Two essential skills you must have if you are planning on being a winner in the FX market are (1) self control and (2) risk control.
Two essential skills you must have if you are planning on being a winner in the FX market are (1) self control and (2) risk control. If you manage to rein these skills in then you have a better chance at being a good FX trader as opposed to being average or failing.
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The most important of these two skills to master would have to be risk control and setting your account up the correct way to manage risk is relatively easy. You need to set up in such a way that you can compare the risks and rewards for differing stocks, be able to calculate the many angles of money management as well as spend time researching all this. It is said that many professionals would spend up to a third of their time covering the above issues.
The professional trader would then, after considering all the above, leave well alone those stocks that he concludes have risk parameters that do not suit his trading.
On the other hand, the average trader or one who could be classed as setting themselves up for failure would spend practically zero time on risk control. This type of trader will probably make decisions on their previous trade and conclude that because it went well then they’ll double down on their next trade, they may even decide that because the previous trade didn’t go well then they’ll give a wide berth to the next trade.
They have no system to understand the risk and take a more informed decision. Whatever this type of trader decides, skipping a trade or doubling down, then they are making the wrong decision each time. They do not understand the basic principal of trade management, they have let their gut instinct control their decisions to their detriment. They have not grasped the simple fact that you cannot let your last trade dictate what your next trade will be. To be successful they need to get a system in place that will help them manage and understand ‘risk control’ otherwise they are setting themselves up to fail.
Which brings us onto the second skill which is considered harder to implement or quantify. However, what is paramount here is maintaining this, is that they should set up an accurate system of recording their trades by keep quality trading records.
It is a common fact that of all the interviews given by professional or successful traders that they all have stated that they all had one thing in common. so irrespective if they were in the futures, options, long term, short term, man or woman. They all unequivocally say that the most important aspect of their business was maintaining excellent trading records. A good trader will always have an excellent set of record keeping of their trades.
On the other hand it is generally accepted that if there are no records of trades being maintained then that individual is likely a very poor, average trader. Which likely means that trader is losing a lot of money consistently. This means that those who are making money have perfected the skills required to be a consistent winner, the losers who are likely the majority have set themselves up to lose, therefore keeping the market alive for those winners to make money. So, if you want to be a successful trader then you’ll see from the above the areas you should focus on beforehand.
Get these two systems in place and maintain them at a very high standard and you have dealt yourself a good hand to play with.