The 3 Skills You Need to Become a Successful Forex Trader
In order to be a successful and profitable forex trader on the long run, there are three important factors or secrets you must take into account. Below I’m going to discuss these factors and show you why they are very important for any profitable forex trader.
1. You MUST Use a Powerful and Profitable Forex Trading System
The trading system should be profitable for a long time and must be simple and easy to apply. It should be of a mechanical nature, allowing very little or even no discretion or judgment from the trader’s part, especially if you are just a beginner trader, it is very important that you follow mechanical hard-and-fast rules: if X=Y then do Z.
The reason for this is very clear and logical. When trading, there are a lot of emotions that come into play. If you have a set of rules to follow then you know exactly what to do and no matter what your feelings are telling you, you simply can neglect them and follow the precise trading rules dictated by your proven trading system.
Most reliable and effective forex trading systems such as sRs Trend Rider are 100% mechanical, you do not use any judgment or discretion. There are no profitable discretionary trading systems, but I like to use mechanical trading systems in my forex trading.
2. You MUST Have a Solid Money Management Strategy
Throughout my trading career I have come to learn that success in trading is not only about using a profitable forex trading system (of course that is VERY important) but also about having a good and solid money management strategy. Trading without a clear and precise money management plan is a sure way to fail.
But what do I mean by the term “Money Management”?
Let me simplify what I mean by the term “money management”. The term “Money Management” points to the principles and discipline the trader use in order to control his risk exposure when entering the market and opening a trade.
How much of your total capital you will risk on any one single trade, where you will place your stop loss, what will be your profit target and the ratio between your profits objective etc.
3. You Must Control your Emotions
The trader must learn to master this very important factor. While trading, you are constantly presented with feelings such as fear, greed, and excessive excitement (for example – as a result of a winning streak). The reason many traders experience these types of feelings is simple, they don’t have a good trading plan.
The trader does not follow a strict and clear set of trading rules. He will trade based on emotions rather than on trading signals issued by a robust and profitable trading system. He will not respect stop losses, profit objectives or any other important parameters essential for profitable trading.
Without mastering the above 3 important and crucial factors, there will be only one way to failure.