The single most important factor to your success as a trader is if you have a forex trading system to follow or not. Before trading a live account you first must spend your time detailing and developing a well written strategy to stand a chance at becoming a successful trader.
A study was done by a famous university and they found people who wrote down their goals achieved them more than those who did not. Having a written trading plan will help you achieve your goals more so than those who do not.
A forex trading system helps you in advance know how to react in all market conditions. It is important always to be enforcing good behaviors in yourself, for example if you entered a trade on accident that is outside your rules then you need to exit that trade right away.
After a trade experiences a large loss and tries to make back those losses quickly it is called revenge trading. When a trader places trades in haste outside the trading system in place even larger losses can occur.
The one mistake I see new traders making over and over again is putting together a few rules and calling it a trading plan. Deciding you will not loss more than a certain percentage on a given trade or during a trading session is not a trading plan but a mere thought.
A forex system needs to include all of the essentials of trading which include money and risk management, market edge from technical or fundamental analysis and price action for entry. The only way to be successful at trading is to have a well rounded system that takes nothing for granted.
Instead of spending valuable time backtesting trading systems which only causes curve fitting of past data and sure system failure learn the important market fundamentals. Price action is the only leading indicator and you must understand this which only comes from experience in front of the screen watching the charts.
Having a detailed well written and planned trading system is the difference between those who desire to make money in the markets and those who do. Learn how to first have a return on your account before spending all of your time playing with a calculator dreaming how much money you could make with a high monthly return over a period of time. Begin by building a solid foundation built on solid ground and you will reap the rewards.
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Tags: Currency Trading, Forex, investing