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Successful Forex Traders vs. Unsuccessful Forex Traders

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:

1. A successful forex trader educates themself on how the market works.
2. A successful forex trader understands how to find and place a trade.
3. A successful forex trader trades only when solid equity management allows.
4. A successful forex trader NEVER trades without a protective stop loss order.
5. A successful forex trader never chases the market.
6. 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

Rules for trading trendlines

It’s Saturday morning and I just poured a cup of coffee. Even though I prefer trading days, I do like the forced break of having no forex trading with weekends off!

Today I’m going to give some quick tips about trading trendlines, then I’m off to the beach to surf some non-forex waves

When looking at trends, remember the following:

1. Draw your trendlines (inner, outer, and long-term outer). This will help you determine if the market is trending up or down, or if a trendline has been broken.
2. Locate the price at which you anticipate the market will bounce (at the trendline).
3. Find the last level of support or resistance to determine where to place your stop loss order.
4. Practice sound equity management. If you can’t afford the potential loss (the loss you would incur should the market reach your stop loss order), don’t make the trade.
5. Create a trading plan. Trade the plan.

Follow these rules and you’ll prevent yourself from lots of dumb mistakes. If you find that you can’t follow a rule, it’s telling you not to trade. If you can’t draw trendlines, anticipate a market bounce, find support or resistance levels, trade within proper equity management guidelines, or create a trading plan….

JUST DON’T TRADE!!!

The time will come when you can follow these rules and the forex will still be there.

Posted in Technical Analysis

8 Rules For Successfully Trading Candlestick Formations

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:

1. Find all of your support and resistance lines.
2. Find and draw all of your trendlines.
3. 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).
4. Trade in the direction of the trend (“the trend is your friend”).
5. Wait to trade until the market bounces at the convergence to make your trade.
6. 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.
7. 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).
8. 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