I respond to most of your mails because the eagerness to acquire knowledge is obvious from your posts. Furthermore, you asked specific questions. Before sharing my views on the issues you raised, I ask some critical question. The first one is – What is the most important virtue in FX? Patience is the most critical virtues a trader needs to be successful. Why is patience important? You need a large dose of patience to be able to acquire the knowledge required to become a successful investor or trader? How do you acquire this critical attribute? Through discipline! Why do you need discipline? You need discipline because timing is very critical in all investments including FX. You must have read it in some of my posts that there are five critical times in FX and they are:
TIME TO WAIT
TIME TO BUY
TIME TO SELL
TIME TO STOP CUT LOSSES
TIME TO TAKE PROFIT
Each of the above timings must be done at the right time to ensure success. Put different, it could be disastrous, when if you buy when you should sell or sell when you should buy or take action when you are suppose to wait. Additionally, you need to know when cut your losses if you get the first three timings wrong. The simplest part of the deal is when to take profit. You can only do this when you get first three timings right. Time to take profit is however important because getting it right will guarantee you adequate rewards for your efforts. My honest advice to potential traders is that they should not be too eager to trade forex. The most important step is acquire sound knowledge first, even if it will take you months acquire it. Most potential traders think forex is best investment opportunity out there. I can tell you from experience that this is far from the truth. I have had investments that gave me over 1,000% returns on investment. Could this be attributable to luck? May be yes, may be not! But I know, there are better opportunities out there with lesser risks.
If I have my way, the first assignment I will give any new trader is to trade only 500-1000 pips movement for the first three months of their trading lives. In other words, he should open a trade for 0.01 lot size and not close it until they make 500 pips profit or more. As for stop loss, he should put at maximum of 2% of his account size. How long do you think it will take to get the profit or loss level? Perhaps 3 months or more, depending on price action. Whether the trade result in loss or profit is immaterial. What I am sure however is that at the end of the exercise, such trader would have learned quite a lot about the emotions involved in FX trading. I can guarantee it that such trader would come out a better trader from this exercise. He would realize that you do not need to sit in front of your platform 24 hours to be successful in forex. He would realise that watching the chart and wishing will not make price goes your way. He would realize that you can actually place trades and go out to do other things with your life. He would realize that price stalls most of the times and significant movements only come in a few times in between. He would also realise that "babysitting" trades is simple a waste of time.
This is by the side, I will address your specific queestions in my next post.
TIME TO WAIT
TIME TO BUY
TIME TO SELL
TIME TO STOP CUT LOSSES
TIME TO TAKE PROFIT
Each of the above timings must be done at the right time to ensure success. Put different, it could be disastrous, when if you buy when you should sell or sell when you should buy or take action when you are suppose to wait. Additionally, you need to know when cut your losses if you get the first three timings wrong. The simplest part of the deal is when to take profit. You can only do this when you get first three timings right. Time to take profit is however important because getting it right will guarantee you adequate rewards for your efforts. My honest advice to potential traders is that they should not be too eager to trade forex. The most important step is acquire sound knowledge first, even if it will take you months acquire it. Most potential traders think forex is best investment opportunity out there. I can tell you from experience that this is far from the truth. I have had investments that gave me over 1,000% returns on investment. Could this be attributable to luck? May be yes, may be not! But I know, there are better opportunities out there with lesser risks.
If I have my way, the first assignment I will give any new trader is to trade only 500-1000 pips movement for the first three months of their trading lives. In other words, he should open a trade for 0.01 lot size and not close it until they make 500 pips profit or more. As for stop loss, he should put at maximum of 2% of his account size. How long do you think it will take to get the profit or loss level? Perhaps 3 months or more, depending on price action. Whether the trade result in loss or profit is immaterial. What I am sure however is that at the end of the exercise, such trader would have learned quite a lot about the emotions involved in FX trading. I can guarantee it that such trader would come out a better trader from this exercise. He would realize that you do not need to sit in front of your platform 24 hours to be successful in forex. He would realise that watching the chart and wishing will not make price goes your way. He would realize that you can actually place trades and go out to do other things with your life. He would realize that price stalls most of the times and significant movements only come in a few times in between. He would also realise that "babysitting" trades is simple a waste of time.
This is by the side, I will address your specific queestions in my next post.
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Since you have finished your monthly updates, can you please respond to some of my questions. I want to be 1005 sure that I have understood your method before I venture out with real money
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