Trading Insight - September 30, 2008
1) Why Do You Want To Trade? The obvious answer is to “make money” but the successful trader takes this a step further. Are you trying to get to a profit threshold that will allow you to leave your day job and trade from home? Are you retired and want to stop touching your savings to live so you want to trade to make up for that? Are you trying to create wealth with long term positions while still enjoying your career outside of the markets? When students answer this question properly, it is easy for me to guide them into the right markets, time frames, and strategies.
2) What Is Your Strategy? This one is key. you must have a detailed strategy, I tell students to be as specific as they can. In other words: When exactly do you buy and sell? How exactly do you handle stops and targets and so on? From my experience, the more you can make market speculating 100% rule based, the better you will do. Even though I tell students to be very detailed here, I always end up adding rules they did not consider
3) What Markets Will You Be Trading? This one is again very important as everybody is different in some way. There are 4 major asset classes and many markets within them. They all have pro’s and con’s but the beauty is that a set of markets like the Futures may be perfect for one person and the Stock markets may be appropriate for someone else. By knowing someone’s goals, life style, account size, personality, and so on, it is easy to steer them in the direction of a set of markets that helps them achieve their goals in the safest and most efficient way possible. Also, within each asset class, the markets are very different. Maybe you trade the stock market and are more conservative and looking for a slower moving market, you would be well served trading the QQQQ but if you traded GOOG and BIDU, this would not work for you at all. In futures, the person that trades the DAX futures is going to be bored trading the Five Year Note futures. The point is, there is a set of markets out there for each and every person but every set of markets is certainly not for each and every person. I help students towards customize that to their needs.
4) How Much Capital Do You Have? I meet students all the time that are trading markets that are much larger than they should be trading with their account sizes. Furthermore, some people take on too much risk and leverage. This is a recipe for disaster and reason for most people’s failure in trading. Having position sizing parameters and account sizes set in stone in a trading plan helps give you the best chance with the lowest risk.
4) How Much Capital Do You Have? I meet students all the time that are trading markets that are much larger than they should be trading with their account sizes. Furthermore, some people take on too much risk and leverage. This is a recipe for disaster. Having position sizing parameters and account sizes set in stone in a trading plan helps give you the best chance with the lowest risk.
Tags: Australian Dollar, bear market, benefits, best forex trading strategy, British Pound Sterling, bull run, Canadian Dollar, candlesticks, currency, currency trading, forex broker, Forex Expert Advisor, forex trading, forex trading frauds, forex trading made easy, forex trading platform, forex trading software, forex trading tool, FX, Global Forex Trading, history, Japanese Yen, major currencies, mini forex, minors, money, online currency trading software, online forex trading software, profits, Selecting a Broker, Swiss Franc, tips, US Dollar
Leave a Reply