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Forex Trading Road Map, Free eBook
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Trading Forex like the World-class Investors: A Road Map to Success Only 5 percent of investors succeed in Forex trading! ▪ Meaning 95 percent of investors or the majority “Fail and lose from trading in the long run” ▪ How do five percent of investors do?
Forex Trading Road Map, Free eBook
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From our survey, it was found that ▪ All successful Forex traders have ever failed in that market, such as consecutive losses or wash during the bad time from an economic crisis. But what makes those people come back and succeed are… 1. Not giving up after failure 2. Intention to become an expert in this market 3. Applying an efficient a trading strategy 4. Strict discipline and risk management 5. Positive attitude and point of view * From our survey, we can derive the road map consisting of five steps as follows.
Forex Trading Road Map, Free eBook
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1. Solid foundation ▪ A solid foundation does not mean a lot of capital, but instead knowledge “is the most important foundation.” ▪ Many successful investors from Forex trading start with low capital, but they can grow up the portfolio from trading. Foundation knowledge includes 1. Understanding price mechanisms in the economy 2. Technical market analysis 3. Fundamental market analysis 4. Trading systems and principles of statistics 5. Principles of risk management
Forex Trading Road Map, Free eBook
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2. Good trading system ▪ A good trading system is not the most profitable trading system, but rather it is “a system which is suitable for each individual.” ▪ Because each investor has different financial goals and accepts the different amounts of risk, a strategy adopted and appropriate risk management model of each individual are different from each other. A good trading system is a trading system that helps an investor achieve financial goals.
Forex Trading Road Map, Free eBook
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All successful investors pay attention to a trading system.
▪ They spend a lot of time testing a trading strategy and keeping statistics to validate whether their trading system can help them achieve financial goals or not. ▪ In most cases, statistics will be collected for the past 3-5 years to gain a high level of statistical confidence.
Forex Trading Road Map, Free eBook
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3. Maintaining discipline ▪ After you have a good trading system, the next important factor is to maintain discipline by following that trading system. ▪ “Maintaining discipline” is probably the most difficult topic for most people, because naturally humans like to break rules and often do not control emotions. Remark ▪ Many successful investors do not trade frequently. ▪ This means they are patient to wait for the right time for trading. ▪ They are like predators that wait for the moment to catch a prey.
Forex Trading Road Map, Free eBook
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Did you know? ▪ Most of successful Forex traders “use a very simple trading system.” ▪ From an interview of world-class investors, we have never heard that they use a sophisticated trading system. ▪ Most of their trading strategy are simple but they mainly rely on risk management and they are well tested and measured in terms of statistics. ▪ The simplicity is another key part that helps those traders follow the system easier.
Forex Trading Road Map, Free eBook
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4. Psychology of trading ▪ A business perspective is crucial. ▪ There is a saying that “if you are a trader, “Loss is a part of doing business.” ▪ This is absolutely true, since no trader in the world can make a profit every time. ▪ The truth is that a trading system with a win rate over 70% is considered very good. ▪ The most important is risk management to overcome the drawdown of 30% in the long term.
Forex Trading Road Map, Free eBook
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A portfolio of world-class investors does not always make a profit.
▪ Even though those investors have a great trading system, there is inevitably a period of accumulated losses (drawdown) for every trading system. ▪ Their portfolio has ever experienced drawdown, but maintaining discipline by strictly following the system and risk management will help those return to be profitable again in the long run. Forex Trading Road Map, Free eBook
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How those traders view a draw-down situation? ▪ This is the difference between people who are successful in Forex trading, because they do not feel down in that situation. ▪ That is, even if they receive accumulated losses, they can maintain the discipline and follow the system. ▪ This is because those people trust in their trading system which is tested well, so they already know in advance what the maximal drawdown for the trading system in a percentage form is and whether the drawdown rate is not over statistics they tested. ▪ And when the drawdown is over, their portfolio will make s profit again. This positive thinking is a very important part of long-term trading.
Forex Trading Road Map, Free eBook
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5. Adaptation ▪ Successful investors are well aware that one day, as the market can change over time, a trading system which has been profitable for many years may fall down. ▪ They therefore have to measure their trading system every year whether it can work well under the current market conditions, and plan to improve or develop that trading system to deal with changes of market conditions. Forex trading carries a high level of risk and may not be suitable for all investors. Before you engage in trading foreign exchange, please make yourself acquainted with its specifics and all the risks associated with it.
If you want to learn more about Forex trading, please visit the website ForexNew.org
Forex Trading Road Map, Free eBook