Mastering Changing Conditions As Part of a Home Forex Business

Posted by on Mar 31st, 2011 | no comments home title

If there is one thing that is constant in forex trading, then that is change. From the moment a trade is triggered, things will change in your mind and you will see the trade differently. Mastering change or rather how it affects you is a key strategy.

In Napoleon Hills classic book “Think and grow rich” he said “Success come to those who become success conscious; Failure comes to thus who indifferently allow themselves to become failure conscious”. Getting the right mind-set in trading is easily the most important skill you will need to acquire.

A successful trader is able to keep to his strategy and plan no matter what the market conditions and the technical analysis will show. That does not mean that he does not change once a trade has been entered. Constant review of your trade and keeping an eye on your exit strategy are important components of successful forex trading.

On many of the large projects, one of the key decision points of the project life-cycle are project gates. One of the most important questions is “Does the continuation of the project a) fulfil the desired requirements and b) are the requirements and benefits defined in a Business Case still valid. I am often amazed how on very large projects, often the difficult decision to pull out of a project is not undertaken despite the obvious rationale for doing so.

During a trader, the trader must also review his objectives in light of the information presented to determine whether the underlying conditions for the trade are still in place. Or maybe the conditions have changed, but the trade is still progressing within its operational parameters. Any association with Lt Data from Star Trek is purely co-incidental.

It is essential that the trader understands that a trade once live needs to be monitored, and decisions are taken on a constant basis. And it is not easy for many people to pull out of a forex position has opened.

As part of the due diligence conducted to review the suitability of the trade, the trader should be clear on his exit strategy. However, a word of caution. For me one of the most frustrating pieces of advice is the talk or profit and loss ratios. The problem I have with that, when placing a trade, how is it possible to know how far the trade will need to travel before the exit criteria have been met. All to often, the trader will either exit a trade too early or stay in too late whilst the trade moves in the opposite direction. Unless you have the ability to see into the future there is no certain way of defining a set target.

Let me be clear, I am not saying that having a target exit point is wrong. But what is wrong, is keeping within a trade because a certain target has not been achieved is utter madness. I know, I have been so close to my target level and have waited to achieve my targets only to find that after a certain amount of time I have not only lost my profit, but ended up in a winning trade.

And finally, and this is by no means the least important. Before entering the trade, a strategy should define the level of risk that the trader is willing to take through the use of stop losses. There is a school of thought that states that there is absolutely no reason why a trader should ever hit his stop-loss. The stop-loss is a point of last resort in place to protect the trader in the worst case scenario. However, the correct level of stop-loss is essential to successful trading.

As someone once wrote “It’s not what we don’t know that prevents us from succeeding, it’s what we know that just isn’t so that is our greatest obstacle.” That is why it is essential to get the basics of trading right.

By applying these points to your trading strategy, the trader will find himself in a position of being confident in the trades that he is placing. And that is important. When confidence is combined with confidence, this becomes a very powerful tool in the trader’s armoury. It will enable the trader to become a strong and efficient warrior trader, one who is willing to enter into the battle of the forex market and win!

To find out how I learnt to become a successful forex trader, please click on the link within my bio below.