“Easy money” is the allure that captivates many beginning FOREX traders. FOREX websites offer “risk-free” trading, “high returns”, “low investment.” These claims have a grain of truth in them, but the reality of FOREX is a bit more complex.

Mistakes Of The Beginning Trader

There are 2 common mistakes that many beginner traders make: trading without a strategy and letting emotions rule their decisions. After opening a FOREX account it may be tempting to dive right in and start trading. Watching the movements of EUR/USD for example, you may feel that you are letting an opportunity pass you by if you don’t enter the market immediately. You buy and watch the market move against you. You panic and sell, only to see the market recover.

This kind of undisciplined approach to FOREX is guaranteed to lose money. FOREX traders must have a rational trading strategy and not make trading decisions in the heat of the moment.

Understanding Market Movements

To make rational trading decisions, the FOREX trader must be well educated in market movements. He must be able to apply technical studies to charts and plot out entry and exit points. He must take advantage of the various types of orders to minimize his risk and maximize his profit.

The first step in becoming a successful FOREX trader is to understand the market and the forces behind it. Who trades FOREX and why? This will allow you to identify successful trading strategies and use them.

Accountability

There are 5 major groups of investors who participate in FOREX: governments, banks, corporations, investment funds, and traders. Each group has its own objectives, but 1 thing all groups except traders have in common is external control. Every organization has rules and guidelines for trading currencies and can be held accountable for their trading decisions. Individual traders, on the other hand, are accountable only to themselves.

Large organizations and educated traders approach the FOREX with strategies, and if you hope to succeed as a FOREX trader you must follow suit.

Money Management

Money management is an integral part of any trading strategy. Besides knowing which currencies to trade and how to recognize entry and exit signals, the successful trader has to manage his resources and integrate money management into his trading plan.

There are various strategies for money management. Many rely on the calculation of core equity — your starting balance minus the money used in open positions.

Core Equity And Limited Risk

When entering a position try to limit your risk to 1% to 3% of each trade. This means that if you are trading a standard FOREX lot of $100,000 you should limit your risk to $1,000 to $3,000. You do this with a stop loss order 100 pips (1 pip = $10) above or below your entry position.

As your core equity rises or falls, adjust the dollar amount of your risk. With a starting balance of $10,000 and 1 open position, your core equity is $9000. If you wish to add a second open position, your core equity would fall to $8000 and you should limit your risk to $900. Risk in a third position should be limited to $800.

Greater Profit, Greater Risk

You should also raise your risk level as your core equity rises. After $5,000 profit, your core equity is now $15,000. You could raise your risk to $1,500 per transaction. Alternatively, you could risk more from the profit than from the original starting balance. Some traders may risk up to 5% against their realized profits ($5,000 on a $100,000 lot) for greater profit potential.

These are the kinds of strategic tactics that allow a beginner to get a foothold on profitable trading in FOREX.

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Intraday Trading is High Risk – High Gain. Intraday trading is more about speculation rather than technical and fundamental. Scrip can even fall 10% in a day, but what really matters where it closes. So even bullish stock can gives losses in intraday. Nobody can create wealth doing Intraday Trading. So intraday trading should be part of trading not core of trading. One should Diversify in various trading like intraday trading, swing trading (2-5 days) and positional trading (6-30 days trading).

2. Never, under any Situation add to a losing position. Reverse averaging always leads to more loses. If you bought something and its down. Better Continue to hold without any average. 3. Never buy or Sell just because the price is high or low. Predicting tops and bottoms are like guessing future actions which is nearly impossible. There is no limit for Upside and downside. Always buy when scrip started moving up and vice-verse. Money is never made in buying high or low. It’s made in buying and selling at trend reversal. 4. Always cut your losses quickly. If boat is sinking, don’t pray to god. Just Jump. Always accept your mistake and exit the trade. In a Same Way, Always Hold your winning positions with trailing Stop losses. Scrip’s always moves beyond expectations. So Cutting Losses quickly and let your profit run mostly works. 5. Don’t get nervous by Losses. Losses are part of trading. No one can earn all the time. What really matter is earning more than losses. Even 60%-70% Success makes overall profit. 6. Only trade with what you can lose. Never trade with borrowed capital, only trade with funds you can afford to risk. Divide your capital into few equal parts; never risk more than one part of your capital on any one specific trade. 7. Trend is the most important thing. If trend is not clear, avoid trading. Sometime no Trade is better than trying your luck and loose at the end. 8. Never change your trade until and unless one has valid and concrete reason to do so. If you think your strategy is good, then you should continue to hold your positions. Changing the strategy all the time, makes all trade in vain. 9.Never blame the market. Market is always right. If your prediction and analysis was not correct. It’s not the market fault. Learn from mistake and improve trading strategy. Improving all the time what makes a successful trader. 10.  Always remember, there is no trick and tips to earn easy money. Only In-depth Knowledge and experience works. Investing software and trading books by themselves can’t make you enormously wealthy. Nothing is 100%. Follow some strategy & Do analysis and make a profitable trade is only possibility. 11.  Don’t follow news. There are some big fat cats who get the news ahead of you. Most of the news already priced in. Always Check the chart to know whether the news has already been discounted or not. 12. Trend is trader’s best friend. Never trade against it. If overall trend is bullish, buy on decline and if bearish sell on high. 13. No Risk, No Gain. If you are not in a position to accept losses, either psychologically or financially, you have no business trading. In addition, trading should be done only with surplus funds that are not vital to daily expenses. 14. Avoid Margin Trading. Margin looks lucrative and profitable. In reality, they are not. Profit might be in multiple. But they will be less due to time limitations and emotional desire to book early due to leverage positions. Loses will be too many and that also in multiple 15Don’t trade for the sake of trading. Trading for addiction always leads to misery. Trading is a business which should be proper analyzed before implementations. 16. Always trade in liquid stocks. It’s easy to buy, but what really important is to exit in any case. Low liquidity does face different bidding prices as well as Circuits which makes difficult to exit when we really want to exit in worst case scenario. 17. Always reduce your trade after first lose. After lose mostly people get unbalanced psychologically which leads to more failure. Observe mistakes, learn and trade second one with lesser quantity. Once confidence is build, you can come with normal quantity.

18. Use Stop losses. It’s must. When boat is sinking, don’t pray to god.  Just jump. Stop loss is must to protect your capital. If you have capital, you can surely recover later. But if you losses big, it’s nearly impossible to recover. 19.Never follow anyone’s advice until and unless that very person knows more than you. Everyone has different way to look the market so the trading style. Develop, Follow and Create wealth. Use systematically approach. 20.Make sure you follow your rules - About the Author:   EQUITYAHEAD – 1 STEP AHEAD IN EQUITY RESEARCH. Any Query Mail to: info@equityahead.com

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Online, Day trading has exploded across America. Some investors have been very successful and boast of huge gains made in incredibly short periods of time. However, there are many others who experience devastating losses because they have not tapped into the 6 critical factors necessary for successful Futures and FOREX Trading. Http://Free-Cash-Site.com

Success in any profession can be broken down into a number of critical factors. Trading is no different. A successful trading strategy incorporates the following 6 factors.

1. Determination of An Edge: Trading Futures is a zero sum game. There must be an identifiable edge over the other market participants.

2. Disciplined Execution:There is no point in identifying an edge if there is no discipline to follow thru. Create a plan, stick with it, then determine if the plan is successful. If it is not, change the plan. The important thing is disciplined execution.

3. Money Management: If the risk per trade is too aggressive, then there is the risk of blowing an account. If trades are too conservative, then the opportunity to optimize returns is missed. It is critical to establish the maximum expected draw down of any system and set money management rules accordingly.

4. Create a Trading Plan: A trading plan will determine what will be done in any given situation during the trade day. A plan helps keep one focused on execution and not distractions.

5. Responsibility: Responsibility lies with the trader. Gains, losses, success, or failure is determined by the skill, determination and discipline of the trader.

6. Commitment: There must be commitment to placing every trade according to plan, even through the losing periods where every trade seems to end up a loser. Trading seems to throw up extremes of good times and bad times. One must not be over confident during the good times, and one must not give up in the bad times. There also must be adequate time every day to compare actual performances against the trading plan.

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You have a responsibility to be prepared mentally each day you choose to day trade.  Many traders shun the emotional realities of trading, and this aspect of trading is among the most important. Recent findings in scientific studies reveal, unequivocally, that a traders emotional state during a trading session may be the single most important factor in determining whether a trader has a successful day or loses money.

In my experience the best way to quiet a group of chatting traders is to ask them about their emotional preparation to trading.  For a variety of reasons, traders are reluctant to discuss how they feel, at the emotional level, during their trading.  Whether the root cause of the this phenomena is vanity, inability or reluctance to share emotional tendencies, or a societal norm for traders to be mentally “tough” is unclear.  What is clear, however, is the incontrovertible evidence that states that your mental and emotional state has a profound effect on your ability to trade.

In a past article I discussed outside factors like television, radio, and music that effect our emotional state, and in this article I will discuss internal emotional considerations each trader must conquer.  There is a feeling that some traders are gifted, that they are natural born traders.  It is my opinion that some traders have an emotional profile that makes them successful, as oppose to a technical style.  As a chaos theory trader, I am convinced the market is, at the macro level, random and difficult to predict.  At the micro level, certain patterns occur over and over.  That being said, most of the successful trading systems share some common characteristics and very little has occurred in the past ten years that we could consider revolutionary breakthroughs in trading technique.  To be sure, no trading style has in any way pulled ahead of the pack of mainstream traders.  Sure, we have new styles of trading, but the ultimate judge of trading successfully is profits and losses, and the new styles have done anything but disproved the long standing tenets of trading with their profits and losses.

So what kind of emotional situations hinder a trader?

Emotional attachments to a trading position are among the toughest to recognize and rectify.  For a variety of reasons, traders invest their emotions into a particular trade in the belief they are right, despite overwhelming evidence to the contrary.  For example, a trader may decide the market is going to go in a certain direction for a certain period of time and positions his trade to capitalize on this perceived winning trade.  Before long, the market begins to move counter to the trader’s theory, but the emotionally invested trader does not take corrective action because he is convinced he is right.  Despite his indicators telling him he wrong, despite the market price action that is telling him he is wrong, the trader has invested himself so deeply in his conviction he is right he rides a trade straight into his stops. (if he has stops)  When I think I know what the market is going to do, especially if it is contrary to what my chart is telling me, I know it is time to stop for the day.

What causes this phenomena?

The need to be right, basically.  The literature on this topic suggests there are more than one factor that contributes to emotional attachment to a given trade.  Losing trades are a part of day trading, and how you handle a trade at the emotional level will determine whether or not you can trade successfully.  You are not going to always be right, and an individuals ability to accept that he/she was wrong and move on to a new trade is essential.  It sounds very easy, but it’s not.  Many traders are unable to adjust if they are in a losing trade, it unnerves and rattles them.  I have watched many traders battle this problem and most are unable to conquer emotional investment in a trading position.  For some, their need to be right simply overwhelms the intellect they possess.  While emotional investment in trading positions is not necessarily the end of a traders career, it takes a considerable amount of work to overcome.

Another serious emotional issue with traders is overconfidence, especially on a day with many winning trades.  This is a tough issue to deal with.  As you make good trades throughout the day, you become convinced that any trade you make will be a winner.  It’s a great way to give back all you have earned, which is not uncommon.  This usually occurs on a trending day when nearly all your trades will be profitable if you stay in the trend.  Of course, the next day may well be a trend in the opposite direction, or a consolidating market, and your overconfidence becomes a distinct liability.  You must be nimble in your trading, and not lock in on ideas to the point where you are not able to properly focus on the market.  Overconfidence is terminal to a trading account.  You must stay a student of the markets, not the master.  There are few masters of the market, just observant and nimble traders.

In summary, we have looked at the effects emotions have upon trading futures.  Many traders tend to become emotionally involved in the positions fail to adjust to the trading situation.  They have an intense need to be right.  Other traders become confident, which is a great attribute to have if you are in a sporting contest with another opponent.  On the other hand, the market is inanimate and overconfidence is poorly deployed in the trading environment.  Your ability to recognize the emotional demands of trading will, more or less, be a major contributor to your success.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.

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Day traders are those people who deal with shares on day to day basis with the sole objective of making some quick easy money.Traders are those short term buyer who indulge in buying and selling of shares and stocks and keeping a close watch on the price fluctuations of the market.

The traders generally close up the transactions at the end of the day so that their risks are minimized for the next day. Nobody knows how the market will open the next day and what will be the prevailing price of various securities. This a way of managing risks when the stock market shuts for the day. At times if there are great fluctuations they may even close the deal within minutes of buying the shares and thus making a quick profit.

There are estimates that about 2, 50,000 people operate from home.

However in spite of tall claims no one really knows whether the day traders finally make any money or not at the end of the day. Nobody really publicly announces his balance sheet at the end of the day and there is no available statistics regarding the number of day traders operating in the market.

Most studies have pointed you the fact that the traders on the whole lose money in the stock market but there are stray instances of successful trading too. The percentage of day traders losing money is higher in cases of those who are new to it. Apart form this there are some firms where day traders lose money for unknown reason. Only a small number of firms make little money and a very small percentage of day traders actually make big money.

Statistics also point out to the fact that those day traders who operate from home tend to lose more money than those who operate through a professional stock broker’s firm.

Making money by day trading has nothing to do with intelligence. No matter how much you study the trends and the various financial reports, it is purely a matter of luck in the end. There are so many unforeseen factors which influence the value of stock that no one can accurately predict its future swing.

Paul Ingersole is an Australian based business person who enjoys writing.Paul discovered a great system that makes small continuous recurring profits using the internet.You can see Google Sniper at Paul’s website

http://www.guruswipe.com

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