How to succeed on Forex?
Apply the money management.
Do not gamble like Toto!
To know take a loss: this is the first thing everyone says. But that is not actually! This is to know leave your stop loss run!
No cancellation of order, not any moves … No no …
Your trade is well defined:
– You enter at a level
– Your Stop is at another level
– The amount of your position is calculated by money management.
But all that is known before the award of trade. And you will hold.
After you know that there are only two possible ends:
– It goes to the Stop Loss, you lose the amount of risk you have settled.
– Your goal is reached, you earn what you have settled
It is advisable to move your stop loss rather than setting traget point.
Why? Because you can take profit of all the movement.
The first movement of your stop will bring you mostly very close to your entry price, and after, you know you don’t risk anything, you always come out winner of the trade.
But you need to place your stop in the right place…
(Use the higher or lower point, charts or any chart pattern that emerges. But do not forget to always add or remove a few pips (depending on the side of your trade) and be aware of the spread.
If you treat this way, the stress of trading does not exist. You just hope not to see your stop loss being executed (after you move it several times already if you’re in the right side), but you know the risk or the possible loss at anytime of your trade.
Start with a demonstration account, and after you run!
You will be confronted somedays of whatever you do, no matter the side, you’re always wrong. You’re bullish, the market goes down … Then you change your side, it goes up…
You should not insist on these days.
The best thing you can do is simply to stop trading that day.
Keep your “need to be on the market” in your pocket.
And do not worry, the market will be there tomorrow with good trades to make.
We could make a list, but if you apply what has been said, there are no more than three:
– Trying to catch up with a loss. I mean, increase the risk in the calculation of the position in money management. Trading is a strictness activity. A trade is meaningless. You earn money if you stay disciplined in your trading strategy.
– Steal the market of few pips by taking a position without any conviction and above all without stop. If you don’t see anything to deal with, don’t trade. The parameters that make you normally enter into the market will come soon, don’t worry. No “Need” to be always in position.
– Talking about what your profit or loss. This is your life and it can provide nothing. Do not talk about the amounts of your positions you are dealing with.
On the other hand, broadcast your trade ideas, your analysis, your comments … All your Forex!
You will see that having other visions on a trade can be very beneficial. But remember always hear that good … It is advisable …
Choose your Timeframe!
All timeframes are good but remember two things:
– The more you trade, the better your broker will be grateful. He does not expect at all that you lost, it is the contrary. He makes money with the spread, so the more your trade, the more you he makes money because he has better spreads in his bank.
– A timing too large (eg daily), involves a gap more important to your stop loss, therefore, the amount of your trade is less important for the same risk. (Conversely for trades per minute)
We must therefore adjust the risk according to the timing.
You must use the timing who suit you the most. If you know you will spend all the day long to trading, and you will be full of round trip, choose for 1,2,3,5,10 or 15 min.
If you know you can follow your trades only 1 or 2 times in a day,
choose for 30 min, 1h, 2h, 3h, 4h even.
And if you’re on the long term position, then use the display daily.
The displays offer higher are just more farther from the general trend.
Should you diversify your portfolio to deal in medium term?
The answer is not obvious. Some would say yes, others not.
A former Trader said it was preferable to set only in one (or several) currency. In this case, this one traded on the Deutschmark, at the time.
So I tried both methods in demo to see the results: It appears that when your portfolio is diversified on Forex, it is almost all good, almost all wrong.
Why? Probably because of correlations between parities. Indeed, if for example the GBP is showing signs of weakness on a pair, it will tend to show weakness in all pairs. So, you will be short on GBP / USD, GBP / JPY, GBP / AUD, GBP / CHF and others … And if it goes in your side, you’ll be all right. Your portfolio will fully benefit of the rise. It’s logical, you play only the decline of GBP.
However, if there is a correction, all your positions will take a blow on the head.
(problem which is actually the same on the stock market, because when the stock market get down, all your shares have no escapes in most cases)
The correct method in MT is to stay in position until the signals change of direction. Then you hope that the correction does not compromise the figure …
And what you fear more than anything is the stages of yoyo … As always … The only way to deal with those ones is to stick to the price movements by moving your stop loss.
I advise you to test yourself the demo mode. Above all, you cut your position, if it’s not what you expected. (Normally, you necessarily cut one or two positions). On a loss of 200 to 300 pips, you will necessarily see a signal to change, like: Crossing moving average, sign change of MACD, change in the direction of Super Trend or otherwise.
Last small detail: do not change the timing. If your positions have been taken on 2h, stay on it.