The 3 elements of good trading are:
1. Cutting losses
2. Cutting losses
3. Cutting losses
We are not kidding!! But to make your visit to our blog even more valuable we came up with a little more diversified "elements of successful forex trading!" list... Since it's a busy trading day we will keep this post as direct as possible to save you and us some precious time.. they do say time is money right?
ELEMENT #1: Controlling your exposure by having structured position sizing.
The one thing that really saved my ass and made me consistent in forex trading is "structured positions sizing", now there are a few ways to employ this but the basic idea is... your balance dictates how much you can expose your account.
The model I like working with the most is if I have 10,000 to trade with I cant expose the account more than 0.90 lots. This gives me risk control and I get to gradually grow my account.
When I combine this with compounding, that's when things get really interesting, controllable risk with higher rewards.. It sounds like BS but boy does it work!
Controlling your exposure and having a plan for it is essential to success in trading. You can't trade like you are chasing a home-run on every trade because all it will take is for you to be wrong once and you are done!
Create up your own little plan for this or email me (firstname.lastname@example.org) and I will share our little formula!
ELEMENT #2: Having a tactic for every trade you enter, especially the exit.
Every single trade is different... because of the factors in place, the current price action, the trend and what is driving momentum, that is why we need to treat every trade differently.
There is a big difference between system and tactic, you system is the same and doesn't change, it tells you when you enter and exit a trade everything else... but your strategy says HOW you trade THIS particular setup!
Don't mix up the two... I have a trading system and then I have a trading tactic that is different on every trade and I create it before I enter any trade with the first thing being "where do I get out!?".
ELEMENT #3: Have a clear outcome of where you want to be and how you will get there!
Now this is important because trading is a job and to succeed at this job you need to have goals and visions unless you want to be like the rest of the people at your "company"...
The difference with this job is that you are totally independent and you get an uncapped potential of profit... you can work anytime and anywhere but to "keep" the job you need to endure a very long and extremely painful learning curve... its worth it but are you willing to pay the price?
The one thing that helps me as a trader is that I focus on weekly profit targets and at the time of wiring this blog I'm trading an account with 10,000 and targetting a 6.5% weekly ROI which of course compounds weekly... and if I manage to get the 6.5% every week with my day and swing trading setups I will be rewarded with $248,216.13 at the end of the year, worth it? Yes, yes it fu***** is.
Want to learn to trade like me? Shoot me an email, I'd love to hear from you!
Denis Popvioda / Denis@pipsmatter.com