Get started

Howtobesuccessful

How to be a Succesful Forex Trader Segemnt 3ABACK TESTING: Some traders find it helpful other do not. Back-testing is, imho, the most critical part of trading Back-testing the proper way, although arduous, provides incredibly valuable data. It is the Ditch digging of trading but well worth it. I have come to embrace back testing and reviewing my trades religiously and in this day and age of automation, I have found it best, for me at least, to go back to 2am est (when I start trading and scroll forward bar by bar looking for my set-ups, my entries and my exits. In fact, I spend more time reviewing and planing my trades than I actually spend trading. While this method is not for everybody and it is time consuming, I firmly believe it is well worth it for the following reasons: First and foremost, it builds confidence in your trading methodology. Seeing how your trades set-up, execute and finish while observing what the market does will allow you to stay in a trade when it is either taking heat or going your way because you will have "seen" it before. Second, it will allow you to build a statistical base for your trades. For me the 2 most important pieces of data that I look for are 1) DD (drawdown) and 2) PP (Pip Potential). This has allowed me to determine how much of a stop I usually need (point of no return for a trade) and how far the trade will run. DD, the Draw down, I find this information most useful as my position size is based on my stoploss. For example, I risk 2% of my capital per trade, so if my stoploss is 10 pips I can use a position size 10 times larger than if my stop was 100 pips. Obviously, the bigger position size the more bang for my Pips I am getting. I hope this helps and please feel free to comment and ask questions, I will continue this topic in my next post. Allen
by AGold54
2
How To be a Successful Forex trader Segement 2Have a Trade Plan Although most traders figure out pretty early on that they need a trade plan. They don't always know how to formulate it or what should go into it. Although a Trade plan can be go very much in depth, I will discuss what, imho, are the most critical components: First and foremost, it must fit YOU!! Any trade plan must fit how YOU want to trade as well as the time you have available to trade. when I first started trading, I wanted to be a scalper. However I had a day job which prevented me from trading the London and US sessions, so I had to trade the Asian Session, which is, for me anyway, not very conducive to scalping. So I developed a methodology that would trigger during the Asian session and usually hit it's profit target (or stop loss) during the London session. It was for the most part a set and forget strategy that I was comfortable with. I would urge any trader to find a methodology that they are comfortable and confident with and go from there. Second, A trade plan must give you exit targets, both good (Profit target) and bad (stop loss). I put this ahead of Entries because, I believe it is more important to understand both the risk and reward of a trade BEFORE you are in it. Third, Entry conditions, what ever your strategy is, you want to have a consistent way to trigger your trade. Fourth, the trade plan has to be repeatable. When you get to point where your trading is boring, that's is when you will the most productive. For example, in the chart above I have my "Type 1" trade, which I absolutely love and that is what I look for. If you look at my past posts, you will see that there are a lot of them and they are, after awhile, boring except that they generate MONEY!!! Fifth: Your trade plan should include a daily review. what worked?, what didn't? how can you improve? the illustration above is how I document my trades on a daily basis. I hope this post is helpful. In the next segment I will address back testing Allen
Education
by AGold54
9