Posted on March 15th, 2010
by Rapid Forex
Two weeks ago I discussed the 7 habits of a forex winner so you don’t become a forex loser (yeah, I’ve read some Steven Covey 
).
While there are several concepts that I’ve reinforced repeatedly on the rapid forex blog, the ideas below are simple and need to become part of your mindset as a forex trader in order to become successful.
As a forex trader, you will have the highest chance of success if you believe in – and follow – the following principles:
- A successful forex trader educates themself on how the market works.
- A successful forex trader understands how to find and place a trade.
- A successful forex trader trades only when solid equity management allows.
- A successful forex trader NEVER trades without a protective stop loss order.
- A successful forex trader never chases the market.
- A successful forex trader patiently awaits solid trading opportunities that meet his trading criteria and passes on trades that do not meet his equity management requirements.
One of the fundamental reasons that 90 percent of Forex traders fail is that they do not follow the rules. It is crucial that you educate yourself on how to place sound, educated trades, this is why you’re at the rapid forex trading blog
But you can have all of the education in the world and if you don’t follow the rules you have learned, you will fail. Do not get emotionally attached to the money invested in a trade (that means, in part, that you should not trade more than you can afford – practice sound equity management).
Do not get emotionally attached to a trade. Psychologists have found that many people who lose big in the markets held on to losers for too long – you can prevent this by setting appropriate stop loss orders with every trade.
Remember that every trader loses sometimes. It’s how we deal with losses that allows us to ultimately be successful! The ones who win overall are those who trade the Forex in an educated, methodic way.
Posted in
Forex Trading Mindset
Posted on March 2nd, 2010
by Rapid Forex
The last 4 blog posts have taught some of the major candle patterns worth knowing as a forex trader. And with 8 posts in the past week about candlesticks, we’re almost ready to move on to support and resistance.
As a wrap up for now (there’s more to learn about japanese candlesticks later), I want to give you some rules for trading candlestick formations.
No matter what forex candlestick formation or other indicator you are basing your trade on, you should follow several rules to ensure that you are making sound judgments when you are trading, that you are trading based on educated reasons and always while practicing sound equity management.
These rules apply specifically if you are trading a morning star , evening star , tweezer top , or tweezer bottom candlestick pattern:
- Find all of your support and resistance lines.
- Find and draw all of your trendlines.
- Find a convergence (a location where there is more than one reason for the market to bounce, such as a trendline or a Fibonacci sequence).
- Trade in the direction of the trend (“the trend is your friend”).
- Wait to trade until the market bounces at the convergence to make your trade.
- Buy at the opening of the next candle after the morning star or tweezer bottom has fully formed. Sell at the opening of the next candle after the evening star or tweezer top has fully formed.
- Set your protective stop loss order at the last level or resistance (if you are trading an evening star or a tweezer top) or at the last level of support (if you are trading a morning star or tweezer bottom).
- Do not trade morning stars (evening stars) or tweezer tops (tweezer bottoms) if prices are in consolidation (the rapid forex blog will discuss this in more detail in future blog posts).
In my next blog post, I’m going to start explaining support and resistance (this is the real meat-and-potatoes of forex trading).
Posted in
Japanese Candlesticks, Technical Analysis
Posted on February 26th, 2010
by Rapid Forex
To help you completely understand the Forex game, I’ve been blogging about some of the forex basics. Before you can start surfing the forex, you need a thorough understanding of proper equity management principles.
Staying in the Game: Practicing Sound Equity Management
It is important before you begin trading to learn how to manage your equity.
A large part of sound equity management is managing your risk.
The most important way to manage your risk is to set a profit limit order and a protective stop loss order for each trade you place. Your trading software will most likely not require you to set a protective stop loss order and a profit limit order each time you enter the market, but doing so is crucial to consistent successful trading.
For each market order you set you will need one stop order and one limit order.
That means that every entry will have two exits.
If you you enter a long position (you buy) and you set one exit point higher than the entry price (that is your for profit limit order where you will sell if the prices reach that point) and the other exit point you set lower than the entry price (that is your stop loss order where you will sell if the prices reach that point).
This way, you minimize losses if you were wrong about the trade, and safeguard gains if you were right.
If you enter a short position (you sell) and you set one exit point above the entry price (that is your stop loss order where you will buy if the price reaches that point) and the other exit point you set lower than the entry price (that is your for profit limit order where you will sell if prices get to that point).
By setting to exit points for every entry you will minimize losses if you were wrong about the trade and safeguard gains if you were right.
When you buy above the market or sell below the market your order is a stop order.
The reason is this: if you place an order to buy above the market that means that your market order is a sell. Your order to buy above the market is a stop order, which you set to minimize your losses should the market not go down, as you bet it would.
Setting a buy order above the market (a protective stop loss order) means that in each trade you make you will know in advance how much money you could potentially lose – because you do not have to place a market order to buy if the trade is going badly; that order is automatically filled when the market reaches that higher prices, it stops you out there.
In my next blog post, I’m going to talk more about market orders. Keep reading and you’ll soon understand the basic rules of the forex market enough to start trading like a super successful rock-star (we’ll get it it, stay tuned )
Posted in
Forex Basics
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