Best six-step for forex trader Forex traders around the world square measure creating cash a day. These
traders have one issue in common—a secret. This secret could surprise you. If you’re like Pine Tree State,
after you initially started learning concerning
trading you thought all the traders United Nations agency were creating cash were pc
science, arithmetic, or physics wizards with lightning-fast computers deploying secret algorithms. mercantilism
was the domain of the well educated
that had the computing power to crack the market code. I used to be convinced
that solely by duplicating these efforts would I be able to systematically rack
up profits. I knew that mercantilism had to be advanced, and maybe you are feeling
think the same method.
This is not true.
Some of the easiest traders within the world share an easy secret: They
use very simply and nonetheless powerful, mercantilism systems. the most effective traders
in the world—hedge fund traders, bank traders, personal have traders
you will ne’er hear from—all have one issue in common: These individuals square measure
experts. they are doing one issue
WHY does one wish TO TRADE?
This may look like a funny question, however, why does one wish to trade? If
you want to trade as a result of you would like to create cash, maybe mercantilism is
for you. If, however, you would like to trade as a result of you would like excitement, or
you want to be able to tell folks that you’re a merchant, or as a result of you
love the thrill of getting cash in danger, then maybe mercantilism isn’t
for you. If you would like excitement strive jump, or searching wild boars. If you
want to inform folks that you’re a merchant, you’ll be able to try this, however, if you’re
not quite in keeping with your mercantilism, simply trade an awfully little account, that
way you’ll be able to get the popularity of being a merchant for atiny low fee. If you like
the excitement of getting cash in danger, you must strive for gambling. Gamblers
are honest. They risk their cash, and that they acknowledge the inherent risk in
their occupation, they’re upfront concerning it. this can be Associate in Nursing honorable approach
to gambling as a result of gamblers admit that their cash is in danger and admit
that luck can guide their winnings. Traders will be gamblers in disguise if
they are mercantilism for incorrect reasons.
You probably understand a gambler or 2 disguised as a merchant. this can be the
difference between a merchant and a gambler: A gambler has no risk management, and a gambler is willing
to lose massive amounts of cash quickly. A
trader treats every trade as a calculated risk and manages every trade in keeping with his system rules.
Gamblers will lose all the money right away, and
traders lose solely the maximum amount of cash as their system can permit. The distinctive issue is that a gambler doesn’t follow risk management rules,
whereas a merchant follows strict risk management controls.
Expert traders do quite merely follow strict risk management controls; they conjointly focus on one
mercantilism technique. this can be the $64000 secret
of knowledgeable traders: They target one market, one mercantilism system, one edge,
and they use this draw near their mercantilism repeatedly. Profitable mercantilism is boring. Profitable
traders square measure consultants, and these knowledgeable traders do one issue
over and once again.
THE SECRET OF THE Experts
Why do profitable traders limit themselves? the solution is simple: Profitable traders grasp what makes cash.
Profitable traders trade to form
money. If you’d prefer to create cash as a dealer, do what the specialists
do. Become sensible at commercialism one system. you recognize a way to try this currently.
All you would like is during this book. you just got to place the add, practice,
and become an associate professionally with a commercialism system that creates sense to you, and
then trades that commercialism system. Trade your system over and yet again till
trading becomes boring (and terribly profitable).
All the terribly triple-crown traders do one issue. this might appear unbelievable, however, the entire hedge
funds area unit engineered on one plan. Hedge-fund traders
often have one edge, and that they use this come near their commercialism. Now, some
hedge funds could have many traders, every together with his own edge, however, to be a
successful dealer you just need to have one issue that you simply area unit excellent
at, so you are doing this one issue over and yet again.
The most triple-crown traders i do know follow this rule. The traders that
struggle, the traders United Nations agency have a problem finding consistent profits, are the
one’s United Nations agency repeatedly modification their systems, reanalyzing and reorganizing
their commercialism rules. In alternative words, they’re still stuck within the cycle of doom.
The key to breaking the cycle of doom is to come to a decision what is sensible to
you, that of the commercialism systems during this book resonates with you. Once
you have chosen one, you just got to check it over and yet again. Then
apply this technique, target following your system rules, and watch
your confidence grow.
You can do identical issue hedge fund traders do. you’ll be similar to
a bank dealer. you’ll be an expert dealer. however, before you go professional, you
must decide however you’ll create your cash within the markets. what’s your
expertise? that commercialism system fits your beliefs? Once you align your beliefs with a
commercialism system, you just got to gain expertise and confidence within the commercialism system,
and you’ll ne’er recall. Your exciting
journey is prior to you; before long you’ll become associate professional dealer.
SIX STEPS TO BECOMING AN EXPERT
Although it may seem that becoming an expert is a very difficult thing to
do, it is really rather simple. As with many things in life, if you put the work
into it, you will be able to reap the rewards. Here are six steps to becoming
Step One: Get in the Comfort Zone
The first step is to become comfortable drawing zones on your chart. Zones
are the basis for your trading decisions. As a naked trader, all your trading
decisions will be based on zones, so it is very important that you have these
zones drawn correctly on the chart. It is much easier to draw fewer zones,
provided those zones are very strong and well defined than it is to draw
too many zones on your chart. If in doubt, err on the side of using fewer
zones on your chart.
As a naked trader, you will spend a lot of time waiting for the market
to hit your zones. This is fine; this is part of what it means to be a naked
trader. If you find yourself feeling as though you need to take action, perhaps you should back-test
your trading. Test one year’s worth of data (on
a shorter timeframe), and then test a lower frequency trading system on
longer-timeframe charts. Compare the profitability of each back-test. Are
you surprised at what you find? Sometimes making money is easier when
you do not trade. Sometimes avoiding trades is just as important as taking
trade opportunities when they arise.
Step Two: Decide on a Catalyst
The second step toward expertise is for you to decide on which catalyst
you will use in your trading. You have learned about several catalysts (and
there are more at www.fxjake.com/book), and hopefully, by now, you have
back-tested some of them. So which one resonates with you? Do you prefer
the simplicity of the kangaroo tail? Or do you like the added confirmation
of the last kiss? Perhaps you find the trendy kangaroo to be an excellent
method for capturing trending markets. It does not matter which catalyst
you have chosen. What does matter is that you trade a catalyst that fits with
your view of the markets?
You must trade a catalyst that fits with your beliefs. Choosing a catalyst
that fits with your beliefs will help you to ride out any bumps in your equity
curve and avoid the cycle of doom.
Step Three: Back-Test
By now you probably have a good understanding of all the benefits associated with back-testing your
trading system. Back-testing will verify that
your trading system works. It will help to build your confidence in your
trading system. It will help you when you are experiencing drawdowns,
it will help save you from falling back into the cycle of doom. In short,
back-testing is what separates those consistently profitable traders from
those traders who are forever stuck in the cycle of doom.
If there is one idea that you take from this booklet it be this: Backtesting your trading system is
the one thing that you can do to accelerate your trading. This one thing is the most important habit that you can
develop in an effort to become a professional trader. Back-testing is that
You should have a clear goal in mind when you back-test your trading
system. Try to triple your trading account with a small percentage at risk
for each trade (e.g. 1 percent or 2 percent at risk). Tripling your trading
account will help you to believe in your trading skills.
Step Four: Forward Test
If you have back-tested your trading system, and you are happy with the
results, you’re ready for the next step. The next step is to employ your
trading system in real-time. Unfortunately, this is a very slow stage. You
will be unable to speed up time as you can when you are back-testing, but
you will closely mirror the live market trading experience.
Create a goal for your forward testing. Try to triple your demo account.
Because you will be trading in real-time, it will probably take longer to
triple your account than it did when you tripled your back-testing account.
However, in some ways, demo trading much more closely resembles “real”
trading because you cannot quickly advance the charts to see if you have
made the correct trading decisions. Embrace the time it takes to accumulate expertise with your forward testing.
To forward the test, you simply need to open up a demo account. These
accounts are offered by any forex broker.
Step Five: Trade a Small Account
After you have found success back-testing and found success forward testing, it is time to start trading a live account. Live trading can never
really be duplicated. Back-testing is wonderful and adds to your confidence; forward-testing is
also great because it closely resembles live trading. However, the only thing that matters is live
trading profits. Begin with a
very small trading account. What is small to you may not be small for someone else. The size of your
account should be made up of 100-percent risk
money. This is money that you are willing to risk for this exercise. Never
risk more money than you can afford to lose.
Once you triple this small account, you are ready. You have built your
confidence by trading (back-testing with historical data, live data with your
demo account, and, finally, you have tripled your small live account). At
this stage, you probably cannot wait to begin trading your standard live
Step Six: Trade a Live Account
Most traders do not do what you have just done. You have built your
confidence over the previous five steps. Now you are ready. It is time to
put into practice what you know, and by this stage, you will be excited.
Make sure that you maintain your discipline and continue to do the same
thing that you have been doing. The important thing here is to follow
your system, without regard to whether you are in the midst of a lucky
streak or an unlucky streak.) Remember, you have the power of your
trading, and you understand that you will successfully pull profits from the
The most important thing at this stage is to duplicate what you have
been doing. Just because you are trading a standard account does not mean
anything changes. Concentrating on your trading system rules will yield
positive results. Thinking about the money involved in each trade will probably be
distracting and will likely throw you off track. Keep doing what you
do well, and you will become an expert.