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  1. #1
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    Six Steps to Improve Your Trading

    Six steps to improve your currency trading
    Whether you're new to Currency Trading or a seasoned trader, you can always improve your trading skills. Education is fundamental to successful trading. Here are six steps that will help hone your Currency trading skills.

    Steps
    • 1. Strategize, Analyze and Diarize
    • 2. Learn to Manage Your Risk
    • 3. Choose Your Approach
    • 4. Chart Your Course with Technical Analysis
    • 5. Be In The Know with Fundamental Analysis
    • 6. Beware of Psychological Pitfalls






    step 1: Next Step ► Strategize, Analyze and Diarize
    Successful professional traders do three things that amateurs often forget. They plan a trading strategy, they follow the markets, and they diarize, track, and analyze each of their trades.

    • Plan How You Will Trade
      You may have heard the adage, "if you fail to plan, you plan to fail." This is particularly true in Forex speculation.

      Successful traders start with a sound strategy and they stick to it at all times.
      • Choose the currency pairs that are right for you.
        Some currency pairs are volatile and move a lot intra-day. Some currency pairs are steady and make slow moves over longer time periods. Based on your risk parameters, decide which currency pairs are best suited to your trading strategy.
      • Decide how long you plan to stay in a position.
        Based on your currency pair selection, plan how long you want to hold your positions: minutes, hours, or days. Remember that depending on your account type, having open positions at 5:00pm Eastern Time may incur rollover charges.
      • Set your targets for the position.
        Before you take a position you should establish your exit strategy. If the position is a winner, at what rate will you cash out? If the position is a loser, at what rate will you cut your losses? Then, place your stops and limits accordingly.

    • Follow the Forex Market
      Use Forex charts and Forex news to monitor market information and technical levels that affect your positions.
      • Use Forex Charts
        Charts are an indispensable tool to improve trading returns. You can easily recoup the money spent on a charting package from a single well-placed trade based on the analysis from professional charts. Check out XE Charts. Please keep in mind that forex trading involves a high risk of loss, and no guarantee is made that the investment on the charting applications will be recouped.
      • Follow Forex News
        XE Forex News provides breaking Forex news on economic reports and political events that influence the currency market. You can access detailed market commentary and trading strategies from experienced Forex traders.

    • Keep a Forex Diary
      Most traders fail because they make the same mistakes over and over. A diary can help by keeping track of what works for you and what doesn't. Used consistently, a well-kept diary is your best friend. When keeping your diary, make sure that it contains at least the following:
      • The date and time you took the position.
      • The rate at which you took the position.
      • The reason you took the position.
      • Your strategy for the position.
      • The date and time you exited the position.
      • The rate at which you exited the position.
      • Your profit/loss on the position.
      • Why you exited the position. Did you follow you strategy?

      Once you learn to recognize successful trading patterns, you will be able to spot them when they return.



    Be aware that trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.



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    step 2: Next Step
    Learn to Manage Your Risk




    In our experience, the most successful traders are not simply the ones who take the best positions. They are the ones that are smartest about risk management and disciplined in their strategy. They are never emotional about gains or losses. They set their profit target and loss limits for their positions, and use Limit Orders and Stop/Loss Orders to lock them in.
    Limit Orders A limit order instructs the system to automatically exit a position when your target profit has been achieved. This enables you to "lock in" your desired profit on a winning position.
    Stop/Loss Orders A stop/loss order instructs the system to automatically exit a position when your maximum loss limit has been hit. This enables you to cap your losses on a losing position.
    Trading Discipline Professional Traders use Limit Orders and Stop/Loss Orders as the cornerstone of a disciplined trading strategy. By setting both on all their positions, they have removed emotion from the equation and are letting the market work for them.
    Amateurs, on the other hand, dont use Limit Orders and Stop/Loss Orders. They stay glued to their screens, trying to juggle all their positions in real time. They miss critical action points, and they let emotion rule their decisions.
    Setting Limit and Stop/Loss Orders As a general rule of thumb, you your Stop/Loss Orders should be set closer to the opening position price than your Limit Orders. If you do this, then you can be successful while being right less than 50% of the time.
    For example, if you use a 100 pip Limit Order with a 30 pip Stop/Loss Order on all your positions, then you only to be right 1/3 of the time to make a profit.
    Where you place your Limit and Stop/Loss Orders will depend on your risk tolerance. However, you need to be smart when setting them. If a Stop/Loss Order is too close to the opening position price, it can be triggered by normal market volatility. This means that a temporary dip can knock out a position before it has a chance to retrace. Similarly, if a Limit Order is set too far from the opening price, potential profit may never be realized.
    Be aware that trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

    - - - Updated - - -

    step 3: Next Step
    Choose Your Approach



    There are two basic approaches to analyzing the Forex market. It is important to understand how they can be used successfully.

    Technical Analysis Technical Analysis focuses on the study of price movements, using historical currency data to try to predict the direction of future prices. The premise is that all available market information is already reflected in the price of any currency, and that all you need to do is study price movements to make informed trading decisions.
    The primary tools of Technical Analysis are charts. Charts are used to identify trends and patterns in an attempt to find profit opportunities. Those who follow this approach look for trending tendencies in the Forex markets, and say that the key to success is identifying such trends in their earliest stage of development.

    Fundamental Analysis Fundamental Analysis focuses on the economic, social, and political forces that drive supply and demand. The premise is that macroeconomic indicators such as economic growth rates, interest rates, inflation, and unemployment can be used to make informed trading decisions. Information about economic data can be found using XE Forex News, which is free to use.

    There is no single set of beliefs that guide Fundamental Analysis. Different traders look to different indicators, and weigh various indicators in different ways.
    What should I use - Technical or Fundamental Analysis? Traders using Technical Analysis follow charts and trends, typically following a number currency pairs simultaneously. Traders using Fundamental Analysis must sort through a great deal of market data, and so typically focus on only a few currency pairs. For this reason, many traders prefer Technical Analysis.
    In addition, many traders choose Technical Analysis because they see strong trending tendencies in the Forex market. They look to master the fundamentals of Technical Analysis and apply them to numerous time frames and currency pairs.


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  3. #2
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    Re: Six Steps to Improve Your Trading

    We can't be extreme competence if we are not looking for the methods that could improve the trade.Making big profits and sometimes loses ignores a perspective that we need more improvement.these six steps mentioned are of significant importance and we should give proper consideration in trade.Obviously they will also help me.

  4. #3
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    Re: Six Steps to Improve Your Trading

    Trading forex as a beginner can be faustrating because you can make a lot of mistake and lose money. As a beginner you need to learn how to detach your emotion from your trades by not allowing it to interfare in your trading decisions. As a trader always keep a journal of your past and present trade for future references so to help you in subsequent trades. Every loss you make should be taken as part of your learning experience. The use of stoploss can also help you minimize your loss

  5. #4
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    Re: Six Steps to Improve Your Trading

    This does make lots of sense since starting with proper planning and analysis is the way to go but I would say that this order is incorrect. For a newbie he can’t straight away get to learn to do analysis so firstly we should get common knowledge and trade on demo to get experience and then we could move these line up you mention.

    At the moment I do it exactly how you mention but it’s not on my own since I follow my reliable broker OctaFX, it has free analysis service for all currency pairs so I can easily trade in whatever I like to and they really easy to follow and I can make profits without any risk.

  6. #5
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    Re: Six Steps to Improve Your Trading

    It's the fifth step, knowing fundamental analysis, which I found inconsistent. I did learn about fundamental analysis, but couldn't make any sense out of it -- too many variables and too unpredictable, not to mention no historical data about its past performance. I'm more comfortable with technical analysis alone. And I know many people do.

  7. #6
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    Re: Six Steps to Improve Your Trading

    I donít think we need to go that far to be successful if we have few right ways then that should be more than just enough to bring rewards and I completely believe itís a complicated business, so the lesser stuff we need to think the better we are going to be. I am working with OctaFX broker where there is a simple success mantra and thatís to do trading with correct entry because of their low spread which is just 0.2 pips; itís really special to work with such low spread.
    Last edited by David Ogilvie; 06-10-2015 at 04:08 PM.

  8. #7
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    Re: Six Steps to Improve Your Trading

    Sometimes, knowing too much is the one thing you should avoid. For example, knowing about 10 indicators seems right, but can play havoc with your mind while you trade since you will be bother by what you know from the one you don't use. Know your parameters might be a good advice.

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    Sometimes, knowing too much is the one thing you should avoid. For example, knowing about 10 indicators seems right, but can play havoc with your mind while you trade since you will be bother by what you know from the one you don't use. Know your parameters might be a good advice.

  9. #8
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    Re: Six Steps to Improve Your Trading

    We just need to be sensible to improve, if we use common sense then we will improve automatically, but without that even best of tools will be unable to improve us. I do like these points made, itís definitely very good and needs to be followed, as only then we will be able to perform well. I am trading with OctaFX broker and with them, I can do it all easily with their lovely educational guidance while there are several other benefits too like low spreads from 0.1 pips to high leverage up to 1.500 while there is also rebate program where I get 50% back on all trades and even more, itís too good which helps me in improving big time.

  10. #9
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    Re: Six Steps to Improve Your Trading

    Frankly speaking, you only improve IF you have the sufficient knowledge and experience but if you lack it then improvement is almost impossible to come. I always focus and work on planning things out very CAREFULLY.

    However, I have entire focus on Stocks, as I feel itís far more rewarding. I only keep myself to obvious options like Facebook stock; it is something thatís meant to give you profits. And like doing it through Facebook stock forecast. It makes working incredibly easier and puts me in comfort zone.

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