Three Easy Steps to Day Trading Success
Trading is a complex and multi-faceted process. Complexity can be overcome by putting in the hours to build a solid system. However, forex is not a pure science. I refer to it as part science and part art. The reason for this is that generally speaking investors are controlled by their emotions. They make investmente https://npfinancials.com.au/ decisions based on their beliefs, fears, hopes, and lust for profits. If all decisions were made on scientific grounds we may well have an efficient market, but they aren’t.
Forex trading should be broken down into three easy steps in order to succeed in overcoming the complexities and become a consistent and profitable trader.
Remove the emotional factor
Individual traders compete against themselves, not the market or other traders. If you are unable to reign in your emotions you will become your own worst enemy. The best way to remove emotion from your trading is to build a detailed trading plan. Your foreign exchange trading plan should outline your objectives, your beliefs and your approach to the market. It will also include details of your trading system. This should be a detailed report on what your exit and entry rules are and your risk management parameters. Once you have completed your trading plan it’s time to build your forex trading system. By building a robust and water-tight trading system you are removing the need to bring emotion into your trading. Without emotions getting in the way of your trading your chances of success will increase dramatically.
Back-test through all market conditions
Next, you will need to test that your system actually works and that it will generate the returns that you are expecting in terms of your trading plan. Be sure to test the risk aspect of your plan. What sort of draw-downs can you expect? Does it generate a steady equity curve?
It is important to note that back testing is only effective if you test in varied market conditions. Test over different time periods and in volatile, q