The following article comes from a student who is working, and practicing, his way to being a consistent forex trader. Below he shares some of his insights on what it takes to trade forex successfully, based on mistakes made and lessons learned.
What It Takes Trade Forex Successfully, From Student’s Viewpoint…
My (new) friend Cory Mitchell,CMT has been key to learning about forex trading and identifying a risk-managed, profitable, time-efficient strategy. Cory draws on over 13 years of trading experience…yet in talking to Cory it’s clear he doesn’t focus on profits; he focuses on implementing a strategy that will get you there. Through his writing, approachable manner and his experience he makes it possible for dedicated learners to create a strategy tailored to their account size and goals.
In regards to learning about forex trading, Cory has taught me key things which are moving me towards becoming a more consistent trader:
First, I should mention I did read through his ebook “The Forex Trading Strategies Guide for Day and Swing Traders 2.0“. You can also see his free articles [see the trading tutorials section] to help you become a more consistent trader. Articles are great, but you need to piece them together; the book provides all the information you need and pieces it together for you.
Once you find a strategy you like, I’ve learned you need to practice it. What looks easy in the examples may be harder to implement in real-time, so spotting the trades as they occur takes time to master…likely 6 months or more. Most people think that when they have finished reading a book, profits will come easily. The work is just beginning. It will take about 6 months or more to really practice and see strategies play out on the chart.
When you start practicing, here are a few things I’ve learned to keep in mind.
—Remember to always check the forex economic calendar before placing trades. Short-term traders need to be aware of when major economic announcements are occurring. If you forget to check and happen to be in a trade when a high impact news announcement comes out–such as an interest rate announcement or unemployment figures–it could be devastating. Avoid trading in pairs (at the time of the news) that will be affected by a high impact economic event. This seems simple enough, but this too takes practice so you never forget to do it…every day.
—Have your charts set up the way you like them, in whatever platform you use…MetaTrader or even just TradingView.com (if not live trading yet). Flip through the pairs you trade, only looking for valid signals based on the strategy you are practicing. Ignore everything else, just look for valid signals. This is part of the practice: to not get drawn into other trades which aren’t part of your strategy. This makes trading very efficient, as you can look at a chart and determine within seconds if there is a trade signal or not.
—When swing trading, use pending orders. This allows the market to come to you, and gives you the price you want. The trade only triggers if it matches up with your strategy. In the trend channel strategy, once you see a potential trade setup, you set the entry, stop loss and target at the price you want. After that, there is nothing left to do. The entry order will fill or it won’t. This will allow the market to come to you (your strategy and pending order). It helps you avoid “chasing the market” and provides you with a precise and correct entry (for your strategy).
—Keep it simple, aim to get out of trades within your timeframe (depending on swing or day trading) according to your risk reward ratio (2:1 at least).
—Don’t manually close trades (unless it’s part of your trading plan). Instead, have a target and a stop loss set on each trade. As the trade moves in your favor, move your stop (as determined by your strategy–see youtube channel or eBook for some ideas) to reduce risk and lock in a profit. What has amazed me is how simple trading can be, yet how difficult we can make it. After the initial learning curve of just learning how to place orders correctly, in whatever platform you use, the difficult thing is actually conquering our human nature. This can be done by using a disciplined trade plan and not deviated from it.
—Sticking to the plan is the only edge traders have. Trying to guess which way a currency pair will go is more about vanity than trading. Don’t predict, just trade the setups your strategy tells you to.
—Cory outlines a number of proven strategies that work, yet the difficult thing is not so much understanding them…it is using them over and over again without deviating from the strategy.
–Most traders lose money, or give up, because:
- They start to believe they are “above” their plan, and can therefore deviate from it (taking trades they aren’t supposed to).
- They believe they are “above” only risking 1% of their account on each trade (the most new traders should risk on a trade).
- They fail to see trade set ups or fail to take the valid trade setups they do see. This is often due to a lack of practice in the demo account.
—What I have found is that it is very easy to become distracted and enter trades based on external (unrelated) data or an internal “feeling” which are outside of the practiced and proven strategy.
—Guessing, predicting or mixing strategies brings frustration and confusion. Mastering one trading strategy at a time is essential. Slowing down, knowing when not to trade and not being afraid to take valid setups based on the strategy are some of the key things I’ve learned.
—I am trying to move towards not thinking about profits or losses, which distract us. Rather, the focus should be on the strategy and implementing it properly. Trading is kept simple, with no complex indicators or analysis. Instead just practice one (or two) strategies and discipline.
—While trading I constantly ask myself if I am acting within the strategy that I’ve practiced and planned out? This helps keep me on track and disciplined. If a pair doesn’t have a valid trade setup, I don’t trade that pair. I also review my trades, to see if I deviated without realizing it. If I did, then I note the error (why did I view this trade as valid when it wasn’t? Or, why did I not see or trade a valid setup?) and work on that error in the demo account, so I don’t make the error again.
Risk 1 percent of your account on each trade. This means risk management is ingrained in every trade you make. New traders will find that developing trading discipline–gained through practice and mastering one strategy at a time (in a demo account)—is the way forward…not complex technical knowledge or paying to follow “famous” trader signals/gurus.
All this has helped me take a low-risk approach to the serious business of forex trading. All this and more is covered in Cory’s eBook: The Forex Trading Strategies Guide for Day and Swing Traders 2.0.
This information is soley intended to help people research and improve their trading. I receive no monetary or other benefit for recommending Cory Mitchell’s resources that are available on Vantage Point Trading. The article is written because of gratitude to Cory for his valuable resources.
[This article was originally published on March 1, 2017]
– By Jonathan McCallum
Jonathan McCallum has a passion for sharing stories that bridge the gap between cultures. Currently learning Basque, he enjoys writing, traveling, and photography: https://vimeo.com/jonathanmccallum