Forex Trader ultimate blueprint

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Picture this:

Trader A is living the trading dream. Frequent trips all over the world, lots of cash to spend, nice house and car and ton loads of quality time to spend with the family.

Trader B is living the trading nightmare. Difficulty breaking even, lots of time spent staring at the charts (aka analyzing), no tangible profits to show for the effort being expended.

What is it that trader A is doing that trader B is not? Well it’s all wrapped up in the Trading Plan

The Trading Plan

The ultimate trading plan is used to bring out the ultimate trading skills. Components of the plan include the following:

  1. Trading Psychology

The right state of mind. The ability to manage that adrenaline rush when your trade goes live and seems to be going in the wrong direction. When this happens it is common to hear traders saying things like:

“Darn, the market is going the wrong way”

“It is not my fault; I blame the broker for this”

“The broker is hunting my stop”

“All I have to do is widen my stop loss. Please market, change direction”.

Knowing how you react to stressful situations will assist you in bridging the gap between a solid trading plan and how exactly you execute it. Trader A sticks to the plan, trader B flip flops, changes the plan after the trade is executed and makes excuses.

Trader B is often over confident to the point where he over estimates his ability, gets greedy and gives up gains to the market because of failure to follow the trade exit plan

Trader B sometimes ignores the trading plan and comes out of a trade too early due to fear. Money is therefore left on the table.

Anger and revenge sometimes makes trader B discard the trading plan and get into trades simply to get back at the market in an effort to regain losses

  1. Education

Trading skills also involve knowledge about how the financial markets operate and the factors that move the markets one way or another. Both fundamental and technical know-how are among the arsenal of top traders.

  1. Money Management

Perhaps the easiest way to explain the importance of money management in trading is to figure out how you would continue to trade after you have wiped out your trading capital due to inept risk practices. The way around this is to decide how much risk you are able to sustain on each trade long before you enter the trade. In effect, to use stop losses and reward to risk ratios of at least 2 to 1 so that you do not have to win a majority of trades to be profitable.

  1. Sticking To The Trading Plan

Bear in mind that no trading plan will have a 100% hit rate. The key is to find a tried and proven trading methodology that you are confident in to the point where you do not abandon it if a trade goes against you.

  1. Mentorship

Even with the best display of managing your emotions, of training and money management, trading competence takes time. Utilizing the services of a mentor who has a track record of expertise and profitability will greatly reduce the learning curve standing in the way of trading success.

  1. No Excuses

The ultimate trader skills if adhered to with discipline and rigid focus makes the difference between whether you acquire the title of trader A or trader B. Trader A sticks to the plan. Trader B spends time making excuses.

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Written by Ferl Ngningone


Ferl is a former Financial Analyst at BNP Paribas and a well-seasoned globe trotter. Besides trading online he enjoys traveling more than anything.