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Forex Trading: Enhancing Your Knowledge and Building from the Basics

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Forex Trading:  Enhancing Your Knowledge and Building from the Basics

For traders that have some experience trading and are looking to build on their knowledge, the first thing you will need to do is take a step back and try to make an assessment of what is wrong with your trading approach.  While this might seem to be a relatively obvious assertion, the fact remains that traders tend to look at positives (and potential gains) rather than negatives and potential losses.  The reason for this is that nobody enters into trading because of the potential downsides.  But the unfortunate reality is that losses can (and often will) add up much more quickly than gains.  And this can be more detrimental to a forex trading account than anything else.            

Instead traders look to the positives and chose to focus on those aspects alone.  This is one of the first mistakes that traders make and it can easily be the one that can take a trader out of the forex business forever.  So, surprisingly enough, one of the first things that a trader can do to enhance their game is to focus almost exclusively on the negatives, with the intention of isolating these behaviors and removing (or at least improving on) them.  Below, we will look at some of the ways traders can isolate their inefficiencies and improve on them to become better traders.

Secrets and Behaviors Exhibited by Successful Traders

“Most traders looking for the “holy grail” of forex trading but the fact is that many of the tools you will need to improve your profitability are already available and probably known -- at least to some extent,” said Rick Bartlett, currency analyst at CornerTrader.  “But what must be remembered is that you must follow the rules and strategies that you have in place, rather than simply listening to intuition or trying to predict what will happen in the market.”  Because, the fact is, nobody can guess the market.  If you are trading using “intuition,” you are doing nothing different than people gambling their money in slot machines in Las Vegas.

Trading should be approached as a business.  You are investing your hard earned money and this should not be taken lightly.  Even when the odds are 60% in your favor, there is still a 40% chance you will lose in the trade.   If you don't like handing over your money (and nobody does), then you must approach trading seriously, and with a mathematical and reason-based approach that can be repeated on a regular basis to achieve profitability.  You are not in this game to win every trade.  You are in the game to win a majority of your trades.  In the end, there is nothing wrong with even a 51% / 49% ratio as long as your position sizes are used in constructive ways.  So, how do we focus on out inefficient areas in order to improve our current methods?  After we understand that there are no shortcuts to trading, and that there are no “holy grails” to be discovered, we can remove the “lottery mentality” from our trading plans. 

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Forex Markets

 

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