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Your Forex Trading Strategy Could Probably Use Some Help!

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By : Olliver Kennedy    99 or more times read
Submitted 0000-00-00 00:00:00
Ask any seasoned trader out there what makes a strategy great, and I'm certain you'll find many of them repeating the same things over and over again. By no means is this a coincidence, either. The truth of the matter is there are a number of time-tested techniques and methods that can be applied to any strategy in order to enhance it. It makes no difference what type of trader you are, the timeframes you use, or the instruments you trade... these five tips are guaranteed to improve your overall method without fail.

1. The Trend is Your Friend
This is probably the most overused adage in the trading world, yet it's one that can't be said enough. It appears to be a simple concept, but many struggle with this principle for years. There are multiple ways to define a trend (indicator based, price based, etc.). The idea here is to pick a definition that works for you, and only take trades in the direction of your "defined" trend. Countertrend trading may work at times, but it also greatly reduces your probability of survival. Just go with the flow, and keep it simple.

2. Cut Your Losses Short
If you never learn to take a loss (and quickly), then you can forget about ever becoming a profitable trader, period. This is the single most important factor in profitable trading. Look at it this way-- your profit is not a product of you risking capital. It is a byproduct of capital preservation. If you haven't yet acquired the ability to take losses, start a demo account which only focuses on minimizing loss, and NOT on earning potential gains. I think you'll be surprised at the way your equity curve develops. Most importantly you'll never experience another account blow up ever again.

3. Know Thyself
Ultimately, you are not trading against the market, you are trading against yourself. Make it a priority to understand what that truly means. If you understand how your psyche works, it will be that much easier to make money. This is an entirely subjective topic, and requires some serious self-exploration. A good starting point would be to read a healthy amount of literature on the subject matter.

4. Let the Market Decide
Let the market decide basically means removing personal bias from your trading decisions. Try to view a price point, or price level as a triggering ground for a trade, and not some hunch about what price is going to do next. This idea goes along with the old adage of "Trade what you see, and not what you think you see." Be firm with your commitment to enter on specified prices. Do nothing until those points are reached, and then fire off your trade. It's easy to lose sight of things when prices start jumping all over the place. This methodology will keep your nerves calm when that happens.

5. It Takes a Million Trades to Make a Million Dollars
This last tip implies proper use of leverage. Floor traders commonly apply this principle throughout their careers. They insist on making many small trades throughout the day, because it doesn't require large amounts of risk during any one trade. Over-sizing positions is one of the quickest ways to financial ruin in the market. Amateurs are prone to this kind of abuse because they're blinded by greed. However, a true professional would never over extend him or herself with that type of trading. Be the professional.

If you take time to memorize these five tips and apply them to how you currently trade, a turning point should occur. You will have a higher state of consciousness while looking at charts and interpreting price data. There will also be a state of calm while trading, because many "unknown" variables will now be clearly understood. It may take a little bit of time before all five concepts are truly mastered, but once they are... it's a whole new ballgame.
Author Resource:- Want to perfect these and other trading techniques? Go to Surefire Forex Trading to learn how successful traders make their money.

Olliver Kennedy is a successful real estate investor, trader, and entrepreneur.
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