By: Terry Allen
To begin achieving Forex success, you first need to define a methodical and easy-to-follow plan that will help you, especially if you are a novice, maximize profits and minimize risk before risking a single dollar on live trading. In addition, you need to realise that, in the same way as a doctor or lawyer, you will not become a Forex Expert overnight. So, you must move away from this mindset as quickly as possible. You must learn to adopt a more scientific and business-like approach to Forex.
Here are the basics of a methodology or trading plan that will enable you to do just that and its concepts will be further enhanced during this course. This is a standard process used by many experienced traders. This methodology will show you how to evolve a low risk trading system to a high one using a well-developed iterative process. First, you need to define a trading system which will be used with specific operational configurations.
The main aim of the trading system is to identify trends, as early as possible, in order to maximize profits whilst, at the same time, avoiding false signals and blips. You will need to use the concepts of Forex Analysis to help you select the functions that will be incorporated into your trading system. This topic will be discussed in more detail later in this course.
You can commence the plan by establishing a demo trading baseline that will be used to compare all future trading systems. A trading system, configured to low risk, will be used for this purposed and will have the following settings:-
1 lot traded only, only 2% of your total margin will be traded, only one currency pair will be traded at any time and only one trade will be active at any one time.
You need to realise quickly that there is big difference between risking 2% and 10% of your total account per trade. Ten trades, risking only 2% of the balance per trade, would lose only 18% of your total account if all were losses. Under the same conditions, 10% risked would result in losses exceeding 60%. Clearly, the first case provides much more account protection resulting in an improved length of survival. You must appreciate quickly that the most successful Forex traders are first skillful survivors and second big earners.
This article is part of a course that is intended to enhance these concepts further.
To begin achieving Forex success, you first need to define a methodical and easy-to-follow plan that will help you, especially if you are a novice, maximize profits and minimize risk before risking a single dollar on live trading. In addition, you need to realise that, in the same way as a doctor or lawyer, you will not become a Forex Expert overnight. So, you must move away from this mindset as quickly as possible. You must learn to adopt a more scientific and business-like approach to Forex.
Here are the basics of a methodology or trading plan that will enable you to do just that and its concepts will be further enhanced during this course. This is a standard process used by many experienced traders. This methodology will show you how to evolve a low risk trading system to a high one using a well-developed iterative process. First, you need to define a trading system which will be used with specific operational configurations.
The main aim of the trading system is to identify trends, as early as possible, in order to maximize profits whilst, at the same time, avoiding false signals and blips. You will need to use the concepts of Forex Analysis to help you select the functions that will be incorporated into your trading system. This topic will be discussed in more detail later in this course.
You can commence the plan by establishing a demo trading baseline that will be used to compare all future trading systems. A trading system, configured to low risk, will be used for this purposed and will have the following settings:-
1 lot traded only, only 2% of your total margin will be traded, only one currency pair will be traded at any time and only one trade will be active at any one time.
You need to realise quickly that there is big difference between risking 2% and 10% of your total account per trade. Ten trades, risking only 2% of the balance per trade, would lose only 18% of your total account if all were losses. Under the same conditions, 10% risked would result in losses exceeding 60%. Clearly, the first case provides much more account protection resulting in an improved length of survival. You must appreciate quickly that the most successful Forex traders are first skillful survivors and second big earners.
This article is part of a course that is intended to enhance these concepts further.
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