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How to Become a Successful Forex Trader

  • #1
  • First Post: Jun 7, 2008 3:24pm Jun 7, 2008 3:24pm
I want to open this thread in the hope that all Forex Factory members help each other become better traders or enter the world of forex trading relatively safely.

I'll definitely share my ideas with you but my intention is to keep it as an open discussion to everyone. I'll be part of the game of course.

My main goals is to expand on the following two main items:

- Setting our expectations right
- Manage our emotions

Of course it would be up to you how to lead this. BTW, I'll do my best to avoid promoting my services and hope others stick with this. I'd rather to see an active useful thread rather than a one that ends up in dustbin.
  • #2
  • Jun 7, 2008 7:16pm Jun 7, 2008 7:16pm
Without question, proper MM is the key to success as a trader, especially in the spot forex market. As a rule, I try to risk no more than 3% of capital on any trade, with a maximum exposure on all open concurrent positions of 15%. This is more of a guide than an ardent rule.

The $million dollar$ challenge is properly determining the trend within the given timeframe allotted. "Follow the trend" is a popular phrase; however, it's easier said than done! Yesterday's trend (or even the trend over the last 6 months) is VERY easy to see after the fact (in hind sight). However, past performance is no indication of future outcome... especially in forex. Tracking fundamentals is the safest bet regarding a trend continuation or reversal. The trick/challenge is with the timeframe. One may be correct about the direction, but it may require waiting through several periods (weeks/months) of drawdowns before your prediction is realized. Of coarse, your prediction may never be realized. For those assuming the gbpjpy will soon return to the carry trade glory of 230+ in value, may be waiting for a few more years.

Let's not get "Fooled by Randomness"...

Walt
  • #3
  • Jun 7, 2008 9:34pm Jun 7, 2008 9:34pm
I quite agree with you about Money Management. It plays a significant role in creating the edge to win in this market.

In my humble opinion the most important factor is the trader's attitude. You may give two traders the same tools. Offer them the same system, similar MM approach but yet they come out of trades differently. It is attitude that can turn a winner into loser or a loser into winner.
  • #4
  • Jun 7, 2008 10:07pm Jun 7, 2008 10:07pm
Not trying to catch everywave makes a huge difference.You have to realize the market wont go anywhere if you just dont trake a trade. Dont over expose your account. And like my Bud BOBOKUS tells me its better to miss a trade then to loose one.
  • #5
  • Jun 7, 2008 10:29pm Jun 7, 2008 10:29pm
Quoting Shermenator
Not trying to catch everywave makes a huge difference.You have to realize the market wont go anywhere if you just dont trake a trade. Dont over expose your account. And like my Bud BOBOKUS tells me its better to miss a trade then to loose one.
I use an alternative approach. I use an automated system to capture every single opportunity.

If you miss a trade who knows that it wasn't a winner and then who knows the next will be a winner. Just my 2 cents. I hope it doesn't deviate us from the main purpose of this thread. I'd rather not to talk about automated trading here.

Al Parsai
  • #6
  • Jun 7, 2008 10:45pm Jun 7, 2008 10:45pm
Quoting aparsai
I use an alternative approach. I use an automated system to capture every single opportunity.

If you miss a trade who knows that it wasn't a winner and then who knows the next will be a winner. Just my 2 cents. I hope it doesn't deviate us from the main purpose of this thread. I'd rather not to talk about automated trading here.

Al Parsai

Well you use an alternative approach such an automated trader and that removes the psychological part and that has its advantages and disadvantages... but what happends to traders that dont use automated trading is that the psycological part kicks in and makes you feel like their is another wave when all you are doing is trying to create something that is not there to get rich and you breack the rules in the system. In automated trading you cant breack the rules thats why its an automated trader .
  • #7
  • Edited 11:44pm Jun 7, 2008 10:54pm | Edited 11:44pm
I'll quickly say that luck makes you a success or not. You are nothing without green pips, and nobody has a crystal ball. Green pips come first, then entry/exit strategy, and finally money management.
  • #8
  • Jun 8, 2008 8:11am Jun 8, 2008 8:11am
Quoting Shermenator
Well you use an alternative approach such an automated trader and that removes the psychological part and that has its advantages and disadvantages... but what happends to traders that dont use automated trading is that the psycological part kicks in and makes you feel like their is another wave when all you are doing is trying to create something that is not there to get rich and you breack the rules in the system. In automated trading you cant breack the rules thats why its an automated trader .
That's why I believe that "attitude" is the number 1 factor. Even if you are an "automated" trader you may manipulate the system if you do not have the "attitude" of a trader.

This is a very important factor that unfortunately is not taken into consideration by majority of newbies.
  • #9
  • Jun 8, 2008 8:11am Jun 8, 2008 8:11am
Quoting tdion
I'll quickly say that luck makes you a success or not. You are nothing without green pips, and nobody has a crystal ball. Green pips come first, then entry/exit strategy, and finally money management.
Well said.
  • #10
  • Jun 8, 2008 10:58am Jun 8, 2008 10:58am
Quoting tdion
I'll quickly say that luck makes you a success or not. You are nothing without green pips, and nobody has a crystal ball. Green pips come first, then entry/exit strategy, and finally money management.
“Luck is what happens when preparation meets opportunity.” - Seneca

Happy trading,
Arthcub
Visit my journal here.
  • #11
  • Jun 8, 2008 11:28am Jun 8, 2008 11:28am
I post over at a recent new thread called "Knowledge Is Power"

I only mention that in case some posting here recognize me as I do not want to bore anyone with how good a FX trader I am. Having said that, I am more than qualified to add my unique input here.

There is no question that if you lack the emotional tools you cannot win in forex. Automatic systems if they work and I am not sure if any exist are fine if it suits your personality.

I could never trade with a automated system even if it works. Why ?

Trading forex for me is a way of life. I need to be involved. I need to know all the fundamental facts. I need to have an EDGE !!! I have one and it ALWAYS works.

You need to go with the trend but as said before on this thread know where that trend is. Is it a 90 day trend ? Are you trading it on a daily basis ? Has the trend changed ?

Just look at last Tuesday !!! Ben Helicopter HOT AIR Bernake tried to head fake the markets by verbally convincing them for two days the absolute RUBBISH that the USA has a STRONG Dollar policy. That is the job of the treasury. When I saw the FED take over the job I knew NEVER 100% that some bad data was about to come out. Can you say NFP on the Friday after his Tuesday pronouncement ?
Then as I have posted on other threads, the CHESS game continued with HUMAN pieces of course. Bernake is the PAWN of the Bankers (FED) and he made his move. Thursday at the press conference held by the ECB, ECB Head, Jean Claude Trichet, said and SHOCKED the markets including Bernake that the ECB might raise as soon as July 2008.

Checkmate !!!

Now the EUR/USD reverses course. Bernake loses credibility one more time. 50 Strikes and you are out or the US Dollar Index at 60 !!! Whichever comes first !!!

Now the NEWS !!! With Respect, NO, Chart or Automated Trading System called the Friday Unemployment Rate of 5.5% !!!

The Result ? Dow down 394 in one day ! The USD/JPY which I trade went NOT to 107.00 when it hit 106.30 seconds before the release at 8:30 AM on Friday past. I shorted it at 106.30 for 75 fast PIPS and great profits on 10 Positions of 100K.

Gold went up to $900 US and Oil which traded at $10.72 US Ten years ago in 1998 went up $10.75 US on the day to close at $139.12 US

Understand the facts. Understand yourself and then trade forex using:
(1) Money Management
(2) Fundamental Knowledge
(3) Technical Knowledge

and to close where I started this post with, Proper Management of your FEARS, GREED and EGO !!!

Great Thread...Congratulations. Have A Good FX trading Week !!!
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  • #12
  • Jun 8, 2008 12:09pm Jun 8, 2008 12:09pm
For me the turning point, after blowing out several live accounts, was when I realized that in order to become successful you have to have a system that is a consistent winner for for you.. What is a winner for others may not be a winner for you.. You need to design and determine what method works for you and follow that method religiously.

You also have to realize that no matter what method you use you will have losses and taking losses is part of the forex beast. Don't take them personal every trader takes losses but winning traders check the emotions at the door.

Don't second guess your trade.. Plan the trade and trade your plan that will let your winners run and your loser will be cut lose. I had a problem with cutting my winners early, protecting profit LOL, and letting my losers run hoping for a turn around. Worse still I would add to losers just to try and average out. Don't let yourself fall into this trap.. Cut your losers and let the winners run.

Although I am a technical trader I stay abreast of the fundamentals and spent hours each evening combing through the financial news to get a gauge on the fundamental attitude of the market.. Fundamentals drive the technicals.. knowing when major news comes out and adjusting to it for me has gone a long way into turning my account into a consistent winner..

If you miss a trade don't worry another will come along.. Don't jump in at the end of the move.. wait for the next move..

These are just some things that I learned 2 years back that took me from the brink of throwing in the towel and now loving to trade and prospering from it.

Hope it helps some of the newbies that are struggling..

shaimus
  • #13
  • Jun 8, 2008 12:18pm Jun 8, 2008 12:18pm
Hi all, i just have a question for who is reading this thread, it is like where to find useful informations, like last week, before the unemplyment rate news come out, i read on a thread about some big airlines companies that had fired a lot of workers, and this have let me think that the unemplyment rate may go up, and... my thinking was right!

Now, where to find informations like this ? do you know some market news website or some website that stream useful news like that?
  • #14
  • Jun 8, 2008 2:11pm Jun 8, 2008 2:11pm
Agree with Shaimius specially in the part of not adding to your lossing position . The reason you add to is because you believe the market should head your way now. In reality you are simply enetering a new trade trying to recover a loss. So in reality you did loose you are simply taking a new trade to recover it and since you keep the fact in your head that you need to recover simply you might stack to fast and loose trying to force a recovery.
  • #15
  • Jun 8, 2008 2:14pm Jun 8, 2008 2:14pm
Quoting tunera
Hi all, i just have a question for who is reading this thread, it is like where to find useful informations, like last week, before the unemplyment rate news come out, i read on a thread about some big airlines companies that had fired a lot of workers, and this have let me think that the unemplyment rate may go up, and... my thinking was right!

Now, where to find informations like this ? do you know some market news website or some website that stream useful news like that?

Look at this site they have headlines of important information. It does not hurt to look at it once you have innitiated a trade just incase something unexpected happends as someone important speeks or such.

http://www.tradethenews.com/forex-news.asp
Look into the macro section and you will see alot of good news.
  • #16
  • Edited 4:03pm Jun 8, 2008 3:58pm | Edited 4:03pm
Quoting Shermenator
Look at this site they have headlines of important information. It does not hurt to look at it once you have innitiated a trade just incase something unexpected happends as someone important speeks or such.

http://www.tradethenews.com/forex-news.asp
Look into the macro section and you will see alot of good news.
For a excellent site where you can have the news reviewed for you each day without the spin and BS of the mainstream financial media go to the following FREE site...

WWW.JSMINESET.COM

This Just Out From The Above Site:

Snippet:


My Dear Friends,
I have not been warning you about the developments in Pakistan for two years based on imagination. My sources are people who know and have yet to be wrong.
Do you remember the spin when Musharraf was politically unseated? The spin that day was that it was a true exercise of Democracy, and positive to Western interests. That will go down in the history of spin as world class stupid.
The end of Musharraf will compete in the annals of history with the disposition of the Shah of Iran.
This is not about the in-place nukes.
Crude is going to $170 and gold to $1200 this year with sound reasoning. Globalization now poses a problem for the Authoritarian central planners.
There is absolutely nothing the Authoritarian central planners can do to prevent $170 crude and $1200 gold because markets everywhere are licking their chops for US price controls and market interference.
Pakistan gives in to terror
June 7, 2008
When Pakistan's current government took office following February's elections, it promised to put an end to homegrown violence and terror. It has done nothing of the sort. Instead, it has botched its negotiations with militants. It has utterly failed at freeing its people from the extremists' influence. Instead of protecting its citizens, the current government has sold them out.
This government, a coalition between the Pakistan People's Party and the Pakistan Muslim League-Nawaz, has proved to be worse at fighting extremism than the one led by discredited President Pervez Musharraf.
All of this was sadly demonstrated this past Monday when a car bomb exploded outside the Danish embassy in Islamabad. The blast killed at least six people and injured dozens. Al Qaeda operatives in Afghanistan claimed responsibility for the explosion. And they said they received help from Pakistani militants.
When the new government took office, the only course for the U.S. seemed to be to step back. The U.S. was closely allied with Musharraf, which had created resentment in the political opposition. The new leaders were going to have to be given a chance to take ownership of Pakistan's fight against terror. The new leaders were not going to cooperate if it looked like they were fighting a proxy war on behalf of the United States.
Now it looks like they won't cooperate in fighting a war on behalf of their own people. The inept Pakistani government is capitulating to indigenous militants.
More…



I never miss going there at least once a day and usually twice on event filled days to read the analysis and look at charts with commentary produced there.


Good Trading !!!


Bruce
{Promotion Removed}
  • #17
  • Jun 8, 2008 5:57pm Jun 8, 2008 5:57pm
Quoting Warren Forex
....

I could never trade with a automated system even if it works. Why ?

Trading forex for me is a way of life. I need to be involved. ...
Thanks very much for your input. I just need to add this note that even with Automated trading you have to be involved. You need to monitor your robot constantly. You also need to adjust it every now and again.

On the other hand not all automated tools are fully automated. Some of them need even more involvement from trader.

Anyway if you find your way whether automated or non-automated you can be successful.
  • #18
  • Jun 8, 2008 6:01pm Jun 8, 2008 6:01pm
Quoting shaimus
For me the turning point, after blowing out several live accounts, was when I realized that in order to become successful you have to have a system that is a consistent winner for for you.. What is a winner for others may not be a winner for you.. You need to design and determine what method works for you and follow that method religiously.

You also have to realize that no matter what method you use you will have losses and taking losses is part of the forex beast. Don't take them personal every trader takes losses but winning traders check the emotions at the door.

Don't second guess your trade.. Plan the trade and trade your plan that will let your winners run and your loser will be cut lose. I had a problem with cutting my winners early, protecting profit LOL, and letting my losers run hoping for a turn around. Worse still I would add to losers just to try and average out. Don't let yourself fall into this trap.. Cut your losers and let the winners run.

Although I am a technical trader I stay abreast of the fundamentals and spent hours each evening combing through the financial news to get a gauge on the fundamental attitude of the market.. Fundamentals drive the technicals.. knowing when major news comes out and adjusting to it for me has gone a long way into turning my account into a consistent winner..

If you miss a trade don't worry another will come along.. Don't jump in at the end of the move.. wait for the next move..

These are just some things that I learned 2 years back that took me from the brink of throwing in the towel and now loving to trade and prospering from it.

Hope it helps some of the newbies that are struggling..

shaimus
shaimus,

Thanks for your input. Well said. I personally recommend the well known book "Trading in the Zone" by Mark Douglas. This could change the way a newbie looks at this market.

Cheers,
Al Parsai
  • #19
  • Jun 9, 2008 8:18am Jun 9, 2008 8:18am
I hope we get more input from existing participants and other members.

Al Parsai
  • #20
  • Jun 9, 2008 10:24pm Jun 9, 2008 10:24pm
Greetings. I'm new to the forum, but I have lurked in the past.

I have the feeling that most things about forex will be easier to
figure out once you read the "Mission Statement" thread. Once
you can state your trading objective in a sentence, it will
help you determine which strategies to use, how much to trade
at one time, which currencies to use and what hours to trade
(Big Ben Breakouts and all that).

Why Having a Mission Statement Behind Your Trading is so Critical to Your Success


Also, I pass these along when I come across them: avoid
forex pitfalls.

Good luck all.
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