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A consistently profitable trader will find a strategy that
offers them a higher than average probability of success. They read
articles like this one and formulate a winning strategy. You need
solid trading plan. The consistently profitable trader will use this
for every trade and not deviate from it. Many new traders fall into
the habit of making emotional trades that is not part of their trading
plan and make money the first time. This leads to a false sense of
security and making risk trades.
A CPT will never enter into a trade unless they know exactly how they will
manage the trade from the entry price, protective stop, breakeven,
exit strategy, this is how profitable traders earn a living. Managing
your trade this way will take some of the emotion out of your trading.
This allows you to become more profitable with your trading.
Your trading plan should say at what point you bring your
original protective stop to breakeven once price moves favorably for
you. Allow the trade to move far enough in your favor so as not to get
stopped out prematurely especially if you trade the Forex markets.
Traders should try and allow the trade to cover the price of
commissions by adding one price tick above your breakeven price.
A smart trader will follow their trading plan and never use emotions such
as hoping, praying and or wishing. Once the trade shows signs of
failure, the trader will allow the market to come back to their
protective stop and not just exit because they want to save a few
ticks on the loss. Too many traders get in long after their setups and
they try to use the original size risk. This simply does not allow for
market volatility and they are all too often stopped out only to watch
the market resume in the direction of their stopped out trade.
Consistently profitable traders do not try to make it rich on
one or two trades. They are always thinking in terms of capital
preservation and making smart trades. As traders, they will not risk
more than one to two percent of their available trading capital on any
given day trade. If you are swing trading you can increase this to
three percent.
You need to have a maximum dollar that you can lose each day and if that
is hit you stop trading for the day.
The severity and ferocity of some of the moves we have seen this past
twelve months in the currency markets is testament to uncertainty that
the whole world faces on a global, economic and fundamental level.
Attempting to read between the lines of any bit of information thrown
our way could have rewarded the Forex trader handsomely one day, only
to then go on to cripple him or her the very next. This is why you
need a solid trading plan.
Trading and thinking like a consistently profitable trader
will allow your trading to improve enormously and the profits will
come much easier as you learn to control your risk and let the profits
take care of themselves. Sticking to a detailed trading plan and
maintaining discipline across all money management practices has never
been more vital than it is right now.
Trading is a probability business and a trader must understand that you
will not be right on all your trades, also you not will you lose on
all of your trades. Once a trader realizes this concept of
probabilities, you should remember that after each trade, you will
move on to the next trade and forget about the last trade. |
