This is Forex Trading, not Aladdin Lights
Some people think that forex trading is a miraculous investment, which is able to generate multiple-fold profits in a short time. Is it true?
It is possible that a trader can develop profits up to hundreds of percent of his initial capital. There is a famous trader named Ed Seykota. He has raised capital from $ 5,000 to $ 15,000,000 in a period of 12 years. That means he managed to develop capital up to 300 thousand percent. But try to notice, he did that within 12 (twelve) years. In this period of time, as was his own admission, he had experienced many losses.
But that’s Ed Seykota, the Market Wizard . There aren’t many traders like him in this world. For us among “lower-class traders”, for the time being it is enough to target to be able to obtain profits consistently first.
Forex trading is a form of business. Like a business, it takes a lot of things to be successful. You can’t just open a trading account, then sit sweetly expecting your money to grow hundreds of percent per month. There is knowledge, planning, strategy, patience, discipline and of course the courage that must be involved in it.
Knowledge is power . Without adequate knowledge, it will be difficult for you to be able to trade well.
You must equip yourself with basic knowledge about trading. Start really from the bottom first, then gradually increase to a higher level. That’s the right way to learn.
Most beginners ignore this and jump to complex topics such as trading systems. They don’t realize that no matter how sophisticated, every trading system actually has weaknesses. By knowing the weaknesses of a system or trading strategy, you will be able to plan anticipations that can be done if the system is not running well. Well, to be able to recognize the strengths and weaknesses of a strategy, you certainly have to have a scientific basis first. Makes sense, right?
If you fail to plan, you have planned to fail . As stated above, forex trading is business. If you want your business to grow, of course you have to make plans, right?
You can’t make business decisions just by throwing coins. There are many parameters you have to think about. Likewise with trading.
Well, this means that it is closely related to the first point above: knowledge. How could you make good planning without knowing what exactly should be prepared?
Make a trading plan ( trading plan ) in detail. Starting from how much capital will be used, what percentage of risk tolerance is ready to be borne, what strategy will be used to what will be done if the risk ( loss ) occurs.
As mentioned, most beginner traders jump to this section. Though the strategy that is successfully applied by a trader may not be able to give the same effect when used by other traders. Why?
Because a good trading strategy is a strategy that really matches one’s character. Like clothes motifs, clothes with horizontal stripes are usually not suitable to be worn by people who are fat, because it will make it look fatter. On the contrary, clothes with vertical stripes are not suitable to be worn by thin people, because it will make it look thinner.
There are lots of variants of trading strategies. There are aggressive strategies, some are conservative. There are scalping strategies, swing trading, breakout trading, and others. You must be able to choose which one matches your character. Again, choosing the right strategy will only be possible if you have sufficient knowledge.
No less important: You must test every strategy that will be used. You can use a demo account for that. Get to know every advantage and weakness. When you are able to use it comfortably (marked by consistently gaining profits), then you are ready to try it in a real account.
Quite a lot of people want to get immediate (instant) results. Be aware, this is business, not cooking instant noodles. Even to enjoy a serving of instant noodles you must boil water first, then boil the instant noodles for at least three minutes. Coupled with the time needed to boil water, at least you need ten to fifteen minutes before you can eat the instant noodles (under normal conditions and regular cooking equipment).
It’s just about instant noodles, especially if we talk about business with considerable potential.
It takes patience in carrying out a trading strategy to get optimal results.In addition, a strong capital arrangement also determines your success rate.
It’s legitimate that you set a high profit target, but you certainly understand that the target must be measurable and realistic. You must be able to measure the extent of your capital strength, so that the target you put in makes sense for you to achieve.
For example, it is certainly not realistic for traders like us to match Ed Seykota’s achievements as told earlier, with only $ 500 of capital and minimal experience and knowledge. Therefore, the most important thing is to make sure that we can make consistent profits and that achievement can last for a long period of time.
Ed Seykota managed to record remarkable achievements in 12 years.You may try to imitate the trail, but be patient and use the right method.
For example, you can increase the number of transactions each time capital increases. Suppose that with an initial capital of $ 1,000 you use 0.1 lots per transaction, then when capital has become (for example) $ 2,000 you can use 0.2 lots each time you open a position. Or you can apply anti martingale or pyramiding strategies .
Do it gradually and patiently.
This is closely related to patience. People who are impatient will find it difficult to be disciplined.
Every decision you take must be based on the trading plan that you have made. Plan your trade, trade your plan.
Make transactions only if you have seen a clear signal from your trading system or strategy. If there is no signal, do not make transactions.
Likewise when you decide to close a transaction, do it only if your trading system shows that there is a possibility that the market will turn around.In essence, take all decisions objectively based on your trading plan .
No guts, no glory. It’s useless if you have painstakingly prepared a trading plan, researching strategies that you consider profitable, but you don’t have the courage to run them.
Risk is part of trading. Even Ed Seykota also admitted that he had felt the bitter loss , but in fact he still succeeded in trading.
Again: this is business, man. There must be labor involved in it. You cannot expect miracles to come just like you rub Aladin’s lights and a blue genie appears to grant every wish while saying, “Your wish is my command.” If it is like that, I want it too.