It's time for my mid week educational post.
Today I want to talk about the three pillars needed by all traders for success in the markets.
This isn't just the forex market either this applies to trading all financial markets.
Be it forex, crypto or stocks, so lets get into the the three pillars of success.
PILLAR NUMER ONE- STRATEGY
You MUST have an edge before entering the markets.
When will you enter the market?
When will you close?
What % per trade will you risk?
What pairs will you trade?
What timeframes will you trade?
If you don't have any answers to the above you are entering the markets blind and it will end in tears.
In trading, edge is your ability to select trades that perform better than random.
You can think of edge as the process used to generate and execute entry and exit signals.
Do not enter the markets until you are working a strategy with a proven edge.
The stronger your edge, the more profitable youโll be.
PILLAR NUMBER TWO- RISK MANAGEMENT
We can't avoid the white elephant in the room on average 80% of trader lose money or fail in the markets.
Some say its even more and you will become one of the stats if risk management isn't applied to your trading.
Some of the reasons losses like these exist in trading is down to the fact that aspiring traders donโt put any thought into their risk management tolerance.
We only ever see the upside when we start out and many never do anything to protect themselves from potential losses.
If you never made any money as a trader before or entered the markets before ask yourself the question below before starting out.
How much money am I comfortable losing?
Your first priority with trading is to stay in the game
So manage your risk per trade and total risk at anyone time.
Understand probability and ensure you are comfortable with your maximum exposure at any one time.
Understand the maximal draw down in your testing when finding your edge.
That way it will help you see what a potential losing run you could experience.
PILLAR NUMBER THREE- TRADING PSYCHOLOGY
We need good trading psychology to keep a balanced mind whilst trading, this stops your emotions leading the trade.
The trade outcome cannot be controlled and you MUST detah yourself from each trade outcome.
You will know when your trading emotions are nailed on when you do not 'FEEL' anything when trading.
If you have 'emtions' with your trades or when trading simply reduce your risk further.
Two emotions that need particular attention are GREED and FEAR.
You need discipline in controlling these two emotions or you are going to end up making losses as a trader.
We all been there we make a few profits confidence kicks in and then greed before you know it your in whole world of pain.
We all be there at some point with fear to and not executing trades due to a fear being in our trading game say from a poor run of form.
Emotions will always be there we are emotional beings, but they will need controlling in order for you to be a successful trader.
Practice developing the emotional control needed to trade successfully.
FINAL THOUHGHTS
Trading requires 100% commitment most see it as a hobby to start with but this can be costly hobby if commitment to trading is lacking.
The sole reason most get into trading is to make money. One purpose of a business is to make money.
Treat trading as a business at the end of the day it's your personal money that's on the line.
Every trader needs to have a disciplined approach to the markets. Following these three steps will help you.
In order to be a successful trader and run a profitable account, it is essential that you have these three pillars in your trading.
Thanks for taking the time to read my idea.
Darren ๐
Today I want to talk about the three pillars needed by all traders for success in the markets.
This isn't just the forex market either this applies to trading all financial markets.
Be it forex, crypto or stocks, so lets get into the the three pillars of success.
PILLAR NUMER ONE- STRATEGY
You MUST have an edge before entering the markets.
When will you enter the market?
When will you close?
What % per trade will you risk?
What pairs will you trade?
What timeframes will you trade?
If you don't have any answers to the above you are entering the markets blind and it will end in tears.
In trading, edge is your ability to select trades that perform better than random.
You can think of edge as the process used to generate and execute entry and exit signals.
Do not enter the markets until you are working a strategy with a proven edge.
The stronger your edge, the more profitable youโll be.
PILLAR NUMBER TWO- RISK MANAGEMENT
We can't avoid the white elephant in the room on average 80% of trader lose money or fail in the markets.
Some say its even more and you will become one of the stats if risk management isn't applied to your trading.
Some of the reasons losses like these exist in trading is down to the fact that aspiring traders donโt put any thought into their risk management tolerance.
We only ever see the upside when we start out and many never do anything to protect themselves from potential losses.
If you never made any money as a trader before or entered the markets before ask yourself the question below before starting out.
How much money am I comfortable losing?
Your first priority with trading is to stay in the game
So manage your risk per trade and total risk at anyone time.
Understand probability and ensure you are comfortable with your maximum exposure at any one time.
Understand the maximal draw down in your testing when finding your edge.
That way it will help you see what a potential losing run you could experience.
PILLAR NUMBER THREE- TRADING PSYCHOLOGY
We need good trading psychology to keep a balanced mind whilst trading, this stops your emotions leading the trade.
The trade outcome cannot be controlled and you MUST detah yourself from each trade outcome.
You will know when your trading emotions are nailed on when you do not 'FEEL' anything when trading.
If you have 'emtions' with your trades or when trading simply reduce your risk further.
Two emotions that need particular attention are GREED and FEAR.
You need discipline in controlling these two emotions or you are going to end up making losses as a trader.
We all been there we make a few profits confidence kicks in and then greed before you know it your in whole world of pain.
We all be there at some point with fear to and not executing trades due to a fear being in our trading game say from a poor run of form.
Emotions will always be there we are emotional beings, but they will need controlling in order for you to be a successful trader.
Practice developing the emotional control needed to trade successfully.
FINAL THOUHGHTS
Trading requires 100% commitment most see it as a hobby to start with but this can be costly hobby if commitment to trading is lacking.
The sole reason most get into trading is to make money. One purpose of a business is to make money.
Treat trading as a business at the end of the day it's your personal money that's on the line.
Every trader needs to have a disciplined approach to the markets. Following these three steps will help you.
In order to be a successful trader and run a profitable account, it is essential that you have these three pillars in your trading.
Thanks for taking the time to read my idea.
Darren ๐
