Fat Forex Profits – The secrets of successful trading

Trading consists of two aspects:

1- Analysis and research

This is the easy aspect of trading, because it is totally learnable.
You need to study technical analysis which is the study of price action of a security. I.e. chart reading and pattern recognition.

Using techincal analysis for short term trades and entry points on all trades, and fundamental analysis for much longer term directions, you will be able to get 6 or more trades out of 10 correct every single time on a long-term basis.

This is a fact, if you are not getting this correctly, you need to go back and hit the books until you know technical analysis off by heart, that you know every single pattern and formation, indicators and different time-frames.

2- Money Management and Discipline

This is the hard part and causes most traders to go broke or give up trading.

Getting the trades right is one thing, even if you are one of the best traders in the world and get 8 or 9 out of 10 trades correct, if you lose more in those 1 or 2 trades you get wrong than that you win with the 8 trades you get right, then you are a losing trader.

The problem is the ego and emotions.
If a trade goes against you and you think you are good so it will come right, and you go bigger, double-up and overleverage, and the trade keeps going against you, it can wipe out your account, only because you were arrogant enough that you could predict the market.

What can you do about this?

ALWAYS USE A PRE-DETERMINED STOP LOSS.
This way you know exactly what amount you are risking and if the trade goes against you and you were wrong, you know what you will lose, and you will not get emotional and decide to hold on to that trade just because you think you are right. Also, it will help you not having to sit in front of your screen the whole day!

NEVER RISK MORE THAN 5% OF YOUR ACCOUNT ON A SINGLE TRADE
This rule in combination with your stop loss is a winner.
It means that you can get 20 trades wrong in a row before you wipe out your account and go broke or have to quit. Of course you can get a bad streak of 3 or 5 bad trades in a row, but really if you are a decent trader and you know your technical analysis, it should not be more that 5 losing trades in a row. If that does happen, you seriously need to take a break, hit the books and review your technical analysis skills.
After 5 bad trades in a row you are down 25% in total, but you still have 75% of your account to trade with, which is more than enough to make the money back and continue building up.

I hope you enjoyed this post and apply the rules
Diggy