In today forex faq, we are going to discuss about how to get success in the forex market which is one question that I have received from one of my fellow readers of my blog.
Below is the question from one of our fellow readers:
How to get success in forex market? what we should do?
I will like to start discussing about this question with one of the trade that was taken for my Forex Trade Copier Service last week.
Somewhere last week on the 14th Oct 2014, a LONG trade was taken with the stop loss set as 28 pips and target profits set as 78 pips which gives us a risk reward ratio of 1 : 3 which is a very decent risk reward in my opinion.
Shortly after I had entered the trade, the price shot up to bring the trade to 28 pips profits and later pulled all the way down to -26 pips which is 2 pips short of hitting my stop loss. So this down move is about 54 pips.
When all signs shows that the price will hit my stop loss, it suddenly reversed as it had hit a major support level and later, it shot all the way up to hit my target profits of 78 pips. In fact, it moves another 90 pips above our target profit.
The above is one snap shot from the trading platform showing the details of the trade taken. You can see that my stop loss is at 1.26500 which is at the price of entry and I always have this habit of shifting my stop loss to breakeven when the price has moved to a certain profit level. This is mainly to protect my capital in the case where the price started to reverse.
From this trade alone, there are a few things I will like to share with you about how to get success in trading forex.
Lesson #1: Belief
What I am trying to tell you guys here is that learning forex is like taking a trade, there are times where it goes against you and it seems that you are doomed but if you believe in it like how I believe in my trading strategies, the situation will reverse and give you a satisfying outcome.
So for those of you who are struggling in your trading at this moment, you must have the belief that you will make it one day and that is what I believe in when I first started forex trading.
All you need is to have a good trading strategy on hand and make sure you practice it until you are able to execute it perfectly and you are going to make a good income from trading.
The problem with most new traders is they are either trading without a good strategy on hand or they are lazy to practice the good strategy on a demo account until they are able to execute it perfectly.
There is no short cut in trading and once you get yourself a good and reliable strategy, you must practice it hard until you are able to generate consecutive months of profits from it on a demo account before you move to live trading.
Lesson #2: Risk Reward
This is another very very important factor that will determine whether you are going to be successful in trading forex or not.
A good strategy must have a risk reward of at least 1:2. Take the trade above as example, it has a risk reward of 1:3 which means that your one win can withstands three losses. Imagine your strategy has a very poor winning percentage and you have 5 losses and 2 wins but it has a risk reward of 1:3, you are still making money with such a lousy winning percentage and this is only possible because of the good risk reward ratio.
If you have a strategy with good risk reward and good winning percentage, you will be able to make a good income from trading.
Lesson #3: Discipline
The last thing you must have in order to succeed in trading is discipline. As a trader, you must have the discipline to follow your trading plan completely. You must never enter a trade that is not according to your plan.
Even if you have a losing trade, you will still believe in your strategy and enter another trade based on it and this is discipline.
The above are what I think made me a successful trader and if you adhere to it, you will definitely be able to make a decent income from trading.
For those of you who already have a good strategy on hand, please make sure that you practice it hard on a demo account until you are able to make consecutive months of profits from it before you go to live trading. For those of you who are still struggling in your trading, you can take a look at my Forex Course as it can really end your misery in trading.
However I will always you to go through my blog first to see if you like the way I teach, if my teaching style suits you, then you can consider getting my course.