Learning to trade correctly
It's no secret that everyone who comes to the Forex marketThey all have the same desires - to make money, to achieve financial independence and success. To achieve the desired goal, all they need to do is to trade in the plus, in profit. Profit - This is generally the most important component of any business, and it is achieved in different ways. But in the field of Forex trading the plus will always depend only on you personally. On how you work, namely: how you assess the situation in the market, how you open and close the transaction, how to cope at this or that moment with your emotions, whether you can minimize the minus, whether you can let the plus grow, whether you can follow the plan, whether you follow your trading rules, etc. There are a lot of nuances of work, but we will briefly focus on some working and psychological moments of achieving trading in the plus.
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Where to start?
So, in order to trade in the plus side, in my opinion, it is important to understand, what direction to take in the beginning, I mean, where do you start?
Of course, you have to start by studying the market. With an understanding of what kind of market it is and what its scale is in global terms. Why it emerged in the first place, what time it operates, why and who needs it, who works on it, and what instruments are used in trading. What forms of analyzing this market exist. Then you will need to understand your own style of trading, psychology and planning. I would like to omit the moments of studying and understanding the market, as there is more than enough information on this topic everywhere, and I would like to emphasize the following. dwell on the main point - on the trade. And how to make it profitable in monetary terms and pleasant from a psychological point of view.
What, first of all, will we need in order to trade in the plus side?
Development of trading tactics
It is better, of course, when the tactics are developed by the trader himself, then it will include it exactly his individual view and approach to the market. Otherwise, you can, of course, use a ready-made tactic developed by another person, but here the main thing is that your views on the market and trade fully coincide with the views of the author of the proposed tactics, with his trading rules, with the psychology of trade and even to some extent with life philosophy. Development of trading tactics requires time, effort, research, thought and practice in "combat" market conditions.
Developing your own tactics can start with:
- currency pair selection: focus on one, maximum two currency pairshelps you better study their movements;
- work period selection in the market in a certain trading session, which allows you to keep concentration in certain hours and not to work all 24 hours a day in a tired or sleepy state, and plus be careful in making deals in the period when the European and American trading sessions overlap in time;
- studying the types of trendsThis will allow you to recognize them, and eventually you will learn to work on each of them separately, i.e. always be in the market;
- level concepts - this will make it possible to recognize where buy or sell prices are concentrated;
- analyzing daily and hourly chartswhich shows the big picture within a day or within a month;
- the use of any attractive indicator or exploring different market signals like figures or combinations of "Japanese candlesticks" - will help to find a good entry point into the market;
- working out your own rules of the tradeThe rules help you to act clearly because they should include precise descriptions of your actions at the moment of entry and exit; and Rules help you to act clearly, as they should include a precise description of your actions at the moment of entering and exiting a trade;
- testing different approaches for 3 months or more will help you to identify the number of profitable and losing trades, and you can thus fine-tune your tactics.
The advantages of your own developed tactics are obvious. You will find it easy, clear and simple to work with. You can choose any methods of fundamental and technical analysis, as well as freely mix trading styles, use any indicators that are clear to you personally. In general, from my experience, I can say that the Forex market is very dynamic and very easy to work with. you have to have multiple tactics to capitalize (to work on the upward, downward and sideways trend) that will eventually add up to a trading style.
Determining your trading style
Again, to find out which trading style (scalping, day trading, short-term trading, long-term trading) is most suitable for you, you should at least try all of them on a practice account and choose the most acceptable one for yourself.
Following a developed trading plan
Briefly stated, a trading plan includes the moment of entry, exit and monitoring of an open deal. In the plan you clearly define for yourself under what conditions you enter the market, what you rely on. In what cases you clearly limit losses, based on the rules of money management, which includes the maximum possible loss in one transaction as a percentage of the deposit, equal to 2 or 3 percent. When you know exactly under what conditions you will close a profitable or losing trade.
Let's say you're saying to yourself: profitable transaction I will close it only when it reaches the maximum price value I see on the chart, or I will wait for take profit to trigger, or I will close it under the condition that Take Profit did not work, the price did not reach it, stopped or even drew a reversal. А losing trade with a small minus, which has not yet been increased by a stop order, I will definitely close, when my expectations are not confirmed and I see that something is wrong, when once again looking at the market and analyzing it, I understand exactly - I entered incorrectly, did not see something, succumbed to the mood of the market or my own emotions. Following a pre-designed trading plan helps to control your own "over-the-top" emotions (we'll talk about them below), and in the end it helps you to work in the plus side.
Keeping a trading diary
Some of you may argue that keeping a trading diary is unnecessary. But I personally do not think so, because I keep a diary and it helps me to see where I am in my professional growth. It also helps me to keep track of my profitable and losing trades, especially my profit and loss trades. deal breakersI always record the entry and exit price, the fact that take-outs or stops have been triggered, and briefly record the price of the entry and exit, as well as the price of the stop or take-outs. reasons for opening and closing or what I expect from the market today. In addition, keeping a diary helped me a lot in studying my emotions and controlling and correcting them, so that I could have a cool head and clearly see and evaluate the market situation.
Mastery of your emotional state
One of the important components of profitable trading in the market is managing your emotions. Often our stressful mental states in the form of passion, excitement, fear, greed prevent us from thinking straight and doing the right thing.. For example, the market often provokes a trader to take active actions to open a deal at the time of news release, at this moment it seems to us that if we do not enter at this moment, do not make a deal, we will definitely lose profit. Though it is more correct to keep a cool head at this moment, i.e. not to give in to emotions. It is difficult to control your emotions and feelings, as they are practically not realized by a person, but it is still possible to control them.
If we look more closely at fear, what do we see? What fear is a powerful emotionand it occurs in moments of uncertainty - when we do not know how and what to do in the threat of losing money or a deposit.
It's not natural for any person to part with something of their own, so. any disadvantage we try to prevent or avoid if possible. In the end, we simply forget about what goal we were pursuing when we opened the trade. To overcome the fear of losing money in moments of floating minus, you can simply switch to something else, for example, look more closely at the market and try to find the error either by simply asking questions or by any other method (you can find some examples of such methods in my book).
If we're talking about greedThe main thing is to understand how insatiable your feeling is, and whether you realize what the consequences will be in a situation when you uncontrollably make a large number of deals with your desire to earn as much money as possible. When you give in to impulsive impulses, ignoring your trading tactics, or when you do not close a deal in a changed situation on the market in the hope that the trend, which has turned against our deal, will suddenly in an instant take and go where you would like it to go, and you will not lose money in the end. The cure for greed in the market is discipline.
Observance of discipline
Discipline - is the ability to control one's emotions and make oneself take concrete actions in any situations that arise. By concrete actions I mean, first of all, following their own goals and their own trading rules. And if in these rules we have written to ourselves "do not get into a deal with hands", it means that, no matter how much we would like to do it in a situation of floating plus or minus on the account, we do not get into this deal, and wait until the last time for any result. Observance of this simple rule will help you to test your tactics, identify its strengths and weaknesses, plus everything will teach you to demonstrate willpower in difficult psychological moments.
Discipline for me is also achieving one's material objective in commerce. It consists not only in the sphere of trading on the market, but also in life. In general, a trader working for himself is a free artist. And it depends only on him how he will trade, how he will motivate himself to work, how he will build his day and trade, what he will be guided by, whether he will be persistent in achieving his intended trading goals. Only strict adherence to discipline and struggle with one's own weaknesses will help to "clean up the clutter" from your work habitsit's the only thing that will help you focus on what's most important to you. trader - on the plus side of the trade.
So, if we summarize all of the above, we can say that trading on the plus side is possible only with constant practice, strict discipline, adherence to your own trading rules and the ability to control yourself in any situation on the market. Remember the main thing - the market does not give money to everyone, but only to those who are truly worthy of it.