Currency Trading
Become A Forex Trader: How To Make Consistent Gains
You want to become a forex trader, but did you know that 70% of forex day traders constantly make more losses than gains? If that surprised you, then that’s more or less the effect I was hoping for. That doesn’t mean that you can’t be part of the thirty percent that constantly profit from forex trading, but there are certain things which they take into consideration that make them winners.
For example, if you think that buying some forex trading robot online will make you wealthy with no effort, then think again. If it were that easy, then every forex trader would be rich! This does not necessarily mean that you need a college education, or that you need to work exceptionally hard to be successful. You can learn to trade forex and become a forex trader in a couple of weeks, and for less than one hour a day, you could gather some decent forex wins.
The foreign exchange market is a fast-paced market, and is open to trade twenty-four hours a day, 5 days a week. Fortunes can be made or disappear very quickly, but with the right know-how, motivation and skill, forex trading can be very satisfying both personally and financially. One straightforward, robust forex trading strategy that you are disciplined in following is enough, but it’s the discipline in adhering to that strategy that forex traders struggle with.
In proportion to stock traders, the number of private individuals who trade forex full-time is quite low. most of the forex market is made up of international banks and other very large corporations, and private traders represent about two percent of the whole forex market.
Even so, they are out there, and as the Internet and other technological developments make it more accessible, more and more private citizens are getting interested. Most often, “day traders” are usually those who are already employed and trade forex outside of their working hours. It’s easier said than done to make a living trading forex right from the start, so most that have just started out discover that they need to polish their trading skills before they can consider becoming a full-time trader.
The Forex market is far more involved than initially meets the eye, and a large number of fraudsters abuse this truth. They rip people off by selling them questionable ‘trading systems’ that is guaranteed to make Forex trades push-button effortless. Don’t be fooled, there’s no “holy grail!” That is not to say that there aren’t above-board trading systems available out there, but do your homework
The Forex Trader Safetrading Checklist
A Forex trader just starting out can easily be tempted! What appears to be a great setup can very soon turn into a disaster. Forex traders the world over can probably identify with this experience:
Price has been channeling for a couple of hours, in consolidation.
In an attempt to get taken into a trade at the top of a channel you place an entry order at a strategic place.
Within a few minutes your trade is in and within a few minutes more you are looking at a loss of -10 pips, then -15 pips, and then your stop gets taken out.
It’s ironic isn’t it? Price was static almost for hours. Yet the minute your trade is entered price moves right against your position and you get stopped out. All you can do is scratch your head and exclaim: “What happened?”
In the early stages of gaining trading experience, it is good for the novice Forex trader to go by a checklist every time before entering a trade until certain habits become ingrained.
Having a strict routine in place means the Forex trader doesn’t go into a trade unless all the criteria have been met. This helps avoid the problem of being drawn into the market just because of sudden price movements which can panic the trader into a trade afraid they are going to miss out on a good opportunity.
This may of course delay things as you go through your checklist and you may end up missing an opportunity while you make sure all the criteria are met. But better to miss the occasional opportunity than regularly go into trades in a rush and regret it.
The Safetrading Checklist that follows can help make a new Forex trader cautious, so only high probability trades are considered which in turn leads to a preservation of trading capital.
Safetrading Checklist
Avoid Going Long If:
MACD on either the 4 hour, 1 hour or 15 minute time frames are showing negative divergence.
MACD is pointing down on the one hour or four hour charts.
Price is well above the daily central pivot point.
Price is below the 200 EMA (Exponential Moving Average) on the 4 hour and 1 hour chart but above the 200 EMA on the 15 minute chart. (With this setup on the 3 times frames price is bucking the overall trend and can turn against you at any time.)
Price is above a Fibonacci 50, 62, or 79 retracement (calculated from the last high and low)
Your stop is not below multiple layers of support such as a significant previous high or low, pivot point, or Fibonacci level.
Avoid Short Trades If:
The 4 hour, 1 hour or 15 minutes charts are showing positive divergence on the MACD indicator.
The 4 hour and 1 hour charts show MACD pointing up.
Price is well below the daily central pivot point.
Price is above the 200 EMA on the 4 hour and 1 hour chart but below the 200 EMA on the 15 minute chart.
Price is below a Fibonacci 50, 62, or 79 retracement (calculated from the last high and low)
Your stop is not above multiple layers of resistance such as a significant previous high or low, pivot point, or Fibonacci level.
The Greatest Lesson Of All
Using a Safetrading Checklist list in this manner might mean you take fewer trades. However, the Forex trader hereby learns a very important lesson. What? PATIENCE! A Forex trader might find that simply waiting for the high probability trade to setup does take a lot of mental and emotional energy.
And this is probably one of the greatest lessons the Forex trader will have to learn. A Safetrading Checklist like the one above can get a trader to just slow down, and give thorough consideration to the technical indicators on the screen. At this point, the new Forex trader can start to make progress.
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