already taught thousands of traders the concepts of technical analysis and their application in the futures and stock markets. Covering the latest developments in computer technology, technical tools, and indicators, the second edition features new material on candlestick charting, intermarket relationships, stocks and stock rotation, plus state-of-the-art examples a… |
|
|
Thinking In Systems: A Primer $19.95 In the years following her role as the lead author ofthe international bestseller Limits to Growth, DonellaMeadows remained at the forefront of environmentaland social analysis until her untimely death in 2001.Long anticipated, Thinking in Systems is a conciseand crucial book off ering insight for problem solvingon scales ranging from the personal to the global.Edited by the Sustainability Institu… |
Tags: book, books, ebook technical analysis, ebook technical analysis of stock trends, free ebook technical analysis, math, programming, reference