What Type of Trader Are You?

What Type of Trader Are You? 

What Type of Trader Do You Want To Be?

These are key questions that every aspiring trader needs to answer.  If you are new to Forex or any other form of financial trading, then you will certainly have to do some homework before you may even be ready to answer these questions, but let’s see if we can help.

Most people when they are learning normally have a day job which restricts the times of the day when they are available to trade the markets.  If this is the case then there are probably 2 options for you to consider:

·         Swing or Position Trader - trading mainly on higher timeframes such as the 4hr and Daily charts but also the 1hr and aiming to hold positions over several days to even weeks in order to make several hundred pips or more.  This style of trading may provide you with a greater range of currency pairs to trade as the spread will be less of an issue.

      Scalping is trading on the shorter term time frames such as the 1min and 5 min charts and aiming to make 3-10 pips per trade.  So you get in, get out, and get done in the short time window that you may have available, or may open and close multiple trades in a day.  You may focus on one or 2 currency pairs which have a decent daily range and a typically low spread such as the EURUSD.

If you have more time during the day then you could be one or both of the above plus you have the third option of:

·         Day or Intra-Day Trader - trading where you would be trading on the 15min, 30 min and 1hr charts and aiming to make anything from 20 to 100 pips.  In this case spreads may be of some concern but less so than Scalping.

The point is you need a trading style (one of the above) that suits your lifestyle and then you need a strategy or strategies that suit that style of trading and then currency pairs which are also best suited to that style.

So if you are an aspiring Swing or Position Trader then higher time frame Harmonic Trading strategies fit nicely with this trading style and you have more choice over which pairs to trade.

If you are a Scalper then again Harmonic Trading strategies can be adapted to achieve this trading style but your choice of suitable currency pairs will be limited.

Lastly for Day and Intra-Day trading again Harmonic Trading strategies can be used to match this trading style and you will have a reasonable range of currency pairs to trade.

How can Harmonic Trading strategies be used for all 3 trading styles? You may ask.  Well, harmonic patterns are naturally occurring and repeating patterns in any liquid financial market on any timeframe.  You just have to have the training to know how to identify them, how to trade them to maximum advantage and how to adapt your Harmonic Trading strategies to match the chosen trading style.

Top Trading Tip:  Think long and hard about what style or type of trader you want to be.  It may be that you can adopt all 3 trading styles depending upon your available time, on any particular day, provided you have the right trading strategies (the tool box) and the right mind set and necessary focus.

LUCKY Results in Trading

One thing I have learnt the hard way is that there is hardly any chance of having LUCKY results when trading Forex.  For many people, as soon as they enter a trade then the market reverses in the opposite direction.  To be ‘LUCKY’ and get great results one may consider the following methodology:

• Firstly you have to Learn as much as you can about Forex trading

• Then you need to Understand the methods and strategies you intend to use and how and why the markets move and then you have to be able to implement your chosen strategies and methods as if they were second nature.

• Next you must Check your results and adjust and tweak everything to what suits you and to get the desired outcome.

• Once you have done all the above, then you might begin to Know what you and the markets are doing.

• This repetitive cycle of Learning, Understanding and implementing, Checking and Knowing will begin to pay dividends and Yield tangible and positive results.

So remember:   Learn/Understand & implement/Check/Know/Yields

The best way of doing all this with the aim of becoming a consistently profitable Forex Trader is to:

• Start off by trading in a Demo Account and get familiar with all the tools etc.
• Learn how to, and then Back Test all your strategies over and over again, tweaking your system, especially risk and money management, as you go.
• When you have tangible results in your chosen currency pairs and timeframes then and only then should you start trading live, and then only in a Micro-Account.
• Once you have a consistently profitable track record of trading live in a Micro-Account then you can consider upgrading your account to a Mini-Account and if you do well in that then you might consider scaling up to a Standard Account.
• I would consider a reasonable track record time for any type of account to be anything from 6 months to a year and would encourage a year because the market changes in nature throughout a trading year and thus your results may reflect that.

·         So to achieve consistently profitable Forex Trading results you need to make your own ‘luck’ by doing the above and then you should get LUCKY.

Top Trading Tip:  Make your own luck and learn how to Back Test your chosen trading strategies and methodologies, analyse the results, tweak then retest and so on, this will pay dividends when you start to trade Live.

How to Make Your New Year’s Resolution a Reality!

So Christmas is over and the New Year has started and you’ve made your New Year’s Resolution:

‘I’m going to learn how to trade Forex!’

Then what?  If, like many others, you are psyched up and raring to go but don’t know where and how to make that resolution become a reality, then stick with me and read on:

Firstly you might want to tweak your resolution and add ‘and be consistently profitable’ on to the end of your New Year’s Resolution, because you no doubt are doing this to make money.

Around 95% of people fail in their attempt to become consistently profitable Forex traders for a myriad of reasons, please don’t let that be you.  Also, you will probably need to temper your expectations regarding time scales to achieve your goal as it may take anything from a year to as many as 3 years or so to really make the grade.  One way to fast track your progress is to get yourself a Forex mentor, someone who is a successful Forex trader and also an honest straight talking teacher and mentor, they do exist!  This will cost but it will be money well spent, plus you will get to see what they are trading too.

The key elements to learning how to become a consistently profitable Forex trader are:

• Open a Demo Account.
• Get some lessons, attend a workshop or seminar or enrol in an online course.
• Get a Forex Mentor/Tutor:
• Understand the Basics
• What moves the currency markets?
• Basic Fundamentals and news flow
• Support & Resistance
• Price Action
• Basic Technical Analysis
• Learn Top Down/Bottom Up
• Ask Why, What, When and How and Google everything.
• Prepare for your lessons and ask intelligent questions.
• Get some good Forex trading strategies.
• Practice, practice, practice and learn how to Back Test your Forex trading strategies.
• Learn to trade in the context of the differing timeframes.
• Decide what type of Forex Trader you want to be and what times of the day do you want to trade to suit your lifestyle.
• Learn about and implement the 3Ms (Money Management, Method and Mind).
• Learn about the 5 Ps (Prior Planning Prevents Poor Performance).
• Be Honest with yourself and be Accountable for your Forex trading actions to someone else – get an Accountability Partner.
• Keep a Trading Journal and note your trades and observations as you progress.
• Develop (the) Patience (of a Saint) to wait for your chosen strategies to setup and don’t force trades.
• Demonstrate (the) Discipline (of a Soldier) in executing your chosen strategies to the letter.
• Always, always use a STOP LOSS but you need to know where to place it.
• Learn to love your losses – every Forex trader has losing trades.
• Learn that No Trade is sometimes the best trade.
• Be selective in which trades you take – often less is more!
• Learn to minimise your losses and maximise your gains – this is NOT easy and requires mental fortitude.
• Don’t open a live trading account until you are consistently profitable in a Demo account over a period of at least 6 months if not a year.
• When you do open a Live Forex trading account start off with a Micro-Account, because when you blow it up (as most do) you should be able to reseed it with minimal pain and also make sure it is sufficiently capitalized.
• Learning how to trade Forex is more of a marathon than a sprint so pace yourself.
• There is no substitute for experience in this game especially as the Forex market conditions can change quickly, so learn as much as you can from your Forex Mentor.
• Experience can also be gained from others – so don’t trade alone, try and find a group of like minded people to trade alongside with this can help you be more disciplined and you will learn from them too, we offer a Live Trading & Education Room and Skype thread where you can do just that 24/7.
• WARNING:
• When you start don’t set you sights too high – be realistic.
• There is NO one Golden Button/Indicator/Robot or one perfect method to make millions in Forex.  You have to build up a tool kit.
• 99% of all indicators are lagging – Price action is key!
• Trading Forex live is often different to that described in text books and is an art rather than a science and requires judgement on a case by case basis.
• Forex Trading can be addictive so be aware of that and remember that there are other things in life besides Forex.
• Don’t stare at your screen all day – learn how to set Alerts and then go and do other stuff whilst waiting for trades to setup.
• No one can really afford to lose money, so any money used to trade Forex should be Risk Capital in addition to your savings etc.

If, after reading the above, you are still interested in learning how to trade Forex then we might be able to help you realise that New Year’s Resolution at Forex-Crazy & FxTribe.  

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Forex-Crazy & FxTribe wishes everyone a prosperous and Happy New Year!

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Copyright Forex-Crazy.com & FxTribe.com 2011.  All Rights Reserved.

How To Become A Consistently Profitable Forex Trader - My View

Hi Traders,

One of the best ways to become a consistently profitable Forex trader is to do the following:

1. Take responsibility for your own mistakes and actions.
2. Be accountable to someone for your trading results.
3. Learn about Support and Resistance in all its guises.
4. Learn how to conduct Top Down analysis of a currency pair.
5. Get yourself a Forex Strategy.
6. Back test each and every Forex strategy or system 1000s of times before trading them in a live account.
7. Trade in a Demo Account before trading Forex in a Live account.
8. Keep a record of your trades (excel spreadsheet) and keep a Trading Journal noting your progress, your reflections on your trading and how you feel.
9. Take PC or laptop screenshots of your trade setups and  their progress to completion.
10. Learn to fully plan your trades in their entirety and then trade that plan.  Prior Preparation Prevents Poor Performance.
11. Adopt good money and risk management.
12. Find yourself a successful Forex Tutor or Mentor - this will be money well spent and will fast track your learning journey.  Attend their Forex classes/seminars/workshops and soak up all their knowledge.
13. If you have a run of losing trades - then stop trading, take a break and re-asses and note your findings in your Journal.  Put the problem right once you have identified it.
14. If you are struggling to find a trade then the market is probably consolidating, so go do something else!
15. Be patient and let the trade set ups come to you, don't force it.
16. Forex can be addictive so try not too let it impact upon other aspects of your life and don't sit there staring at your screen all day watching every pip movement.
17. When you do start trading in a Live account do yourself a BIG favour and start off trading in a Micro account.  If you blow it up you should be able to reseed it, you probably won't be able to do that in a Normal trading account.
18. Once you are consistently profitable in a Live Micro Account then start to scale things up slowly.  When you are ready (proven track record in Micro Account) move upto a Mini-Account and so on.  Trading a Normal account with Large Lot sizes is significantly different 'emotionally' to trading a Demo or Micro account.
19. Make sure your account is sufficiently funded. You should not be risking more than 1% of your account on any one trade and at a max total  of 3 - 5% for a Micro account, if you really must.  The point is when you make a mistake, if your account is sufficiently funded and your are controlling your risk, your account will survive to allow you to trade another day.
20. Use fractional money management to determine your position size based upon the number of desired positions, your account size and the Reward : Risk Ratio for that trade.
21. Do yourself a favour and employ a Stop Loss at all times (at least until you become a seasoned Forex Master and your strategy allows you not to do so, which you will have, of course, back tested!)
22. Network and link up with other Forex Traders and exchange ideas online - Skype is great for this. Trading with other like minded people is also a great way to learn as you swap knowledge, ideas and trade setups.
23. Enjoy the fruits of your labours.

That is just a quick overview of many of the essentials, if you want to know more then grab my free e-book which goes into greater depth.  I wish you every success on your Forex quest.

Martin
www.forex-crazy.com

Forex Currency Correlations

Most Forex Traders with a modicum of experience will have come across and may know the ins and outs of Currency Correlations. They will know that some currency pairs are negatively correlated whilst others are positively correlated, and others are uncorrelated with each other. On top of that some currency pairs are correlated with commodities such as Gold and indices such as the S&P 500. In doing so the Forex Trader will be able to make certain judgements and minimise their risk when taking particular currency pair trades, but that is probably as far as their knowledge goes.

Currency correlation (positive and negative) also offers some Low Risk, High Probability trading opportunities provided you know what you are doing.

If you would like to know more about Forex Currency Correlation Trading Secrets and get a free Forex Trading Strategy, then go here and download a Free PDF on the topic, plus you will also receive more free content on the subject over the next few weeks ( starting 15 Oct 09): Don't say I never told you!

If the above link doesn't work then just go to www.Forex-Crazy.com and select the Currency Correlation Secret Menu page. You do need to act on this one as it's a time restricted opportunity for the Free Stuff.

Hope that helps in some small way.

Martin S

www.Forex-Crazy.com

The free site for Forex newbies to stop them losing money and their shirt! We try to help them learn how to become consistent and profitable traders.