Saturday, June 24, 2017

Key To Becoming a Successful Trader

June 4, 2012 by  
Filed under Forex FAQ & Latest Post


In the forex faq for this week, we have a question from one of our fellow traders.

Dear Kelvin,

My question is this. What is it about you that have made you succeed? It is not just the trading strategy but you. Can you shed some light on this please?

I must say that this is one good question that I am waiting for someone to ask. To become a successful trader, you need more than just reliable forex strategy to make it. This is exactly what I will be sharing with you guys here today in this post.

First of all, I must say that the key to successful trading lies in having a good and reliable forex strategy. Once you have that, you will need other factors to help you become a profitable trader.

1) Discipline – This is one of the most important factor to becoming a profitable trader. There is no point in having a reliable trading strategy but you do not follow it completely.

I know some new traders who are very eager to get into a trade and they enter a trade even when the setup is not according to their trading strategy. This is usually the reason why people fail to make money in trading.

They start to blame their strategy for not working without realizing that they are the cause of the problem. Their strategies actually help them to minimise their losses made in those trades that are not according to their trading plan.

These trader will think that their strategy don’t work and will start to look for new strategy to use. For me, I never ever enter any trade that is not according to my strategy and this is how I manage to trade for a living.

2) Risk Management – Irregardless of how reliable your strategy is, you will definitely lost money when trading as losing is simple part of the game.

When we talk about risk management, we are talking about the amount of money you are going to risk per trade. I know that there are some traders out there who do not trade with stop loss and this is one of the worst risk management to me.

The key to being successful in trading lies in your ability to trade another day and this can be done by protecting your capital with the help of a stop loss.

Besides placing your stop loss, you will also need to control the amount of money you are going to risk per trade. Never risk too much of your account in one trade as you may have consecutive losses that may wipe your account out.

3) Consistency – Once you have made consistent profit every month for 3 months. Please do not try to reinvent the wheel. You just have to stick to your trading plan by staying discipline and control your risk management.

I have know traders who are profitable for several months and started to be greedy and want to add more strategies to their trading plan. I am not saying that adding more strategies is bad but you should at least make 9 months to a year of profit from one strategy before you start to try out new strategy.

This will prevent you from getting distracted. Remember this; all new strategy must go through your demo account to make sure that it is workable before you start to trade live with it.

The above 3 factors are what makes me a profitable trader every month and I hope that you guys can stick to it and become a successful trader one day.

If you have anything to share with us, do feel free to give your comment below.

Comments

4 Responses to “Key To Becoming a Successful Trader”
  1. Tee says:

    Dear Kelvin,

    I had been in forex trading for years but I still could not find out one strategy that it is really works. Understand that it should use more than one indicator to judge but it just could not guarantee consistent income.
    When come to the situation that you lose 4 trades straight, do you still stick to your strategy?

    Trader always says rewards risk ratio must always more than one. Most of time it just could not make it. How do you overcome this?

    My friend told me that money management more important than trading strategy. Do you agree? He gave me an example; use 100 glass ball with 60 balls blue color ( win) and 40 balls red ( lose), then you randomly pick up the balls to determine whether you win or lose. The result of this games, most of people lost all their money before they could complete the 100 trades. Like to hear your opinion?

    Hope to hear your comment soon.
    Thanks..Tee

    • Kelvin says:

      Hi Tee

      For your first question on whether I will still stick to my strategy after 4 consecutive losses, my answer is YES if this is a strategy that I have traded several months on a demo account and it has been able to make me profit for consecutive few months. Unless this is a strategy that I have never trade before on a demo account for months to see if it is really workable, then I will not use this strategy.

      If you says that your strategy could not hit risk reward of more than one, I must say that this is not a good strategy to use as you will be very unlikely to make money from it. My suggestion is for you to take up a course to learn a good and reliable strategy first. Practice it on a demo account for a few months before you move to trade live with it.

      As for your friend example of 100 glass balls, it is a way of telling you that you should not risk more then 2% to 3% of your account every trade. Let says that you only risk 2% of your account every trade, you can take 50 consecutive losses to be wiped out. However is it possible to trade with a strategy that lost 50 times in a row. Your friend example is applicable when you have a good strategy with decent winning percentage and good risk reward ratio.

  2. Tshepo says:

    Hi Cavin,

    Thanks for sharing your secret to success.
    We newcomers to forex are being sold, get rich quick with forex.
    I read about a new strategy that makes 100 to 300 pips every week,infact as I write I just got another message with a strategy promising 300 pips per day.

    I have to questions for you.
    1. How long did it take you to succeed with forex?
    2. Do you have an indicator that tells you not to enter the markets?

    Best regards

    Tshepo

    • Kelvin says:

      Hi Tshepo

      Stop believing in those course that make big claim. Be steady and learn forex the correct way and you will learn a skill for a lifetime.

      It took me nine to 12 months to succeed in forex. I do not trade with one indicator. I use a combination of indicator, S&R as well as patterns to tell me whether to enter or not to enter a trade.

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