7 Keys To Building Great And Lasting Profits In Forex Trading

It can often be very sad to watch an account that has taken one so much time and efforts to build to suddenly crash and put the trader in deficit or worst still in dept that he now finds it difficult to recover from. I have heard of traders and “Fund Mangers” who built their accounts from $8,000 to $12,500 or even more and watch it crash to less than $250 for no reasons they can be proud of. Some have accounts that have grown to $30,000 drawn down to as low as $200 within weeks. I once asked a few traders to withdraw their little profits and rebuild again until they have withdrawn their initial start-up and possibly take some profits off it. They agreed but got carried away by the wind of profits and before they knew what was happening, they had increased their lot sizes to match their new balances, but the market showed up and took back all it had given them including great draw downs on their capital. And someone is asking if all there is a way out for forex traders and fund mangers in this country.

My answer is and to be honest is YES, there is. I will love to hold you by the hand and take you through the 7 LESSONS I have found useful to help you build great and lasting profits in the Forex Market. They have been presented in no particular order. Enjoy your reading.

  1. Get Quality Training in both Trading and Risk/Portfolio Management:

Most will prefer some cheap training program and think they have got all it takes. Someone once said that for a great many if they had $2000 to go into the business, they would prefer to get some training if any at all with $100 or $500 and invest the rest. And what usually happens is that they end up losing it all because they failed to get the right training and information they need to do well. My advice: It will be better for you to gain quality education with the larger amount since it is an investment into you as a person and no one can take away it form you. Not even the market. Any decent training program in Forex Trading should be able to cover the following as a benchmark; (i) Risk/ Portfolio Management (ii). Trading systems (iii). Psychology of Trading (iv) Key Technical and Fundamental Indicators for Trading Decisions making to say the least.

2. Get A Reliable and Proven Trading System:

A decent Trading system should do 2 important things for you as a trader: (a) To help you identify trends as early as possible and (b) To protect you from possible whipsaw. The following are the components of a decent one when you see it: (i) Time Frame (ii) Indicators to help you identify new trends (iii) Indicators to help you confirm the trend (iv) The Risks the system allows (v) Entry and Exits Rules. So, next time you ask your trainer for a system, test it with the above. You may develop one yourself or buy a reliable one from a trusted source.

3. Develop a Trading Plan, Set Achievable Goals and stick to them:

This one that most people pay blind eye to. Many simply wake up and say, my plan is to make $4,000 a month or my set Goal or target is to make 2000 pips monthly, and some of these may not have even demo traded for more than 3 months. Then they rush to trading without a decent plan. But my advise is this, always start small and then grow big. A good Trading plan should at least contain the following 6 components: (i) Trading Goal (ii) Trading mindset (iii) Trading weaknesses (iv) Trading System (v) Trading Routine and (vi) Trading Journal. Build your trading plan with this guide.

4. Do not Trade More Than 20% of your Accounts Equity

Simple! If you have $1000 in your account for instance, do not take trades with more than $200 or 0.2 mini lots.

5. Do Not Increase Your Lot size Until You have withdrawn your initial capital and grown it back:

Set a goal to first get back your initial investment and possibly make profits on it before increasing your lot size. Develop a habit of making even small withdrawals regularly. Do not wait until you make a million naira profits. Let the power of compounding work for you.

  1. Avoid Over trading

Know when you have reached your goals both in terms of projected profit or loss and number of trades per day, week or month.

  1. Be sure you have successfully and profitably managed your own money before managing other funds

Finally, some people, all in a bid to make it quick, hurry to take on the management of other people’s money without even considering the fact that they have not turned in a single profit on their own account. Please, check out this before you even hand your money to anyone who promises to manage your account for you

Happy trading and be wise

Comments

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    Allen Taylor

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