Thursday, June 29, 2017

5 Things a Professional Forex Trader Must Know

January 7, 2011 by  
Filed under Forex FAQ & Latest Post


This is one interested and important question that is asked by one of our fellow traders.

What are the 5-10 things one needs to become a professional forex trader?

I believe that most if not all of you who are here reading my blog aims to become a professional forex trader one day. Therefore this post today is one that all of you should read.

What I am writing here is my personal opinion that is formed throughout my years of trading.

Become a professional forex trader is not an easy task and it definitely need some effort from you. Below are what I think is essential for you to become a professional trader.

1) Experience – This is one important factor that contribute to most traders success. If you have been reading my blog, you will understand that I emphasize a lot of trading demo. This is because it will help you to have a better understanding of the currency pair that you are specializing.

With several months of trading experience, you will have a FEEL of the market movement which is very important for any trader. It will help you to have a better entry as well as better exit.

2) Trading Plan – There is no way you can become a professional trader if you do not have a reliable trading plan. What I meant by reliable here is not asking you to find a strategy that wins 100% of the time.

As a trader, you have to understand that losing is part of the game and there is no strategy that can produce 100% winning percentage. As long as you have a strategy that produces 70% winning, you are having a reliable trading plan.

My personal suggestion for you is to focus on one or two trading strategy and then fine tune it until it is able to produce the winning percentage that you are comfortable with. Do note that even if you learn a particular trading strategy from a course, you still have to fine tune it by adjusting the indicator or add some indicators to improve its reliability.

This is because trading is a subjective issue, where you deem as entry may not be the exact entry another trader will take. Therefore you need to fine tune the strategy such that it works for you.

3) Discipline – This is usually where most new traders fail. What’s the point of having a good trading strategy but you do not trade according to it and this is exactly what happens to a new trader.

As a new trader, they tend to rush into trade and this lead them to place their trade even when the setup is not according to their plan.

Another problem that leads new trader to enter unnecessary trade is Revenge trading. Revenge trading usually arises when a trader makes a losing trade and bent on winning it back.

This kind of trading is usually based on emotion which wills most of the time leads to more loss.

If you want to become a professional trader, you must improve in your trading discipline.

4) Risk Management – This is another important factor that all professional traders know. There is nothing more important than protecting your capital so that you can trade another day.

I personally risk about 2 to 3% of my trading capital per trade and this allows me to continue trading even if I met with a losing streak.

Imagine you trade with a risk of 20%, you will be wiped out with 4 to 5 trades and you have to call it quit.

Besides the amount to risk per trade, you also have to improve in your trading risk reward ratio. If you have a high risk reward ratio trading strategy, you will be able to make money even if you lose 50% of the time and this is exactly how professional traders make money.

5) Trade Management – Another way to lower your risk of losing money is through trade management.

Let says that you have enter a LONG trade and you started to see the price moving up making you profit. What you should do as a part of trade management is to shift your stop loss to breakeven so that you are protected even if the market reverses against you later on.

As the price continues to move in your favour, you can then shift your stop loss to lock some profit and this is known as trade management.

The above 5 factors are what I think is the key to becoming a professional forex trader. If you have any other suggestion, do feel free to give your comment below.

Comments

11 Responses to “5 Things a Professional Forex Trader Must Know”
  1. Syakirin says:

    Hi Kevin,
    Thanks for a such informative blog. May you advise what timeframes are best to do analysis and for trade entries.

    It will be much helpful if the explanation in reference to your variou strategies such as scalping, swing, breakout and trend trade etc.

    Thanks.

    • Kelvin says:

      Hi

      For the scalping strategy, you should be doing analysis on the lower time frame like the 5 minutes or 1 minute chart.

      As for the swing, breakout and trend strategy, it really depends on you as these strategies works on all time frame.

      If you are someone who can only look at your chart for 1 hour a day, then I will suggest you to go for those higher time frame like the 4 hours or daily chart. If you are someone who have time to look at your chart every hour or two, then you can do your analysis on the 15 minutes or 1 hour chart.

  2. Vijay says:

    Hi Kelvin

    Thanx for guidance about entry and exit. Can you help me
    for better trend trading strategy?? is there any particular
    indicator or by to trade with trendline?? If you can pls let me know
    with screenshot or video.

  3. Dr Julius Ssemakula says:

    This is spot on, actually i can put all the other 4 qualities into experience. But i have two more, something that i consider really impoortant. Because i started forex 6 months ago and i rad some literature and some courses, i thought i had it all but y micro live account was in big losses and i was making more losses down the road. But i continued to read and practice and i continued to search for knowledge but ofcourse with having at the back of my mind that there’s so much literature on the web that can even confuse you the more. But some how i even managed to find my mentor KELVIN LEE AND SUBSCRIBED TO THE BEST BLOG I HAVE EVER BEEN PART OF AND THATS THE FOREX INDICATOR CLUB. But also i continued to take away the enotion when i made losses and continued with hard work.

    The two qualities here are
    1. CONTINUED LEARNING AND PRACTICING
    2. PERSISTENCE (WINNERS NEVER QUIT AND QUITTERS NEVER WIN)

  4. Vijay says:

    Hi Kelvin,

    Thanx,to trade with good plan, we must have accurate entry, else we will get
    hit our stoploss.and wipe out an account.so no use of any kind of plan we make on paper.The strategy and entries must be more accurate then only the plan will work good..so we have to improve trading method especially “Entry” and exit too.
    so pls let us know about accurate entry….
    Thanx

  5. Paul says:

    Hi Kelvin

    Can you please tell us roughly how many pips you make per day.
    Also, how much time do you spend trading every day, and where do you find the time , considering that a lot of your time is spent working on this website.

    Please tell us this.

    Regards

    • Kelvin says:

      Hi Paul

      The whole analysis and trading only takes me 3 to 4 hours and I will use the rest of my time to go through the emails that I received from you guys and writing blog post on this site.

      I do my analysis and look at the chart everyday but I only place 2 to 3 trades per week as I really stick to my trading plan. As long as there is no setup that is like my plan, I will not trade for the day.

      If I enter a good trade, I can make about 80 to 100 pips per trade.

      What about you? What strategy you are using?

  6. Vijay says:

    Hi

    An article you have posted here is excellent, to become a professional trades
    above all 5 points are mandatory.I would like to say on your Trading Plan,even we trade with money management trading with 2% risk also the chances of wiping an account, if the stoploss hits all trades will reduce the confidence of trader.so how will it be more sucessful of trading with plan???Entry must be more accurate in this case to trade with plan, so if possible for you let me know the exact entry strategy if you can.Thanx

    • Kelvin says:

      Hi vijay

      Having a risk management of 2% is not enough as you also need to have a reliable trading plan that can provide about 70% accuracy. To be a successful trader, you cant miss out any one of e 5 factors.

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