Three key elements to transform you into a fully professional Forex trader
Imagine an equilateral triangle. Three equal sides, existing as a whole together. Occasionally one might pull the other two. One side can grow while the other two shrink. The triangle can transform into an acute or obtuse triangle before settling back to an equilateral one. If you can imagine this, you have essentially just visualized what it means to be a constantly evolving and adapting total operator.
Each side of the triangle makes up one third of the elements necessary to be a holistic trader. One side is technical knowledge, the other is risk or Money Managementand the third side is the mental or psychological aspect trade
To fully perform as a holistic trader, you’ll need to be good at all three of these elements and have them all fine-tuned to fit your trading personality. All three work with each other and give you a complete, total and healthy environment to trade. One cannot move without affecting the other two. They are separate but always connected.
The technical advantage
The first part of the triangle is your ability to see, read and interpret the market. For maximum success, this must be a foolproof methodology that is clear and consistent to you. It includes your business analysis, market analysis, and how you view and break down market events. This can be done in the form of charts or any other way you prefer to collect information for analysis. This edge allows you to plot the prices and events you want to place your trades on.
Also included in this technical knowledge is your trading strategy. A suitable Commercial plan will allow you to have a profitable advantage and will allow you to apply all your knowledge gained from analysis to trade successfully.
The last part of the technical angle is to be open and allow continuous learning from the market. You must be open to continuous research based on new events that will arise from time to time. The market is always changing, so you must be prepared to continually adapt.
You can use the %ers Trading Plan Template PDF to help create and manage your own plan, just like professional forex traders do. Download it here- PDF business plan here.
Money Management Advantage
The second key to fulfilling your goal of becoming a professional Forex trader is Risk management. The trick here is to remember that whatever you do, you should always plan your action according to the worst case scenario. To inoculate yourself against risk, you need to have as many protections set up around your trading habits. The market is well known for throwing surprises and spoilers at us at any time. Implement your defenses early on in your business plan.
It is also important to always keep in mind a preferred RRR: risk-reward ratio. Always enter with the lowest, tightest risk weight until you get a good edge in your daily trading routine. Take very small risks. Sure, you’ll miss out on some opportunities, but when you do, your payoff will be that much more impressive. This will make up for any trades you might have missed.
If you take more risk per trade and enter the market early, you will make more trades, but you are also likely to incur more losses. The multiple reward ratio on a broader risk is less rewarding. Any way you look at it, patience pays.
For exampleLet’s say you have a 100 point range in the market. You could risk 5 points on that trade to make 95 points. Your risk-reward ratio here is 95 divided by 5, which is 1 to 19. If you take the same range and let’s say you risk 10 points for this 100, that’s 90 divided by 10, which brings it down to just 9. By just changing 5 points in his risk, his risk ratio was reduced almost 2 times. If you use this type of risk management consistently, your reward will be significantly better than if you trade recklessly without patience.
Finally, learn what the best odds are for you. Where are the inputs with the least probability of risk? This will give you a huge advantage in how you manage your risk. It’s not just about when, it’s also about where. This is where your analysis comes into play in a big way.
Trading Psychology Edge
This is incredibly important, mainly because it is intangibly unique to each trader. There is no general rule here, rather it depends on the mind of each trader. It takes a long time to learn control your intangible emotional elements. Knowing your strengths and weaknesses and learning to take advantage of them is what will give you the power and control to use them in ways that do not negatively interfere with your operations.
An action plan will also be extremely helpful here because hopefully it will be based on a personality map of your unique mental characteristics. You need to know how you will react to all the events that you will potentially face while trading. From there, you can form ways of how you will react to all of these situations. A well thought out action plan based on your unique psychological state gives you a huge advantage when trading. Without it, you could quickly find yourself lost.
Another important aspect of the mental side of trading is being self-aware and approaching trading without ego.. There’s no need to impress anyone, just keep your bank account on the bright side. Eliminate your ego and look within yourself, be honest with yourself and truthful, and the market and your actions in it will become clearer.
Assemble the holistic trio to become a professional Forex trader
Once all the elements are put together, the work still doesn’t stop. To remain effective, you’ll need to modify certain parts over time, all the time. Go deeper, do more research, engage in more experiments, and cultivate more awareness. Keep adding everything you learn minute by minute to your plan. The best business plans are never finished. They need to constantly evolve for you to survive in the market.