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Published On: Mon, Dec 3rd, 2012

Why You Need a Forex Methodology

When traders read or hear about a new Forex secret, they tend to believe that it is a new indicator, a new system or some new psychological or emotional trick that will lead them to the Holy Grail of trading.  Aside from the fact that such an Holy Grail is totally elusive, there is a much better and more successful way to trading profitably than the next best indicator, robot or emotional trick. This REAL secret to trading success is something that many traders have used to achieve success not only on the Forex market but also to trade stocks, commodities, options and futures.

Whether you are trading a strategy based on indicators, fundamental analysis or using a robot, there is one item that is consistent to all these techniques, which is YOU! One of the mistakes that new traders make is that they think they can learn a strategy or activate an automatic solution and then simply sit back and watch the money roll in without further participation by themselves.

What such novices fail to into account is the emotional and psychological aspect of trading.  While learning a strategy or the best usage of a robot, many become caught up in what is known as the “right side” syndrome.  This mindset involves the trader always studying the right-hand side of a trading chart in order to identify the entry and exit points of new trading opportunities.

However, as real-life trading does not work in this way, this method of analyzing can provide a false sense of success.  Without doubt, you must develop a very good understanding about a strategy or an automated solution and how their key components function. However, in order to attain long-term trading success with any trading market and especially with Forex will require a trader to gain the ability to not only see trades but to also believe that they will work.

Consequently, experts have developed over the years a very simple, but powerful formula that when applied to any strategy or robot can turn it into a successful trading tool. Again, traders often make the mistake of spending an enormous amount of time researching into what are the best strategy, indicators and robots that are capable of generating the optimum trading results.  Also, many novices fall into the trap of believing that if one trader has achieved success with a strategy or a robot then they also can as well.

One shortcoming that is prevalent with most present-day trading strategies and robots is that they are not supplied with instructions that demonstrate how to gain optimum results from using them.  These tools are, of course, nearly always presented with comprehensive installation manuals explaining how to install them and adjust their key parameters.  However, new users are often not shown how to achieve the best results from using their new tool or how to integrate them successfully into a trading strategy.

The formula that has been developed in order to overcome these problems and facilitate this implementation is again simple but very powerful.  This methodology will allow a trader to be successful with any proven Forex strategy or robot.  In addition, this formula can be effectively applied to all other security markets that exist today anywhere in the world.

Most traders certainly understand the first part of the formula, which is to gain a clear understanding about how a strategy or robot functions as well as learning how to tune them effectively by adjusting their key parameters. However, once they successfully complete this step, many of them will then start to trade straight away. Unfortunately, this is a serious mistake.

Instead, the major objective of this step of the formula or methodology is to encourage you to learn your trading strategy so well that you will be able to recite its main trading rules by memory. For instance, these rules should include well-defined entry, exit and stop levels for every position that you intend to open. Consequently, in order for you to achieve trading success your saying will be memorize, memorize, memorize!

This is why your rules need to be spelled out clearly in words. The successful trader emphatically records ALL aspects of their trading rules and business practices in writing.  By doing so, this essential part of the methodology enables them to see their trades in their mind’s eye even before they initiate them. That is one of the main reasons using a methodology.

 

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.

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