Currency trading and the three things to focus on.
Currency trading can be frustrating, in fact, let me change that – very, very frustrating.
Trading forex is a business (and should always be treated like one), but it's like no other business on the planet.
With a regular job the hours you put in, at least to some extent, determine the amount you get paid, and similarly the harder you work combined with the more hours you put in, the more successful you're likely to be.
Not so, with forex where the relationship between time, effort and outcome is not as you might expect.
Spending more time in front of your screen doesn't necessarily lead to better results. It can actually lead to overtrading, increased confusion and anxiety.
Reading every news report or analysing every piece of financial data in an effort to understand the currency markets better will not help you make better decisions. Again, this leads to more confusion and with so many conflicting opinions out there, who should you believe anyway?
The outcome, which hopefully manifests itself in the form of consistent profits comes not from time and effort, but from three things:
Is it really possible to turn £50K into £1M? Over the next 36 months I'm going to find out by trading my personal account with full transparency.
Follow my 36-month challenge to turn £50K into £1M.
Read my blog here: https://stgforextvforexchallenge.blogspot.com
Subscribe on YouTube here: https://www.youtube.com/channel/UCyGySJ5IeDjq-DIJPU7nYvw
[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]
Trading forex is a business (and should always be treated like one), but it's like no other business on the planet.
With a regular job the hours you put in, at least to some extent, determine the amount you get paid, and similarly the harder you work combined with the more hours you put in, the more successful you're likely to be.
Not so, with forex where the relationship between time, effort and outcome is not as you might expect.
Spending more time in front of your screen doesn't necessarily lead to better results. It can actually lead to overtrading, increased confusion and anxiety.
Reading every news report or analysing every piece of financial data in an effort to understand the currency markets better will not help you make better decisions. Again, this leads to more confusion and with so many conflicting opinions out there, who should you believe anyway?
The outcome, which hopefully manifests itself in the form of consistent profits comes not from time and effort, but from three things:
- Having a trading strategy that over time gives you an edge. By an edge I mean the ability to win more than you lose over a given number of trades. This doesn't mean you'll have more winning trades than losing ones, but it does mean that your realised outcome on winning trades should exceed what you give back on your losers. For example – over 100 trades if I win £100 when I win and give back £50 when I lose, even if I'm right only 40% of the time I'll still make £1,000 [(40 x £100 = £4,000) - 60 x £50 = £3,000.]
- Sticking to the rules of this strategy, no matter what. Your edge will have a probability associated with it. If you break your rules even once this impacts your probability and could cost you dearly. Breaking your rules 'just this once', is a slippery slope. Once you've done it once (particularly if things turned out well), it becomes very easy to justify doing it again. With no discipline you're pretty quickly no longer trading a system – you're trading on a whim, which can be very dangerous indeed.
- Good money / risk management – capital preservation should be your number one priority, which means not risking too much on any individual trade. I keep this amount to 2% of opening capital on any one trade, and my maximum correlated risk is kept to a maximum of 4% (i.e. if I'm long EURUSD and GBPUSD, I cannot then short USDJPY, as I'm effectively selling the USD three times, which equates to 6% exposure on my account).
So there you have it. Three of the things I'll be focusing on as my 36-month forex challenge begins next week.
There's only two days now until I close out all open trades to start with a clean slate from Monday. I now have 12 copiers on eToro and am looking to grow my money under management as the challenge progresses.
The YouTube channel opens on Monday and you can subscribe in advance here. I've been in Upwork having an 'intro' and 'outro' video made for the channel and have pushed back with some amends this morning. It's looking good and I'm excited to see the end result.
My domain stgforex.tv now points to this blog, so it's now a bit easier to find.
Things are coming to together and I'm once again reminded of the importance of setting goals. When you set a goal you bring clarity to everything you do and focus the key ingredient of motivation behind it.
Things are coming to together and I'm once again reminded of the importance of setting goals. When you set a goal you bring clarity to everything you do and focus the key ingredient of motivation behind it.
*********
Is it really possible to turn £50K into £1M? Over the next 36 months I'm going to find out by trading my personal account with full transparency.
Follow my 36-month challenge to turn £50K into £1M.
Read my blog here: https://stgforextvforexchallenge.blogspot.com
Subscribe on YouTube here: https://www.youtube.com/channel/UCyGySJ5IeDjq-DIJPU7nYvw
[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]
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