The most important part of trading!

Online trading is one of the most unique way to make money online and if you can gained the right knowledge and develop the character that successful traders have then your own your way of amassing wealth in this business, but on the negative side trading is also the hardest profession on earth because statistic shows that the ratio between winners and losers is very bad, in fact some say 95% of traders fail in this business, whatever the real figure is the fact remains that trading is indeed a very tough nut to crack.

So, what is really the reason why majority of traders fails in trading? this is a very important question that a trader must ask and answer before he continue his trading activities otherwise he or she will just end up in a cycle of losing money. We all know that successful traders needs 3 components in order to succeed,these are a good trading strategy, implementation of risk management then handling well of our psychology. Of the three mentioned it is important to note the degree and order of which component you will give importance first in the learning phase of your journey as a trader because if you mess up with the order you will end up in the losing bracket in this industry and that is particularly is happening to majority of traders.

I read e-books, watch and listen different seminars and talks from trading gurus and experts perhaps a hundred times or even a thousand times, yet I still struggle to achieve the profits that I dreamed about 8 years ago, I may not be a bad trader now compare a few years back but I also know that it will still take time before I can consider myself a professional trader, but for sure I will achieve my goal soon.

Looking back from all of my experiences in this business that most reason why I failed in my trading is because of  "BAD PSYCHOLOGY", it is not about risk management and trading strategy that cause a traders to fail but majority of traders never realize it or perhaps realize it but ignores it, in fact I analyzed all my wiped out account before it is not really caused by a bad trading strategy or poor risk management, a trader cannot implement a good strategy and risk management if he has bad psychology so before a trader think about what strategy to use or what risk he will use in his trading, it is better if he gives emphasis first in learning the psychology of the market so that he wont suffer the same fate with the majority of traders. Knowing the importance of how our mind reacts to different market conditions and the degree it brings to our trading every time we commit trading mistakes is a vital point in once trading. Learning the psychological aspect in trading should be given much emphasis in traders education first before learning other stuff. In fact if I draw a relevance figure of the 3 components in trading I would enclosed trading strategy and risk management inside psychology.

Different ways to profit in online trading!

Nowadays there are different ways to profit in the market, when online trading just introduced in the market way back in the 90's, their is only one way to make money in it which is to learn how to trade in a profitable manner in a consistent basis, but the problem in this setup is that becoming a profitable trader is just a pain in the ass and may take years of constant practice before you can fully understand the in and out of the market.

Most traders shy away in trading after a few months of losing money in a constant basis, so brokerage firm try to innovate the market by introducing PAMM account or copy trade program so that traders has the chance of making money right away without really going into a lot of practice and learning, all you have to do is just to chose and pick a profitable trader and copy his trade in your account so that you can also profit from his strategy.

Another way to make money in the market is to use a trading robot or EA(expert adviser), instead of learning how to trade manually aspiring traders can just chose and purchase a trading robot and run it 24/5 in his PC or in a VPS(virtual private server), creating a trading robot is also one way of automating your current manual strategy so that you wont have to spent hours of monitoring your trading chart looking for trade opportunities.

Whether a trader uses manual strategy, copy trade or use a trading robot it is important that he/she must test a particular strategy before using it in live account to avoid excessive lose of money.

Understanding Trading Psychology!

Majority of online traders fails in the long run,statistics reveal that only a few percentage becomes a successful trader, why? is it due to a bad strategy? or poor risk management? well at some point it maybe true that a trader fail because of a bad strategy or poor risk management but I believe that majority of traders fails not in this aspect, traders fail because they become indiscipline in following their trading strategy.

There are thousand of good strategies circulating in the net and most of this are free, in fact to be a winner in trading we dont need those complex strategies, a simple combination of existing free indicators in our platform or by just using a price action strategy can make us a profitable trader but why is it that the opposite happens? that is because majority of traders becomes indiscipline in following their strategy especially if they bump into successive loses. Human mind are programmed to be a winner since we are born in this world and if we suffers losing trades we instinctively want to get out in such a situation that can lead us to altering our trading strategy that will resort to discretionary trading thereby abandoning our strategy, being discretionary in trading can lead to frustrations and bring more losing trades.

Being a profitable trader means being discipline and focus in following a particular strategy in a consistent basis, we cannot just shift or change strategy whenever we wanted, every action in trading should be well planned and tested otherwise we will lose money over and over again.It is very important that aspiring traders understand and learned trading psychology first before anything else, it is the very foundation of how to become a discipline trader which is a must in the trading world.

The importance of risk management!

Risk management in trading is a must, it will be impossible to succeed for a trader to just keep on opening trades without giving emphasis in controlling the risk in every trade he/she open, trading is a winner minus loser game, no matter how good a particular strategy is their will always time for draw down period where such strategy will have its losing moments and if you are not taking care in controlling those loses it will possibly wiped out your account soon. Perhaps every trader read and heard about risk management a thousand times yet majority of traders ignored this aspect somewhere along the way during trading, why? its because of a bad psychology, knowing is something but doing is another thing. In my opinion trading psychology is one of the most important aspect in trading that should be giving much importance in a trader's education.

Choosing the right trading strategy!

There are thousand of trading strategy that are circulating online, some are free while others are expensive trading system. But first it is very important to know what particular strategy you will use in your trading so that you can be have better chance of making profits,trading is a serious business and it requires time, dedication and commitment. There are  common types of trading strategy that is used by traders and each of this approaches requires time for a trader to be able to successfully utilize a particular strategy.

Scalping -  this type of strategy requires more time spent looking on your trading chart to spot trading opportunities and it will be a tiring process in the long run.Most traders use smaller time frames(normally 1 minute to 15 minute chart) when using this kind of trading approach. Profitable trades using scalping strategies normally achieved between 1 minute to 1 hour. Average profits from 1pip to 15 pips.

Intraday Trading - traders that uses this strategy uses higher time frames to spot trading opportunities(normally on a 15 minute to 1 hour chart) and profitable trades are expected within the 24 hour period, but there are also cases that a trader keep a losing trades beyond the 24 hour period until it becomes profitable. On the average expected profits between 20 pips to 75 pips.

Swing Trading - I think majority of traders especially the big players in the market uses this kind of trading approach, it uses higher time frames in spotting trading opportunities where big move of the market can occur most of the time.This type of trading is stress less and more relaxed. Most traders using this approach looks for trade opportunities only in the higher time frames(from 1 hour to daily chart).Trades normally exists for a couple of days until it hit target profit or stop loss. On the average expected profits between 80 pips to 250 pips.

It is important that an aspiring trader pick the right trading approach or strategy so that he can dedicate time for his trading activities, it will be harder to make profits in your trading if you cannot be looking on your trading chart all the time, missing one or more trade setup can give different trading results in the long run. If you go to work or have some important activities that you do in a day to day basis then scalping is not for you, as a trader we must choose a trading approach that suits our daily schedule so that it can yield better trading results.
 

Things you should know in order to succeed as a trader!

Trading is a tough profession, its as tough as nail that it can took you years of frustrations and constantly losing money if you dont fully understand and wont give emphasis on these three important aspects of trading, in fact it is considered to be the foundation in becoming a consistent profitable trader.In order for a trader to be successful he or she must know the importance and relevance to each one of the three.

Trading Strategy - basically it is a set of rules that a trader must consistently follow so that he can be profitable in a span of time.It can be composed of a combination of indicators, patterns or price action technique.

Risk Management - Trading is all about dealing with money and it is just right that we have to control the risk on every trade so that we can always have much better chance of survival and recover our losses. Most newbies and struggling traders does not give much emphasis about this aspect, it is a fact that market gives us random results regardless of how good our strategy will be, so if we risk more their is a big possibility that you will be hit by a series of losing trades that can eat up your capital easily if you risk big in your trading.

Trading Psychology -  A trader can have the best strategy in the world, but if he cannot handle his emotions or the pressure during trading it is impossible for him to be successful, trading will be more successful if we trade without emotions but as humans it is very hard if not impossible to suppress or ignore emotions during trading, that is why majority of traders failed because they just cannot consistently control their emotions during trading, most professional consider trading psychology is much more important than those two mentioned.

Each and every aspect has its own importance and a trader cannot succeed if either any of them is missing.

My Journey As A Trader!

I am an IT technical support by profession and out of curiosity and the desire to find other means of having extra profits online I started to search any viable way that somehow can provide me faster way to gain considerable profits. Of all the opportunities I discovered, it is online trading that give me the most curiosity because it looks easier to start and it promises great profit potential.So by curiosity July 2008 I open a demo account with etoro broker, at first I just randomly open trades and it gives me some winning and losing trades that in the end it only lead me to more loses, 2 months after I play the demo account I realize that their must be better and proper way to trade the market, so I start searching learning materials about the basics about trading and I begin to understand trading.By that time I was able to bump a no deposit bonus of broker Marketiva(now AGEA) at that time I was able to start trading using their own platform but obviously my knowledge is not just enough to conquer the market so I dig deeper on my studies until such time that I became very passionate in learning different manual strategy and even some EA's jumping from one strategy to another but still it continue to give me more loses and nothing seems to be working right in my trading. Great efforts has been exerted but still I am still very far of becoming a profitable trader.

A year has passed and my trading still did not move in the direction I expected, so I read more ebooks about how to properly conduct online trading particularly the FOREX market, then I found out that there are three pillars of becoming a good and profitable trader which are good strategy, risk management and trading psychology or other may consider it proper way to handle your emotions.But to know those 3 is just the beginning because I found out that implementing those mentioned is just almost impossible to achieve along the way and that it will make most trader get stuck in the losing end all the time.Five years has gone by, still becoming a profitable trader remains a dream and I now fully understand that making money in trading is not as easy as what marketers is trying to project 5 years ago.While it is true that it is easy to join in forex and it has great profit potential but on the other end statistic tell that only around 20% or even less of traders makes money in a consistent basis in trading.

Online trading especially in FOREX market is not an easy thing to do and perhaps requires years of constant  practice and learning until such time that your psychology is aligned to the market and perhaps that will be the time that a particular trader will start to reap the benefits of this business, if a trader is really serious in becoming a successful online trader he must give emphasis first in learning all the basics about trading before spending money for trading in such way he can minimize the loses.Having the right knowledge and experience will make an individual a better and profitable trader in the long run but it takes a lot of effort and commitment to achieve such feat.

Introduction

This blog is created to enable aspiring newbies as well as struggling online traders be able to assist in enhancing  their knowledge and understanding about the business of  online trading. All the ideas and knowledge that will be shared in my succeeding posts are product from years of experience as a retail online trader way back in 2008 until present, I will try to write as specific and straightforward so that the reader will exactly know the pros and cons about online trading,specifically the FOREX market. I am not really a good writer but I will do my best to create sensible and useful content, see you on my next post!