While this might sound like common sense, you would be surprised how many strategies ignore placing a stop loss. “It will come back if you just give it time”, you’ll hear them say.
While this might be true 9 times out of 10, it is that 1 time that price doesn’t come back and totally wipes out your account, which makes saying this completely ridiculous.
It literally only takes 1 trade to continue going against you and your entire account is margin called. Don’t play Russian roulette with your account.
Feeling rubbish after losing a trade is natural. No matter how big your trading account is or how experienced you are, we all feel the pain of a trading loss.
The only difference is that the traders who make money, have learned to control their emotions and NEVER give in to the natural urge of trying to double their next trade to make up for it.
Losses are a part of trading that you have to accept. By sticking to the risk management and trade planning principles that we talk about here, you should be confident enough in your trading strategy that you know you will come out ahead in the long run.
When it comes to what actually matters in the world of Forex trading, there is one thing and one thing only: Price.
New traders are easily tempted to fill their trading screens up with indicator windows, moving averages and volume lines. They look exciting, sure. But they definitely don’t tell you anything that price hasn’t told you already.
Instead of looking for the most visually appealing indicator to place on your charts, focus on learning price action. Focus on candle patterns and how they form on or around support/resistance levels for added confirmation.
Indicators aren’t just called indicators. They’re called lagging indicators You need to understand that all indicators are just mathematical equations based on what has already happened in price.
So why not just learn to read price as it unfolds?
This way, you are staying in the moment and reading what is happening in the Forex market here and now. Price really is king!
The Vantage MetaTrader 4 platform is the most popular Forex trading platform in the world for a reason. View and trade price action directly from clear and stable charts with trusted Forex broker, Vantage.
On the path to becoming a consistently profitable Forex trader, there is no one trading system sent from above to get you paid.
Far too many new Forex traders fall into the trap of thinking they can simply jump onto the first Forex forum that they come across, navigate to the trading systems section and then find the system of their dreams. It just doesn’t work like that!
Instead, go into the Forex strategy testing phase with an open mind. Trade and test every single strategy you can get your hands on.
What you’ll find happening is that certain elements of each strategy work for you, while other parts wont. We all have different personality traits, strengths and weaknesses. There is no one size fits all.
By building your own personalised strategy by borrowing elements of tried and tested elements, you won’t find the Holy Grail. But combined with proper risk management techniques, you can place yourself on the path to becoming a consistently profitable Forex trader.
All of this can be done with a FREE demo trading account from Vantage. Make the right call and find the trading strategy that works for you with regulated Forex broker, Vantage.
No matter how good you think any particular trading setup is, you should never be risking more than 2% of your total account balance on any one trade.
As a new trader, you want to keep your risk management as simple and streamlined as possible. By keeping a consistent 2% risk, your calculations are easy and most of the time a simple copy and paste into an online calculator.
Place your stop loss and set your trade size accordingly before you enter the market.
Similar to the above point about stop loss, no matter how good any particular trading setup looks, you have to be disciplined enough to let it pass if there is no positive risk reward available.
This means that every trade that you take should make you more money than you risked and depending on how wide your ratio, can even mean that your account has a win rate under 50% but still makes money overall!
Put the odds in your favour and never trade with less than a 1:2 risk reward ratio.
Once all of this has settled into your trading psyche, only then can you think about consistently making money as a forex trader.
Don’t let yourself become distracted by the newest or most shiny thing that pops up on your screen. If you’ve put the work into developing a trading system that matches your personality and focuses on price, then you know that you’re close to making it.
If you know that you’re so close to making it, then why would you scrap all that hard work that you’ve put in just to start again? Can you see how ridiculous chopping and changing between strategies sounds when you stop and think rationally about it?
The best forex traders know themselves enough to know which type of trading strategy works for them and most importantly, they stick to their guns!
Do you think you can follow the principles above? Test yourself for FREE and open a Vantage demo account now.
Vantage Market Analyst