3 Steps to Improving Your Trading
For new beginners wanting to improve their trading education will play a fundamental role to improve their understanding of the market and this will lead to the trader becoming more successful.
After traders have learned the trading lessons required to start trading and well as the various strategies then traders need to follow these three steps below so as to improve their trading. If you have not learnt about the lessons needed to start trading or you are looking for a trading course that provides these lessons then you can find these lessons on the learn section of this website. You can also find strategies from the learn strategies section of this website. After you've completed reading these guides traders can then follow these steps to improve their trading.
Come Up with a Trading Plan
Traders need to plan their trading and to do this, traders will have to create a trading plan. Traders looking for an example trading plan can find one on this website, the lesson of writing a trading plan can be found on the learn lessons of this website, this is the last lesson on this learn lessons section.
Use a Trading Plan and Stick to the Plan
Traders should always use the trading plan they come up with to trade the online currency market. The strategy that a trader chooses should be well written down in this trading plan and trader should always follow the rules of this trading plan when deciding when to open & close trades.
The currency pairs that a trader will be trading will also be specified within this trading plan, the currency pairs chosen will be the currency pairs that are best suited for trading based on the trader’s strategy.
The plan will also specify which chart time frame that the trader will be trading with, whether the trader will use the minute charts or hourly charts. The chart time frames used will depend on the trading style of a trader. A scalper will use the one minute charts, a day trader might use the 15 minute charts & the swing trader might use hourly charts.
The plan also will set the take profit targets for each trade as well as the stop loss for each trade. Once a trade is open then a trader will close their trade once the take profit level is reached or once the stop loss level is reached. By sticking to this technique of closing trades at pre determined levels will ensure that traders will be more successful because they will have decided the points to close trades before opening the trade.
The trading plan will also include money management rules that the trader will follow. For example a trader should follow the money management rule that specifies that they should not risk more than 2% of their account funds on any 1 single trade. The money management rules tutorial can also be found on this site on the learn lessons section under the key concepts topics.
If as a trader your chosen strategy is to use automated strategies and Expert Advisors then these automated strategy should be specified in your plan. Whatever system you decide to use as a trader, write it down in your plan and stick to trading with that strategy.
Traders should also avoid emotions of fear & greed when trading in trading market. The trading plan will help traders plan their trades & this way traders will not make trades based on their emotions. A trading plan will help a trader set clear goals when trading & at same time will help traders to stay organized when trading & thus ensuring the traders become more successful when trading in market.
Trade with The Trend
Traders should always make sure that they open trades in direction of the market trend. The market trend is the general direction of the market prices and this direction can be upward or downwards. Once the market trends start to move in a particular direction price will continue to move in that direction for a while because the trends will have gained momentum that will keep pushing prices in direction of the market trend.
This is why traders should always open trades in direction of the market trend so as to trade in the direction that has momentum and this way traders can increase their chances of being successful when trading the market.
Trader always have a saying in the market - The trend is your friend - which means that traders should always trade in direction of trend & never open a trade against the market trend. This is because the most reliable method of trading forex, and not just forex even stocks and other financial instruments is to follow the trend and only open trades in direction of the trend.
There are different techniques of determining the direction of a market trend & to do this trader should use trendlines or moving averages or Bollinger bands indicator.
Keep a Journal To Track Your Results
Traders should always keep a journal & write down all trades that they open in this journal, they should write why they opened each trade, when they closed the trade and also the amount of profit or loss generated from that trade.
After a while traders can then review the trades they have made try & look at why the losing trades made a loss and why the winning trades were successful & after that they can then try & do more of what makes them successful & less of what is making them to open losing trades and that way keep on improving on their strategy.
As a trader if you do not keep a trading journal you may continue making same mistakes over & over again without even knowing it, but if you keep a journal & keep reviewing this journal from time to time then you give yourself a chance to identify the mistakes you make in trading from reviewing your trading journal.
Once a trader gains some experience in the market and start to recognizes the successful patterns from their winning trades they can then use this information to identify the trading setups that will have more probability of producing winning trades and this way they can then continue to improve their trading.
