Whatever you intend to do in life, whether you are intent on being a builder, a butcher or a brain surgeon, you will need to equip yourself with the requisite knowledge and you will need to have a practical, sensible working plan to shape your approach to work. The consequences otherwise are too awful to contemplate! This also applies to those contemplating becoming Forex traders because if you are unprepared or unready, you won’t be a trader but a gambler.
You will need to know when to trade and when not to trade. You will realize that emotional attachments are fine in the world of romance but possibly fatal if applied to Forex trading. You will certainly need to develop a plan, following some detailed research. Before you go “live” in the markets, give the plan a thorough trial thus allowing you to monitor both successes and failures at a time when you are playing with dummy funds, and that will undoubtedly give you a much better chance of future success.
Before you can create that essential trading plan, your first task must be to set your goals which in tune with the well-known formula should be smart goals – specific, measurable and attainable. Much will depend on your personality and your circumstances – are you for example the kind of guy who wants to sit up all night on your computer staring at a screen in what is after all a market that runs 24/7? Are you looking for regular, steady growth of funds or are you hoping (perhaps in vain) for one big killing now and again? When you are writing down your goals, remember specificity – consider what your goals should be on a daily, weekly, monthly or annual basis. Only if you know where you are hoping to head for will you have any chance of arriving.
Know When to Fold
An important feature of your planning is to know the points when you will enter a trade and leave one. It’s just like a normal life situation – the lively party may be fun but when it starts going over the edge, that’s the moment to make your excuses and leave. The same applies with Forex trading – knowing when a trade is likely to go wrong is the time when you either content yourself with a small profit or cut your losses. Once you go live in trading, it’s your money that you are playing with!! He who fights and runs away lives to trade another day.
You of course need to measure and balance risks against rewards. You also, bearing in mind what we said in the previous paragraph, have to know how much of your capital you are prepared or can afford to risk on any one trade.
The wise man learns from his successes and his failures. That’s why you need to be methodical in your record keeping. How much did you venture? What was the return? How long did you trade? The more you analyze, the more chance of greater success in the future.