| How to Minimize Forex Trading Losses |
| Written by Gregor Anton |
| Friday, 18 December 2009 09:28 |
|
by Forex currency Day Trader Gregor Anton - http://www.ForexCurrencyDayTrader.com
by Forex currency Day Trader Gregor Anton - http://www.ForexCurrencyDayTrader.com Last week I had some good trades and some bad. You will have losses. How you manage your money and minimize risk, and minimize losses will play a key role in becoming a successful Forex Trader. Rather than looking at how to get the most profit and make more pips, lets focus on minimizing your Forex Trading Losses: * No Trade is a Good Trade - Patience is key. If the market doesn't make sense, stay out. Create a demo account and practice first. Only trade when you're 100% sure all your trading conditions are met. * Don't Babysit Your Trade - Everyone loves watching that green positive number get bigger and bigger, but don't stress yourself out and watch it fluctuate or worse, go into negative red numbers. Follow your Forex trading plan, set your stop losses and take profits. Walk away or do something else. Don't stress over your trades. Let your system handle it. * Don't Get Greedy - No matter how many pips and profit you make, you'll always want to make more. Sometimes less is more and that extra 10 pips can cost you the 200 you just made earlier. Greed is an emotion and you want to keep your cool and stay focused on practical trading. Emotional and impulse Trading is Gambling. * Save Your Emotions - This is a tough one for me, it's hard not to get frustrated when you've had a great week and in the matter of minutes you can see your profits disappear. Even with the best of trading plans, systems, and strategies. And in my experience, especially with Forex Robots, Signals, and Alerts. Let your profits run, cut your losses, and be sure to stick to your system and strategy. * Measure Profit in Pips - I find focusing on pips rather than profit in $s is far better. $'s make it emotional, pips keep it strategic. If you're not comfortable trading bigger lot sizes, don't. The right money management and risk reward ratio is key too and surprise surprise will usually align nicely with your comfort zone. * The Trend is Your Fairweather Friend - It will change and according to some the Forex Market is Trending only 20% of the time. Don't get me wrong, identifying the trend or lack of a trend, is important, you want to do so across multiple time frames. You'll also want to use trend lines, horizontal and angular. Lets face it the market doesn't just move up and down and side to side. It moves in all directions. Pivot Points are important too. * Set Goals - Know exactly how many pips you are targeting. How many good or bad trades you're going to stop at. Everyone has bad days... I go for a walk, eat some Ritter Sport chocolate, grab a Mocha at Waves Coffee, or change my scenery in some way that gets me away from Forex. Bottom line, have a plan! ...and follow it. * Set Conditions - When are you going to enter/exit a trade? What is your Stop Loss / Take Profit? What are the market conditions? Market hours? Will you Trade around news times? * Economic Calendar - News can really impact the Forex market. This "noise" can really impact your open trades. You need to stay on top of Forex News by checking the Economic Calendar at least daily and determine if you're going to trade around news times or not. * Manage Your Money - Only Risk 5% at most. Combined. If you have multiple trades, the sum should be 5% or less. Some people like 3%. Any more and you will have a tougher time rebuilding your portfolio after a bad trade. * Know Your Risk / Reward - How many pips are you willing to risk to make your pips? Are you going to risk 100 pips to make 10? Clearly you want to risk less than you are bound to make. * Practice Practice Practice - Open a demo account, thoroughly test your system, plan, and strategy. Your demo account balance after 1 month of trading will give you a good indicator of how well you've done. * Take a Forex Trading Course - Education is key. Education can be expensive, the alternative is far more costly. Can you afford not to take a coruse? There are many great trading courses out there, and there are many scams and hack-job courses too. Visit my site to find out who I swear by. * Walking Away is the most important part of your day - A great trading day, week, or hour. x amount of successful trades and you decide to stay just a little longer, go for that extra pip and before you know it the market changes and your profits are gone. Be sure to plan your "Walk Away" strategy. About the Author: Want to find out more about Forex Day Trading, then visit Gregor Anton's site on how to Minimize Your Forex Trading Losses. |