This article is about implementing time to research and plan your foreign exchange trading.
All forex traders need to have a solid plan in place to ensure that they trade effectively. Below are some general suggestions as to how you can ensure that you are ready to trade and do so profitably.
Foreign Exchange Trading
You should be treating your trading career as you would any other business. This means that you should maintain specific trading hours. Make an attempt to be available before the market commences for your trading session. This will give you time to prepare and skim over your trading plan for the day.
You should make time to study graphs and indicators to determine its relationship to the market. Try to set aside at least an hour to do this and to prepare for the next day’s trading. Do not try to do this during your trading hours. You will get to know the market and soon be able to recognise particular movements that will affect your future trading.
Over the weekend when the market is not trading, you should set aside additional time to prepare for the following week’s trading. You should also look at forex news and other announcements during this preparation time. To succeed in this market, you should be prepared to offer up at least ten hours per week to do your study of the market and draft a suitable foreign exchange plan.
You should ensure that your mind is clear and ready for trading. This is an intense market and you need to be able to focus throughout your trading session. If there are any problems that may take your mind away from trading, even for a few minutes, you should sort it out before you commence trading.
The effect of psychological influences in this market has seen many trades go bad. Remember, treat your trading career like a business and you will not allow outside influences to affect it.
Number of Trades
You should consider limiting the number of trades you undertake during your session. Many traders with little experience tend to trade as much as they possibly can and often get their accounts wiped out by doing too many trades. Until you are showing profits consistently for about ten days in a row, you should limit the number of trades you enter.
You should limit your trades to a certain number per day. You know how much you can handle and at what point it will all become too much. Stick to your gut feeling about your capabilities and do not push yourself.
You should aim to limit your trading to a single open position at any one time. You could opt for two if you are able to handle the pressure and the concentration level of focusing on it.
You must bear in mind that you will make mistakes – all traders do, regardless of their experience level. One of the most common mistakes is to sell when you actually wanted to buy or the other way around. You have to take responsibility for your mistakes and try not to make that same mistake again. If you make this type of mistake, it is best to exit that position immediately.
If you are a day trader, it is vital that you have a trading plan in place. This should include research and planning time, apart from your trading time.
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