There’s a particular sound that’s simply music to my ears. A distinct “boing-a-boing” which fills me with such delight that I practically jump off my seat and punch the air with joy. Have I gone insane? Certainly not – you see, the boing-a-boing denotes yet another profitable forex trade from my laptops trading software. It’s a boing-a-boing that confirms that my trading capital has grown just that little bit more – and my goals of being financially secure before old age are just that little bit closer.
It wasn’t always like this – at one time my trading was sloppy. All over the place. In fact I burned through my first trading account within months. How I wish I knew about the below before I made my first few disastrous trades:
- Practice Strict Risk Management – Look, as traders we’re not looking to gamble. Serious traders – the ones who make real money, day after week, after month after year…they understand risk. Risk management simply refers to taking some precautions to protect your trading capital. Ultimately, you will set your own rules about how you risk your trading money – and this will largely depend upon your own appetite to take on risk. Many traders dislike risking more than 2% of their entire capital on one single trade.
- Never Ever Trade To Pay Bills – There are of course full time traders who trade for a living, and if that’s your ultimate aspiration then go for it! However, when I say don’t trade to pay bills, I mean never enter a trade just because you need the money from a winning trade. The markets just don’t work that way, and you’ll almost certainly discover to your cost that when you trade desperately, you’ll lose more times than you win.
- Trade With A Dummy Account First – I bet you’ve worked like a donkey to put up your trading capital. If you have, believe me it’s a morose and gut wrenching feeling to see it whittled down, losing trade by losing trade. Why go through that agony? Especially when just about every broker around now offers a dummy trading account where you can practice trading in absolute market conditions – only with fake monopoly money. It’s a brilliant way of trying. Testing. A way of getting your mistakes out of the way before they matter. Then, when you’re consistently making profits with your dummy trading – you’re ready to move onto the real thing.
- Capital Preservation – You’ll hear this term a lot as you venture further into your forex adventures. Capital preservation is all about making sure you protect your trading capital. Without it, you’re nothing. With it, you live to fight another day. That’s why risk management is so critical to your success as a forex trader. It sets down certain rules to follow to make sure that you cannot lose more than a certain amount of your trading capital on one trade.
- Control Your Emotions When You Trade – There was a character in Star Trek Next Generation called Data The Android. While Data aspired to be human, and longed for emotions, one of his most useful traits was the ability to carry out all his duties with absolute impartiality, and free of emotion. When you trade the forex, you need to become like Data. Never let emotions like greed and fear overcome your judgement. See a trade for what it is, not what you want it to be. Because emotions will really impair your trading judgements, and the best traders – the ones who crank out 30, 50, even a hundred pips without even batting an eyelid… they are just dead inside. And so should you be.
So, have a go. Trade fearlessly. But, as you make your way through the maze that is the forex trading world, please do keep these 5 tips in mind. They might just help you hear some sweet, dulcet boing-a-boing sounds for yourself.