Do you want to be a day trader or a swing trader? Do you want to trade
stocks, futures, forex or options? Do you want to use fundamental
analysis or technical analysis? Do you like to rely on chart patters or
on indicators? - There's no "right" or "wrong" way to trade. Every
trader is different. For some traders day trading is easy. Other traders
don't like making quick decisions and rather take time to analyze the
charts in the evening. Note: THIS is probably the most important step! - So make sure you know what trader you want to be.
2. Find a strategy that suite YOU.
There are thousands of profitable trading strategies out there. But you
have to find one that works for you. As an example, if you like a high
winning percentage, you should consider a scalping strategy like "The
Seahawk Strategy". If you are looking for a trading strategy that takes
advantage of trends with a smaller stop loss than profit target, then
you need a trend-following strategy like "The Simple Strategy". Make
sure that the trading strategy fits YOU, otherwise you'll never have the
discipline to follow the rules of the strategy.
3. Get a charting software and a trading platform
Once you completed the first two steps, you can now select a charting
software and a trading platform that supports YOUR trading style and
YOUR trading strategy. Don't do it the other way around! I've heard from
many traders who FIRST select their charting software and then wonder
why you can't display the indicators or time frames that your trading
4. Practice the trading strategy
Never ever trust ANY performance statistic unless it's your own! You
need to practice the trading strategy that you selected for 3 reasons:
Make sure that you understand the rules and can EXECUTE the strategy. Make sure you're comfortable with the strategy. Make sure that the strategy is actually making money
5. Learn chart reading to improve the performance of your strategy
A trading strategy is either trend-following or trend-fading. To date I
haven't seen a "hybrid" strategy. A trend-following strategy performs
well in trending markets, but has more losing trades in sideways
markets. Therefore it's important that you practice your chart reading
skills to easily identify whether the market is going up, down or
sideways. Trade a trend-following strategy like "The Simple Strategy" in
trending markets, and use a trend-fading strategy like "The Ping Pong
Strategy" in sideways markets.
6. Understand money management
It is a proven fact that without proper money management you can lose
money despite having a profitable trading strategy. You MUST understand
money management if you want to become a professional trader. You might
have heard of Larry Williams, who turned $10,000 into $1,000,000 in only
12 months. I asked him about his secret, and he said he couldn't have
done it without flawless money management.
7. Create your trading plan
There's a huge difference between a trading strategy and a trading plan
(check out my other blog post for more detailed information).
8. Execute your plan on a simulated account
Yes, a simulated account is not the same as trading with real money.
But if you can't make money on a simulator, chances are slim that you
will make money on a real account! Take your time and practice your
plan. Make sure that you make consistent money on the simulator before
committing real money to trading.
9. Execute your plan with real money
Start small - grow big! Even if you already traded larger size on a
simulated account, start with the smallest number of contracts or shares
possible when trading real money. Keep in mind that trading real money
is different than trading on a simulator. Fills will be different, and
you might experience some emotional pressure. Make sure that you still
make money on a real account before increasing your position size.
10.Use money management to grow your account
You can't trade small lots forever! If you want to become a trader and
make a living trading, then you need to increase your position size. But
as I said earlier: Without proper money management you could lose money
despite having a profitable trading strategy, so make sure to apply
solid money management to grow your account.
note : Trading is a business. It's a profession. And like any other business it needs planning. STRATEGIC PLANNING.
Tags: Forex, How to trade forex, Forex Strategies, Best Strategy, Forex trader, How to be a good forex trader, Forex Trading