The Secrets To Profitable Forex Trading presented by Trade on Track.com The Secrets To Profitable Forex Trading Table of Contents Introduction The Three Pillars of Success: 1. Learning 2. Planning 3. Discipline General Trading Tips Conclusion Disclaimer This report is provided for information purposes and is not intended as financial advice. Forex trading has inherent risks and may not be suitable for all people. Anyone intending to trade should make themselves fully aware of all relevant risks, and obtain relevant professional advice, prior to undertaking any trade activity. This report may not be reproduced in any way without permission from Trade on Track. Permission may be granted if a relevant link or reference is made to Trade on Track. Please contact us if you would like any further information. The Secrets To Profitable Forex Trading Introduction The forex market (also known as foreign exchange, fx, and currency market) is the biggest financial market in the world with a daily turnover often exceeding $3 trillion dollars. Smaller investors are becoming increasingly attracted to the trading of forex due to the easy accessibility of the market and the profits which can potentially be achieved. The reality is, however, that most new traders will ultimately lose most or all of their trading funds over a period of time. There can be several reasons for this but most often it comes down to a few basic flaws that seem to apply to most novice traders. These can be summed up as: ➢ Lack of knowledge and experience ➢ No trading target or long-term outlook ➢ Poor money management ➢ Poor risk management ➢ Lack of record keeping This report is not meant to be a detailed or technical look at how to trade the forex markets. It doesn't try to teach you all the details about forex trading and doesn't tell you what specific strategy to use. The idea of this report is to provide some practical insights into what it really takes to be a successful forex trader. If you asked a profitable trader to explain their secret to success, you would probably be surprised with the answer. You would generally find that they don't have a secret technique or some kind of special software that directs their trading. The reason that they have become successful is usually due to adopting some simple strategies and making the effort to follow them through. These are often tips that really anyone could use but they tend to be ignored or forgotten by losing traders. It is human nature to look for an easy or quick solution. We all hope to find that one idea or application that will lead us towards making easy money. The reality is that life rarely provides a shortcut to success and most successful people are able to get ahead of the pack through hard work and perseverance. So this report won't give you a simple trick to instantly become a millionaire from trading forex. What this report will give you is the tips and techniques that successful traders use to give themselves an advantage over the longer term. These secrets aren't really sexy, and they could even be classified as common sense, however they have proven consistently to be the difference between unsuccessful traders and those that can make it into a profitable career or pastime. The tips and advice mentioned in this report can be used by anyone currently or intending to trade the foreign exchange markets. They apply equally to traders that use technical analysis, fundamental analysis, or even trade based on third-party advice. This report provides the following: 1. The Three Pillars of Success – the most important elements to becoming a successful forex trader. 2. General Trading Tips – practical advice and tips. The Three Pillars of Success There are many elements that can make a profitable forex trader, however there are three (3) things that we have found to be common amongst almost all successful traders. We call these things “The Three Pillars of Success” as they are the foundation for anyone hoping to build a long term career from currency trading. These Three Pillars can be simply summarized as: 1. Learning 2. Planning 3. Discipline 1. Learning Knowledge is power. The more you know about the forex markets, and how to trade it, then the better are your chances of success. Learning as much as possible doesn't just give you knowledge it also gives you the confidence to make better trading decisions. Obviously most traders undertake some type of training or learning before they begin to trade. However, successful traders treat learning as an on-going process and commit their time to continually improve their skills and expertise. There is a massive amount of information available regarding forex and forex trading. These include resources that are both online and off-line. Some of the information, such as training courses for example, will have some cost to access while there is also a large amount of free information available just by searching the world wide web. Keep in mind that the cost of learning or training can actually be a very wise investment. The relative value will obviously depend on what you actually get out of it but it can often fast-track your learning and give you practical advice that is otherwise difficult to obtain. When we talk about learning as a secret to trading success, this encompasses a whole range of issues including: The Basics It is important to have some level of knowledge about what the forex market is and how it works. This doesn't mean that you need a large volume of historical background or intimate market knowledge, but it will certainly assist you to have a decent understanding of the various elements involved. In particular, you want to build up your knowledge so you have a clear understanding of the following: Elements of the foreign exchange market Relevant trading terminology How the market works and fluctuates How a trading platform works The role of a Market Maker The relationship between you and your broker Leverage Trading risks Evaluating potential trades Where you can access market information Initial Training One of the first things that any potential trader needs to do is to source the relevant information needed to learn everything possible about foreign exchange. There are a large number of different learning tools and resources available, including: training courses seminars books (electronic and hard-copy) group training one-on-one training mentoring online training (including webinars) All of the different resources have positive and negatives aspects to them. The important thing is to make the effort to learn as much as possible and to commit to the process that you are most comfortable with. Mentoring The quickest and most reliable way to become a better trader is to receive direct mentoring from an experienced trader. They can pass on real and practical advice that isn't always easy to pickup just me from reading. It is certainly the way to fast-track yourself to beco a successful trader. A mentor will be able to show you: ● Real day-to-day trading ● The rationale behind trade decisions ● Risk management considerations and techniques ● Overall management of trading funds ● Practical trade examples Mentors are not always easy to find, and there is obviously a cost to learn from them, but they are an option worth investigating for any novice trader that wants to take their trading seriously. Forums and Portals There are a large number of websites that have been setup to provide information and resources to all forex traders. These are often referred to as “portals” and may include current market quotes, current news items, and overall market commentary. These sites can also include a forum where traders ask and answer questions relating to the various components that make up forex trading. These types of sites can be a great source of practical trading information and are worth researching to improve your overall knowledge. Free Resources and Information Apart from the massive amount of free information available from trader portals and forums as mentioned above, the world wide web also provides easy access to a lot of other free information such as: market history current quotes announcements calendar (of upcoming events and announcements) market commentary indices and economic indicators platform tours trader blogs forecasts assessment tools charts trading tools So it's definitely worth undertaking a search of the web if you are looking for any sort of free information or advice. More Advanced Learning After you learn the basics of the forex markets, and begin to undertake real trades, you should still try to develop your overall knowledge of how the market performs and the different trading approaches that are possible. Look to see if there are other techniques that could assist your trade decision making or that may help to refine your assessment criteria. You could also consider more detailed investigation into historical reference points and overall trading patterns. Gradually expanding your knowledge will help build your confidence and expertise over time. Trading Platform The system or platform that you use to make your trades, say through a broker/dealer or financial institution, needs to be clearly understood as they do not all function the same. Check the various options thoroughly to make sure that the system you choose can handle the types of trades that you are likely to undertake. You also want to be easily able to monitor your trade activity and overall position. Determine what risk minimization options are available (like Stop-Loss or Take-Profit orders for example) and be clear about the initial and on-going funding that may be required. Read all terms and conditions carefully before depositing funds and commencing any trade activity. Financial Arrangements Each broker has different arrangements for how you will need to fund your trading account. This applies to your initial bankroll and also any subsequent funds that may be required as part of margin calls or changing trade positions. Ensure that you fully understand the financial parameters and requirements that you are committing to. On-going Learning should not be considered as a one-off thing that you do before you commence trading. You really need to make learning an on-going part of you overall trading activity. There is always more to learn, and more places to learn it, so try to build up your knowledge of the market and it's various components. Set aside some time and make it a regular commitment. Commit Your Time As previously mentioned, you need to make a commitment to on-going learning. So make the effort to set aside some time every day, or at least a few times a week, that you will dedicate to improving your knowledge. This doesn't need to be a major time commitment – even 15 to 30 minutes would be fine. The important thing it to make it a regular and on-going part of your overall trading future. Learn From Yourself Your own experiences can often be the best teacher, and this certainly applies to forex trading. You may even find that your biggest mistakes, which may have had a significant financial impact at the time, are what can teach you the most valuable lessons. So take some time to review what trading techniques are working for you and what areas may need some improvement. Look at what you might be doing right and what you could do better. 2. Planning Goal setting isn't just a trendy catchphrase thrown around by business consultants, it really is an important part of becoming a profitable forex trader. Unfortunately, this planning stage is often ignored by people who are anxious to begin trading and who often have unrealistic expectations of trading profits. It is common for novice traders to start trading without having any real idea about what they are hoping to achieve and how they will actually go about achieving it. This inevitably leads to failure. So take the time to seriously consider what you really hope to achieve from trading forex. You can then develop a plan that shows the actions or steps needed to reach your goal. The plan doesn't have to be too detailed or technical, but at least write down what your expectations are and what you think might be required. You'll find that a plan will give you the structure needed to ensure that you are always clear about where you are heading. With respect to planning, the following suggestions are made: What Do You Want To Achieve ? Firstly you should determine what it is that you actually want to achieve from your forex trading. Obviously you want to make money, but think also about what timeframe might be needed and what steps might be involved to reach where you want to get to. Develop A Plan It doesn't need to be too lengthy or detailed - it is only for your own purposes. The important point is to document what you want to achieve, when you hope to achieve it, and what actions will be required. This plan can then be used as the basis for your trade decision making and future planning. Keep It Personal Every individual has a different tolerance for risk when it comes to financial investment. Forex trading is inherently risky and it is important to determine what level of risk you are willing to have. So make sure that your plan takes into account what level of risk you are prepared to accept. There is no point in trading at a level that makes you uncomfortable – this will only lead to poor decisions down the track. Set Targets Your plan should include some specific goals and targets so that you have something to aim towards. For example, it may be to achieve a certain percentage increase in your trading funds over a specific period of time. Your targets can also be non-financial in nature and cover things like achieving certain levels of experience or becoming involved in trader forums. Be Realistic and Conservative It is vital that you are realistic and conservative with your goals. If you have unrealistic expectations, then your plan may have little meaning and impact. If you are unsure about what you can realistically expect to achieve then it may be wise to seek further advice before moving forward. Regular Review Determining your goals and setting up a plan won't necessarily be effective unless you continually review and update them. Set aside a regular time, say once a week, where you sit down and undertake a review of your plan. Have you achieved your targets? Do you need to adjust your trading strategies ? Make Adjustments Regularly consider if you are proceeding in accordance with your plans. Are you achieving the targets you hoped for ? Don't be afraid to adjust your original plan and to reassess your targets. If you have been more successful than you had envisaged, and you are confident in your trading, then you may consider increasing your targets and your planned trade outlays. Conversely, if your trading has not been going as well as hoped, you may need to reduce your outlays and potential targets. 3. Discipline Discipline is the cornerstone to any profitable trading experience over the long term. It is often easy to plan for but also easily forgotten. Most traders are aware of the things they need to do to become successful but very few have the discipline needed to follow through over time. Forex trading can be exciting and challenging – it is easy to chase profits and forget the risks. Successful traders are the ones that can stay detached from the possible emotions that can come into play. They are able to stick with their plan and follow through with each process involved. There are things that you can do to help maintain your discipline. Some examples are: Maintain Records Keeping accurate and current records is the single biggest tip that I can give to any novice trader. Record keeping is ultimately what separates you from being a gambler rather than an investor. It helps you to maintain your discipline and also gives you the ability to see your true trading picture. Trading Log You need to keep a record or log of all your trades. Before you commence any trading take the time to setup a spreadsheet or similar document where you can record the details of each trade. You should include all relevant information including the rationale or strategy behind the trade and expected returns. Note that there are now applications available that will facilitate record keeping so keep it mind as a valuable tool to assist your trading. It will make it much simpler to use and maintain. Maintain Limits You should always set limits and parameters for your proposed trades. In the heat of the moment, or in the excitement of making a trade, it is easy to get carried away and to outlay more than you had originally proposed. This is where you really need to be disciplined and stick to the original limits that you determined. Stick To Your Criteria Once you've decided on the criteria that you will use to determine possible trades then you need to stick to it. There are a multitude of potential trade opportunities, and a multitude of different ways to assess them, but try to stick with what you are confident with. Keep a note of what your criteria actually are and refer to this when assessing trades or reviewing data. Decide When To Stop The reality is that not all trades will move the way you had hoped. It is therefore critical to have a strategy for dealing with a losing situation. Ideally you should determine when you are undertaking a trade as to how far you are willing for a position to move against you before closing it out. Once you have decided this level you then need to stick to it. This is where discipline comes into play as it's easy to think that the market might soon turn in your favor. You need to avoid this mindset – set your limits and stick to them. There is also the ability to set a 'stop-loss' order on a trade that will automatically close out your trade if it falls to a certain level. Make sure that you determine this when making your trade and stick to it. Maintain Your Path You've learnt about forex trading and you've developed a plan for how you want to proceed. Discipline is about sticking to it. This is easy to say but actually becomes very hard for most traders to follow through with. Even though most trades are relatively short term transactions you need to keep in mind the bigger picture. Remember what your goals are and what you have determined will be necessary to achieve them. Don't chase losses and don't be greedy. Over-playing your hand will ultimately put your bankroll at risk and lead to poor trading decisions. General Trading Tips Positive Attitude It is important to approach your forex trading with a positive attitude. You need to be confident in your knowledge, your trading strategy and you overall ability. If you are unsure about what you are doing, or about any possible trade you are considering, then it is better to take a step back and wait. Positive Expectation You should also have a positive expectation of profit when you decide to enter into a trade. In other words, you shouldn't just be entering into trades for the sake of it or in the hope that more trades will mean you are closing to hitting a potential jackpot. You should be confident with your assessment approach and trade methodology so that you have some level of belief in each trade that you make. Risk v. Reward Any type of financial investment is about the relativity between risk and reward. It must always be remembered that forex trading has inherent and considerable risks that need to be considered relative to potential profits. We all have different risk profiles which will dictate how and how much we are willing to invest. Be comfortable with the amounts being outlaid on trades and keep within your financial means at all times. Understanding All Risks Currency trading can bring great rewards but it also carries some inherent and substantial risk. Successful traders are normally those people that understand all the risks involved and implement strategies to manage them. While it is difficult to totally avoid all risk, there are several things that you can do to reduce or minimize the potential for loss. These include Stop-Loss and Take-Profit Orders that are offered as part of some trading platforms. If you are not aware of the risks, then don't trade. Use All Available Resources The Internet provides access to a large array of tools and resources for any trader. Many of these resources are also free so there's no reason not to investigate and see if there options that might assist your trading. Look for forex-related sites that offer more than just currency quotes and ads. A quick search should reveal several sites that provide market commentary, economic indicators, free charts etc. Don't Get Emotional It is easy to get emotionally involved with every trade that you make. Whether a trade is doing well or doing badly, it can often cause an emotional reaction which could influence your decision making. As much as possible, try to stay a bit detached from your trades and think logically about their performance. Decisions based on emotion will inevitably lead to poor decisions and even poorer results. Invest Within Your Means Be clear in your own mind about what funds you really have to trade with. Set clear limits and trading levels then stick to them. Be aware of the risks from leveraging and margin calls if applicable to your trading platform. Never outlay or risk more money than you can really afford. Follow The Trend There is a saying amongst traders that “the trend is your friend”. While this statement is an obvious over-generalization, the intent of it needs to be respected. Be wary of taking a position that is contrary to the general market trend or opinion. Assess Your Timing Always consider the timing when you are proposing to enter (or exit) a possible trade. The market can move in certain ways based on the volume of trades which can often be impacted by US trading hours. Experience will gradually tell you what trading times are preferable for certain types of trades. Don't Ignore Your Own Advice It is easy to start with good intentions regarding how you will trade. However many people find that they simply lose sight of what they actually want to achieve, and how they intended to achieve it, once they begin to trade more actively. Develop your game plan and then stick to it. Setup A Checklist Many people are determined to do the right things when considering and executing trades. Unfortunately it can be easy to stray from the intended path when you are in the process of reviewing trade opportunities. Setup a quick checklist that you can refer to when looking at possible trades. Make sure that the potential trade satisfies all your criteria. If it doesn't then leave it alone – there will always be other opportunities. There Are No Shortcuts As we've previously mentioned, it is human nature to look for a shortcut or an easy path to profits. Instead of focusing on looking for a quick solution, your time would be better spent on following the common sense principles which are contained in this report. As your knowledge and experience grows over time you may discover a specific trading technique that works for you and that gives you a market edge. That's great if that happens but remember that only hard work and time will really show you what can work and if you truly have something that gives you a long term edge. Don't Swap and Change Don't go searching for the holy grail. If you find something that works for you then stick with it. A lot of people get caught up in the search for a magical system or technique when they would actually be better to concentrate on being consistent with their approach. Find a strategy that works for you and then keep repeating it. Commit Your Time Forex trading isn't something that you can just spend a few minutes a day on and then expect that you are going to become successful. Even if it isn't your primary source of income you should still treat it seriously and give it the time it deserves. At least set aside a regular period of time, even if it's only 20-30 minutes, where you are free from distractions and can concentrate on what you need to do or learn. Determine Steps and Potential Profits As previously mentioned, it is important to stick to your predefined limits. Determine in advance what profit levels you are trying to achieve before making any step or change in your trade amounts. No Need To Make Every Trade It is easy, particularly for novice traders, to get too excited and look for an possible trade opportunity. There will always be another possible trade in the near future so there's absolutely no need to enter into any trade that you are not completely confident and comfortable with. Sometimes not making a trade can be better than having a successful trade as a bad trade can potentially have significant financial ramifications. Rely On Your Instincts Once you have developed confidence in how to assess and undertake trades, it is important to have faith in your ability. If a potential trade seems a bit risky, or if you are uncomfortable with any aspect of it, then it is probably best left alone. Manage Your Money Professionally Treat your money with respect. Once you have deposited trading funds, it is easy to think of them differently to real cash in hand – this can impact on the decisions that you make. At all times ensure that you know where you stand with regards to any open positions and with your overall financial risk. Managing your money in a serious and professional manner will help steer you towards eventually being a truly successful trader. Don't Ever Think You Are Due As a forex trader you need to think like an investor rather than a gambler. Don't think that you are due to get that lucky strike to make massive profits. Keep in mind you overall long-term strategy and be aware that any currency pair can move in any direction at any time. Consider Both Sides of The Market Before entering into a trade, try to consider both sides of the market opinion. While you might develop an opinion about how a currency might fluctuate, try to always consider the other side of the story. Remember that future fluctuations are totally out of your control. Think about the potential downside of a trade so that you are clear and confident in your own mind that the upside is worthwhile. Respect The Market When you decide on a trade you are effectively making a judgment about the market direction of a particular currency pair – you are backing your judgment against that of the market. Make sure that you pay respect to the market though and don't be too over confident that you see something that the market doesn't or won't. Don't Adjust Your Limits Be sure to maintain your pre-determined limits and don't increase your outlays based on a whim. Novice traders can easily get caught up in the prospects of a potential trade and move away from their intended strategy. Set your limits and stick to them until you reach the level that you define as part of your overall trading plan. Over-Cautious Can Be Counter Productive While we consistently preach about maintaining discipline and working to defined goals, there is also some level of risk if you are too cautious as it can actually be counter-productive over time. This is why it is important to be confident with your trading before you start so that you are not being tentative and unsure with your trades. Think Long Term Even If Trading Short Term It is easy to lose sight of the bigger picture especially if your trading volume increases over time. As a lot of trades are for shorter periods it is easy to get into a mindset based around quick turnarounds and immediate results. Remember that a specific trade is just a step along a lengthy path to get to your overall destination. Greed Avoidance Greed has been the downfall of many traders and this is unlikely to change. It is human nature to be greedy to some degree – nobody wants to settle for a small profit when a bigger profit is potentially possible. However greed needs to be carefully kept in check with your currency trading as it can lead to poor trades and big losses. Take your profit when it comes and don't expect that a currency will necessarily continue to move in the same direction in the future. Don't Be Too Proud If a trade is going in the opposite direction to what you'd hoped then you may need to close it and take a loss. This can be hard to deal with emotionally for a lot of people. This is where you need to avoid emotion and follow your own rules. Don't Fight The Trend There is a well known saying in trading circles that “the trend is your friend”. This saying has evolved from the idea that it is better to move along with an apparent trend rather than try to move against it. So exercise some caution if you are proposing a trade that goes against the current trend in any particular market or at least be aware of the increased risk level. Analyze Your Completed Trades It is critical to regularly review all your trades and to consider the decisions behind them. This applies to both good and bad trades. Are your strategies working ? Were their common issues as to why some of your trades returned a loss ? Is there a common thread amongst the successful trades ? Do you need to reassess your trade limits and risk minimization techniques ? Document Everything Successful traders keep records. It's a simple statement but one that can't be stressed enough. It only takes a small amount of time to make a record of your trading and this information can be valuable in many ways. It keeps you disciplined and ordered. It also allows you to truly assess your decision making processes. Understand The Market This might seem an obvious statement but it is critical to actually understand how the currency markets work. It is easy to get started with trading forex nowadays so there is always the temptation to get started before you really know what you are getting involved with. Take the time to learn how the forex market operates and how your trading might fit in the overall scheme of things. News Impact News and announcements can have a major impact on any currency. Trading in particular currency pairs is likely to increase in volume based on market perception of an upcoming announcement. Research historical records to see how relevant news announcements have influenced a currency fluctuation. Factor this into your overall decision making as history can often repeat. Conclusion Anyone looking to trade forex as a way to instant riches is likely to be bitterly disappointed and will probably end up broke. Successful trading careers are built on solid fundamentals as outlined in this report. Take the time to carefully consider the tips provided and think about how you could adopt them as part of your future activities. If you require any further information about anything contained in this report, or about your trading generally, then please feel free to contact Trade on Track. We wish you all the best with your future trading career.