Ten Ways for Real Time Forex Traders to Stay Focused Part I

Here are the first five ways in which a real time trader can remain focused:

A probability game: Every trader must understand that winning or losing in the forex market depends upon probabilities. Therefore, s/he needs to understand that all a trading system can provide is the knowledge of trading positions that have a high probability of winning and a stop loss mechanism to minimize losses. A trading system, through its market analysis tools, can only provide a favorable bias, never a guarantee to win on the forex market. A trader also needs to understand that there will be days in his/her trading schedule when s/he will make small profits, others when s/he will incur small losses, and some when s/he can make big profits.

Planning & Trading: A trader must write down his/her trading protocols with respect to setup, entry and close of a trading position and must follow it religiously. A trader must never change his/her plan during trading hours, following others’ opinions or daily volatility of the forex market.

Money at Stake with One Trading Position: A trader must never bet a bigger amount of money on one trade. A trader needs to understand that to earn smart rewards, investments of bigger amounts of capital are not a prerequisite. Emotions, such as hope and over-confidence, are of no help in the objective forex market.

Focus on Fundamentals: A trader who focuses on earning profits is doomed for failure in the forex market. Focus on getting the fundamental ratios (such as percentage of trading profit, average risk-to-reward ratio, potential profit points versus maximum points risked, etc.) right is the key to success in earning money from the forex market.

Never attach Emotions to Forex Trading: Never indulge in emotional trading and never ever attach yourself to a specific trading position. Always remember whether you win or lose, you are a professional trader and a specific trade is just one in a series of consistent and regularly traded positions. Imagining oneself entering positions and earning profits as well as incurring losses can help a trader detach himself/herself from trading positions and trade unemotionally.

Stay tuned for other parts of this series.