IF YOU WISH TO BE A SUCCESSFUL TRADER I THINK YOU NEED TO TAKE THIS ACTS AND HAVE THEM AS A HABIT
50 SUCCESSFUL TRADERS HABIT
Reach your trading potential
(EWEB Head of Education)
(BSc, MSc, MSTA, CFTe, MFTA)
EWEB’s Head of Education is one of the world most respected FX educators and Certified Technical Analysts. Kingsley is known for being an authority in algorithmic trading and for developing hundreds of automated systems, indicators and trading tools used today. His passion for educating traders and Forex industry professionals has made him a Guru of the industry with his tutorials being welcomed across the globe by thousands of attendees on a regular basis. Kingsley's seminars are instilled with a lively atmosphere and renowned for being enthusiastic and exceptionally informative with outstanding attendance on every occasion. kingsley's seminars and workshops are tailored to all experience levels, where both beginner and advanced traders gain thorough understanding of the financial markets and a deep knowledge of market analysis. His seminars particularly emphasis the importance of trend and risk management in order to maximize earning potential. With his extensive knowledge, Kingsley has been revolutionising forex education for years and was awarded with the international professional certificate, MSTA by the Society of Technical Analysts (UK), CFTE and MFTA by the International Federation of Technical Analysts (USA). In addition, his latest research thesis is entitled “Anatomy of a living trend: Swing charts, High Points and Low Points, Peaks and Troughs and how their underlying structure may define their forecasting strength.”
The purpose of this book is to provide you with useful tips and tools to ensure that you become an educated investor. EWEB has a team of highly-experienced trainers who develop materials for all levels of trader. Whether you are just starting out, or consider yourself an advanced trader, you will find material that will enhance your skills. This book represents a small fraction of our educational suite, which includes seminars, webinars, videos, articles and eBooks. These resources are free to use, to help you sharpen your skills on the way to becoming a successful investor.
Invest in yourself before you invest in the markets
In any business endeavor, a good understanding of the business, an identification of opportunities, thorough risk assessment and a sound strategy are imperative to success.
Knowledge of the foreign exchange market is a must before you start investing. Successful traders know that very well, that’s why they continually invest in their knowledge. And that’s why we at EWEB offer professional training sessions, seminars, webinars and tools so that you the trader can learn as much as possible. EWEB offers continuous training programs with our team of highly experienced trainers, covering all levels of trading knowledge, including beginner, intermediate and advanced. The best thing about investing in your education with EWEB is that we provide these learning tools for free so that you can invest your time and money wisely.
Learn the rules of the game
Knowing the rules of the game before you play it is essential. Would you get behind the wheel of a car and start to drive before you knew the rules?
Of course not. You need to learn how to turn, when to stop and how to safely accelerate before you put yourself and others at risk on the road. Forex trading is a little more complex than driving a car, but the basic principle remains the same. You need to learn and understand the rules before you start to trade. Understanding the details of your trading account, such as your account currency, spread, leverage, margin requirements, execution type, margin call and contract specifications just to name a few are vital if you are going to succeed. With the right tools, safety measures and professional support, FXTM sends you on the open road fully equipped to make the right decisions when you trade.
Practice, Practice, Practice
Practice makes perfect!
This also applies to trading the markets. After mastering the theory, rules and trading techniques, a time comes to put all that knowledge into practice under real conditions, but with virtual money! At FXTM we believe that it is important to feel confident when you are trading with your hard- earned money, so we provide free demo accounts until you feel truly ready to make educated decisions. With a demo account, you can test out the markets, trade under different market conditions and practice your trading strategies with virtual money. Even the best traders in the world use a demo account from time to time to test out new methods and strategies. At FXTM we offer free demo accounts that can be used at any time, no questions asked.
Start small with a real account
Whilst practicing on a demo account is a good beginning, successful traders know that trading psychology, discipline and emotions are very different when real money is involved.
The fear of losing, the greed of a big win and the panic you may feel if a trade goes against you are all common emotions you will need to learn to control in order to become successful. FXTM encourages new traders to start small and take trading at their own pace. We want you to experience live trading in a comfortable environment where you are not risking more than you can afford to lose. By opening a live account with FXTM, you will experience real trading emotions in a safe and supportive environment. Open an account with FXTM and start trading to see for yourself.
Do not expect to become a millionaire with a $100 deposit
One of the major reasons foreign exchange has expanded all over the world, and enjoys high
popularity amongst traders, is undoubtedly leverage.
It is true that leverage attracts the attention of many traders and especially those who make small deposits. Many beginners rush into trading with a low deposit, expecting to make huge profits. More often than not, their false expectations lead to poor decisions and disappointment. Understanding leverage, strategy and money management are key to extending the power of your deposit, so reset your expectations and learn how to invest your time wisely. Successful traders know very well that their potential profits correspond to their risk.
Have realistic expectations
Successful traders have realistic expectations, which is directly linked to understanding the risk to reward ratio.
How much are you willing to risk?
How much are you able to deposit?
How many hours can you dedicate to your trading? Your answers to these questions will ultimately define your potential profits! Successful traders have detailed plans for their trading and their expectations are grounded in reality which makes them less likely to go off the rails. Learning the rules and having realistic expectations means knowing when to enter a trade and, ultimately, when to exit. Follow our seminars and master your risk management to reach your trading potential.
Learn to identify the trend
The trend is your friend. We have all heard that phrase so many times, but many traders don’t follow the wisdom behind the words.
Well, successful traders do! Their success depends on identifying the trend early on, following it and understanding how to maximize its benefits. This can be daunting for new traders because they are not trained on identifying trends in the early stages of development. Learning how to spot the small signs of a trending financial instrument is a key technique for success which every great trader uses. A trending financial instrument is more likely to continue in the direction of the prevailing trend rather than reversing, so it is a great source of guidance for traders. The center of our teachings at FXTM is the trend, and we provide hands-on training sessions to help you spot it.
Learn to identify trend reversals
A trend reversal marks the end of an existing trend and the beginning of a new one, and it’s the fastest way to “jump” on a new trade.
This can happen in any timeframe and it can make the difference between a big win, a break even or a loss. Successful traders understand that very well and use it to their advantage every single day. Being able to effectively read your trading charts and understand the crowd’s trails is essential at FXTM we can teach you exactly how to identify trend reversals.
Develop a trading system based on trend following & trend reversal
There are thousands of trading strategies out there, which may be confusing for a beginner.
Don’t worry, though, as most strategies are trend following. This is not a coincidence because trending markets are more likely to continue than to reverse. If you need to learn one strategy it’s trend following & trend reversal. FXTM will teach you how to identify the prevailing trend and how to enter the market when a new trend starts afresh. It would be a good idea to develop your own trading system based on trends. Learn to identify the prevailing trend. Spot the reversal. Know your entry to the market. Under- stand the exit. Follow it.
Test your system
As a beginner, you may be wondering, ‘why do I need a trading system?’
What could possibly be the reason for wanting to follow a trading strategy? Having a system is easy. The hardest part is following it. A fully tested system allows you to trust it and act with machinelike accuracy as to when it may be best to enter the market, take your profit or even cut your losses short. Once you’ve found a comfortable mixture of indictors and risk management rules, it comes time to test… test…test! Only by testing your strategy will you know if it is profitable and worth repeating. Take your time and build up trust in your system so that you’re ready to follow it and take advantage of the opportunities the market certainly has in store for you.
Revise your system to achieve low Drawdown
Many traders in the early stages of their trading career look for a trading system that boasts a high percentage of winning profits, largely ignoring one of the most important parameters of evaluating a trading system: draw down! A drawdown is the peak to trough decline during a specifically recorded period of an investment, and it is closely linked with risk management which is imperative for a successful trading system. Successful traders follow strict risk management rules and make sure that their trading account enjoys low drawdown. You can learn drawdown basics with FXTM’s free training webinars, seminars and helpful videos.
Revise your system to boost your potential winning trades
A lot of papers and articles have been written about this vital topic in trading the markets. Some may argue that less winning trades over losing trades is not a big deal as long as the winnings outweigh the losses. The bottom line, they say, is to have more profits than losses. No problem! What about the trader’s psychology, though? How does a trader feel when he or she loses? Not very pleasant, for sure! When emotions take over, a trader’s mind goes blurry. A blurry mind is a recipe for unpredictable outcomes such as a lack of discipline. Successful traders know that very well and make sure that their strategy has more winning. trades than losing trades. After all, trader’s psychology is invaluable in trading the markets successfully. At FXTM our team of experts has plenty of tips to help you boost your potential wins and minimize your losses.
Lock small profits
A lot of economists and fundamentalists will argue that financial markets are unpredictable.
This is only partially true! When markets enter a consolidation phase they are usually trendless, lacking a direction. But when a breakout of the accumulation or the distribution phase occurs, markets do trend and that is manifested on the price charts. Obviously, a trending market is a dream come true for all trend followers out there. This is the phase where money may be made. But what about volatility? What about unexpected events? A single price movement in the opposite direction is enough to turn a winning trade into a losing trade. Make sure you get what you deserve and lock potential profits as the trend is being unfolded on the price chart. FXTM provides you with trading features that can protect your potential profits by locking small profits! Find out more by speaking with our experienced team.
Incorporate risk management rules
Imagine that you are a captain of a boat entering stormy seas. Wouldn’t you feel better if you had a host of safety tools onboard such as a compass, life jacket, emergency radio and inflatable raft? The same is true when trading the markets. We may not want to think about the worst case scenario, but it is entirely necessary to do so. One of the most important elements of a successful trading strategy is undoubtedly the existence of risk management rules. These rules define initial protective stop loss, trailing stops, take profit levels, reward to risk ratio and last (but not least), position sizing. In our educational events we address all these topics and we make sure that you understand their importance. Successful traders do!
Go easy on leverage. It’s risky
One of the most lucrative aspects of trading is leverage.
Leverage is the reason that traders with a small deposit are able to make large amount of profits. Great right? Well, yes, but at the same time, leverage is to blame for big losses because whilst profits can happen quickly, losses can too! Leverage is a financial tool to enhance a trader’s potential to be able to earn more profits with less money. Unfortunately, in the same way that leverage multiplies profits it also multiplies losses and can quickly wipe out a poorly managed trading account. Use it sensibly.
Calculate your position size every
time you open a position
Many traders believe that risk management only comes into play when a trade is going against them, so novice traders often enter the market impulsively without any risk management rules in place. Large drawdowns, stress, lack of discipline and of course the inevitable margin call and stop out can be catastrophic to a trader’s psychology and trading account! It is imperative that traders understand their risks before entering the market or opening a position. How much money might you lose if the market doesn’t follow the direction you expected? Is your protective stop loss in place? What is your margin? Taking your time to calculate your position before every trade may save you a lot of heartache in the long run.
Always place a protective stop loss
Here’s a scenario. If you were walking a tightrope between two buildings, would you prefer to have the glory of doing it without any safety tools or would you be happier knowing that there was a safety net halfway down to catch you if you fall? The safety net won’t interfere with your task it is simply there to protect you if the worst happens. This is the essence of a protective stop loss yet many traders don’t use them. This is usually because in trading there is plenty of ego to go around! Who wants to admit that they were wrong or that their trade went wrong? That’s really painful and that’s why human beings rarely admit that they are wrong. Let go of your ego, be humble and understand that even the best traders use stop losses. They are a part of trading. Learn to accept them and place a stop loss to protect your capital!
Trail the stop loss to protect profits
In a quest to find the perfect entry, traders usually ignore the fact that entering a position is just one element of trading the financial markets.
Many other parameters also exist that are equally as important to trade successfully. The trailing stop is one of them. A trailing stop is designed to protect gains by enabling a trade to remain open and profits to run as long as the price is moving in the right direction, but closing the trade once the price changes direction. In periods of success, where traders let their profits run, it is wise to protect profits with a trailing stop loss. As profits grow, successful traders move the trailing stop loss closer to the current price just in case the unexpected happens. Tools such as this make it possible for you to trade with more discipline.
Be wary of Trading news events
Trading news events, especially the high impact ones like NFP (non-farm payroll) is an adrenaline rush for most traders.
The anticipation, the market buzz, the announcement and the high volatility that surrounds the event is so appealing that most traders overlook the dangers and risks. Re-quotes, slippage, lack of direction and the resulting frustration are just a few consequences. The abrupt bidirectional price movement also doesn’t leave a lot of room to maneuver, especially on lower timeframes where most novice traders are trading. At FXTM we offer controlled training during real life market events so that you can understand the way the market reacts. You may find the lure of trading news events too much to resist but you also need to understand the risks involved and be wary.
Define the trading hours
One of the most appealing characteristics of the foreign exchange market is undoubtedly the trading hours. Twenty-four hours per day, five days a week. Yes, twenty four hours each and every working day. Obviously, this schedule can accommodate any trader any- where in the world but be cautious! Before you start trading, choose the hours that are most suitable to your lifestyle, trading profile and character. Study the characteristics of these hours. Learn about session overlaps. How do currencies and other financial instruments behave during those trading hours? Is price action volatile or dormant? Do prices usually move in a narrow range or do they usually trend? Before you decide on your trading hours do some research and be realistic about your commitments.
Master the art of discipline
Having a professional trading system and risk management rules are not enough.
Discipline is a prerequisite for all successful traders but the good news is that it can be mastered all that’s required is some willpower from your part. Just as an athlete will rise at 5am each day to train, so you must acquire a strictly disciplined regime for your trading. This involves studying the markets (especially the ones you will be trading), paying close attention to relevant news announcements and mastering your self-control. Discipline cannot be taught, however there are plenty of ways to master it. You just need to find the one that works for you. Successful traders take the time to perfect their discipline and so can you.
If you cannot stick to your system, then have an EA developed for you
Expert Advisor trading systems (EAs) are developed through the use of empirical observations combined with statistical findings and back testing on historical data, as well as forward testing on live prices.Sounds complicated right? Well for most traders it probably is but that’s why we use them… to take some of the calculations and stress out of everyday trading. Sometimes, the development phase requires visual inspection of the price charts, expertise, hard work, tweaking of parameters and long hours during the day and night. Why all that trouble? Well the answer is quite simple. To have a road map for trading the markets. Precise entry points, precise profit level
and precise exit points in case the unexpected happens. Everything has to be calculated in advance... even the potential risks. It is important to note that following your trading system is imperative. If you have any difficulty following it then make sure you have an expert advisor developed for you. Even though no trading system is 100% accurate, 100% of the time… having an expert advisor guarantees 100% discipline! Follow FXTM’s seminars to learn more about it.
Do not overtrade
Overtrading is another possible pitfall in traders’ habits that deserves a closer look. Overtrading can stem from a combination of boredom, greed, and a loss of confidence and it’s a pretty dangerous thing. Sitting in front of the screen staring at a price chart for hours, looking for a promising trade is not the easiest thing to do because it requires patience. Traders want to trade. They want to buy and sell. They can’t wait to press the key on the keyboard or click the mouse button to open a position. This is exactly what beginners and intermediate traders alike want to do. After a winning position, the ego is boosted, they feel more confident and they find it easier to quickly open the next position. After a losing position, the ego is hurt, the psychology is down, the confidence is lost and it’s easy to jump straight into the next trade to heal the pain. Overtrading means that often a trader has not properly thought out his next move and this invites danger and risk. Stick to your plan. Don’t let your ego and emotions take control of your trading decisions.
Trade only high probability set-ups
It is widely known in the trading community that trading set-ups are all over the price charts Fundamental, technical or even sentimental set-ups may be spotted with one glance at the price charts. There are many reasons to open a position and equally many more to close one. In the quest to find the balance between job satisfaction as a trader and reward in financial terms, successful traders filter out trading set-ups and they only follow those that boast a high probability for success. By learning to read the price charts and experimenting with your trading strategy you will gain confidence in identifying high probability set-ups. Remember, though, that even high probability set-ups are not 100% guaranteed so you should always exercise risk management strategies.
Test your system and adjust its parameters for different currency pairs
When you buy a bike from a shop, you need to adjust it to suit your riding style. Perhaps the saddle needs to be raised, the tires pumped up and the handlebars adjusted. Think of your trading system in the same way an out-of-the-box solution that needs to be tailored to your needs. Trading strategies, methods and systems nowadays are widely available all over the web. Even though the concept behind most of them is theoretically correct, in practice certain adjustments need to be made for different currency pairs, financial instruments and time frames. Not all financial instruments behave the same way. Some are more volatile than others. Some require bigger filters than others. Some reach their profit targets faster than others. Adjust the parameters of your trading system to accommodate each instrument’s unique characteristics and experiment with smaller trades at first to check the results. Successful traders do.
Never try to beat the market
In the early steps of their trading career, novice traders make it their aim to beat the markets. You have probably heard stories of fellow traders who are determined to take control of the USD, own the EUR or punish that JPY. The truth is that this rarely ends well. To buy at the absolute bottom and exit profitably at the absolute top is of course the goal, however many hours are consumed studying different strategies, indicators and combining tools to do this. The earlier you get out of the “beat the markets” mindset, the faster you will find yourself on the road to success. Let the market follow its course and learn to trade like a professional. At FXTM, our educational seminars and webinars will assist you in achieving your goals and help you keep a level head.
Follow the markets instead
Many traders get caught up in the latest finance prediction methods, but surprise, surprise!
All indicators are designed to follow the market. They do not predict anything, instead they simply follow the financial market. The fastest indicator in the market is price itself so if you learn to understand the price charts, follow the price action and learn to follow sentimental and technical analysis then you are on the right road. At FXTM we will teach you what to look out for in our seminars and webinars so the markets will no longer be a mystery. Focus your attention on the price charts and follow the markets… they will tell you all you need to know.
Do not let your ego take over your trading
It is true that your ego can take over and start to dictate the way you behave while trading. It is surprisingly true that a lot of traders enter the wonderful world of foreign exchange driven by their ego. Their goal is to buy at the lowest possible price and exit with profits at the highest possible level. Can you imagine the effect on your ego? It’s a massive ego booster and you feel invincible. Well, the fact is this is not professional trading because professional traders look for high probability setups and price patterns which are confirmed by a small number of indicators. They study the markets, they pay attention, they keep quiet and they never brag about their winnings. While many novice traders look for ways to boost their ego, successful traders look for ways to boost their account. Successful traders enter the markets to make money.
Do not let your emotions take over
Fear and greed are key factors that need to be addressed in the very early stages of a trader’s career.
Fear is that unpleasant feeling that something painful is likely to happen… mainly that you will lose money. Traders, especially beginners, often fear stop loss and it is perceived as one the most dangerous or even painful events in a trader’s life. It is at that point in trading that one realizes that he/she was wrong. From not using a stop loss at all to moving the stop loss away from the price to avoid the hit, the painful loss, traders will do anything to avoid admitting they were wrong and, in many cases, they remove it altogether. Fear takes over, the mind becomes blurry, decisions are wrong, discipline is not present anymore and we all know what happens next. On the other hand, greed is that selfish desire to earn excessive amount of profits. We believe that if we can just crack this next big trade then the money will be rolling in. That trade didn’t work? Then let’s try the next one, and so on. While the trading system may be proven to be good and profitable, many greedy traders will remove the take profit to try to maximize their earnings. Of course, that is usually the time that prices move in the opposite direction and the profitable trade turns into a losing trade. Greed is a type of fear. The fear of not having enough, Get rid of your fears. Successful traders do.
Be disciplined. Sun Tzu considered discipline a matter of life and death.
One of the greatest Chinese generals of all time, and the author of the popular military tactics book, “The Art of War”, stated in thirteen chapters all the factors needed to win a war. Any war, When he was challenged by King Ho Lu of the state of Wu to test his theory on the state’s army and more specifically on women, Sun Tzu gladly accepted. After putting the center of his teachings and discipline into practice, the King was convinced that Sun Tzu was the one to lead his army. Sun Tzu was appointed as general and led the army of Wu to glorious victory over the state of Chu. For Sun Tzu, discipline was a matter of life and death and he put what he taught into practice. Do you trust your discipline enough to see you through the difficult times? Successful traders have discipline in their trading tactics at all times and at FXTM we will support you in your trading journey towards the ultimate state of discipline.
They are part of trading Losses are a part of trading and this is something you need to accept early on.
Even the best professionally designed trading system will at times experience losses. The sooner a trader accepts that loss is a feature of trading, the faster he/she will have a clear mind to focus on managing a trading position. Losses are seen by many inexperienced traders as one of the most disastrous events in trading the financial markets. After a losing trade they find themselves caught up in chasing the market to take “revenge” because their ego is hurt. Having faith in your system explicitly implies accepting losses and a loss doesn’t mean you should change your entire strategy. Learn to manage the psychology associated with your loss. Successful traders do.
Nothing is 100% in life. Trading is not an exception
Life is full of ups and downs and it’s also full of surprises, some good and some bad.
The same is true when trading the financial markets. Always expect the unexpected and be prepared to handle it and manage it like a pro. Knowing the tricks of the trade, preparing for the unexpected and understanding your risk management tools will cushion the blow of intense shock should the markets go against you. Knowledge will guide you through the ups and downs and at FXTM our superior educational seminars across the globe are here to help. Discover and join our next event.
Amateurs want to be right. Professionals want to make money
It is a characteristic of human nature to need to be right. Humans are competitive, they want to be winners and strive towards that goal their whole life.
The desire to win is undoubtedly one important factor and of course this is a major element of trading. The question is…would you rather be right or would you rather make money? This is where you need to be humble. Take time to learn the tools of the trade, ask questions and listen to the answers because knowledge fuels confidence. Have the discipline to follow your strategy but learn to admit when you have made a mistake. It is important to learn and grow in your trading journey and successful traders are humble and powered by solid knowledge and confidence. Being right and making money are not always the same thing. Accept this. Successful traders do.
While beginners look for the best entry, professionals look to lock profits
It is not a secret that many novice traders spend hours every day studying trading systems and technical indicators in a quest to find the best entry point in the market.
They believe that a good entry will guarantee profits, mega profits that is. While a good entry, especially in the early stages of development in a new trend is always a must, take profit levels and exits are equally important in a successful trading system. Ask any professional. Trade in the direction of the prevailing trend and exit when the prevailing trend does not exist anymore. Lock your profits and pocket them without being greedy. Use your take profit tools to ensure that you get out of your trade at the right time. FXTM offers seminars and webinars on profit taking. Join us. They’re FREE.
Trend is your friend
We have all heard the phrase “Trend is your friend”.
Well, it’s not just your friend… it’s more than that. When trading the financial markets, you should strive to identify the trend and trade in that direction as opposed to trying to beat it. A trend is more likely to continue than to reverse and Newton’s first law of motion states that “a body in motion will continue to move in the same direction unless a force acts upon it”. Similarly, a trend will continue in the same direction until a definite price pattern signals that the prevailing trend has come to an end. Pay attention to the charts and trade in the direction of the trend. Successful traders do.
Leverage your knowledge
Knowledge is power. This adage applies to all walks of life and trading the financial markets is no exception.
Knowledge will guide you through your trades with confidence as long as you are willing to put in the effort. Many new traders read one article and feel ready to take on the markets, but this is not enough. Learn a professional trading system, study the different risk management techniques, practice lots and set clear guidelines for yourself. We at FXTM offer educational seminars and webinars on trading systems, risk management and discipline. Join us anytime to leverage your knowledge. Our sessions are FREE and you can attend as many as you like.
Avoid the frog & scorpion traits
In the famous fable of the scorpion and the frog, the scorpion asks the frog to give him a ride across the river since the scorpion doesn’t know how to swim.
At first, the frog was hesitant because he was afraid that the scorpion would sting him but eventually the scorpion convinced him by saying that if he stung him then would both drown in the river. Midway across the river, a small ripple scared the scorpion, who stung the frog on his back. The frog asked the scorpion why he stung him and the scorpion replied “because it’s my nature.” The scorpion’s instinctive sting was his own downfall. Trading is similar. Many inexperienced traders repeatedly take bad trades even though they know their probability of success is low. They react instinctively each time. Be objective and look at where you are going wrong, remove your frog and scorpion traits. Successful traders do.
Do not be greedy
Sometimes we can become so greedy in our search for the mega big win that we lose sight of the bigger picture.
The excessive desire for more profits governs the actions of many traders in the financial markets, sometimes with unpleasant outcomes. Greed will encourage you to move your profit level or stop loss again and again until perhaps you remove them altogether. Greed will encourage you to abandon your discipline, obscure your decision making and remove the enjoyment from your trading. Novice traders often discover that profitable trades turn into losing trades just because of greed. Accept what the markets have for you, accept when it’s time to exit the trade and don’t be greedy. Successful traders aren’t.
Oscillator extremes are just a warning
A lot of strategies have been formed based on the theory of oscillator extremes.
That is, overbought and oversold levels. An overbought extreme implies that prices have risen too far and a move in the opposite direction is imminent. On the other hand, an oversold extreme implies that prices have dropped too far and a bounce is about to happen. Be wary, because the first move into an extreme level in the early stages of a trend is misleading. Extremes are often just warnings and not reasons to buy or sell. Many novice traders are edgy and can become nervous to make a move when they see a change in the charts. Stay focused, be patient and wait. Join our seminars and webinars to get great tips from our market experts.
Always remember the goose with the golden eggs
In Aesop’s fable “The Goose with the Golden Eggs”, a farmer went to the barn every morning to collect the goose eggs.
One morning, to his surprise, he saw a big yellow and glittering egg. He tried to lift it up and realized that it was as heavy as lead. He thought that a trick was played on him by his friends. He was about to throw it away but after consideration he carried it home to consult with his wife. She convinced him to bring it to town where they found out that it was pure gold. Every morning he followed the same routine and soon he became very rich by selling the golden eggs. Unfortunately, he grew too greedy and decided to kill the goose to get out all the gold the goose could offer. To his surprise he found nothing! The moral of this story for traders is to be patient, wait and enjoy your rewards and never think that you can take shortcuts to success. Successful traders don’t.
Support & resistance levels break all the time
One of the biggest misconceptions amongst traders and especially amongst beginners is Support and Resistance.
Many new traders believe that when the market reaches the support level that prices will bounce up and when the market reaches the resistance level that the prices will bounce back. That is of course true during sideways markets. During a trending market, prices will persistently move in the direction of the prevailing trend breaching any obstacle in the way. Think of the trending market as a tsunami that takes with it every piece of debris - the force is extremely strong. In an uptrend especially, prices will break through all resistance levels until a reversal occurs. On the way down, in the course of a downtrend, prices will violate all support levels until a reversal occurs in the opposite direction. This is the truth about support and resistance. Successful traders know that. Join us for a free webinar to learn more.
Moving averages substitute trend lines
The truth of the matter is that the moving average is one of the most popular indicators used by traders of all levels in the financial markets.
Even fundamental analysts use them. One reason is because they are easy to understand and easy to interpret. Apart from the signals that they trigger above and below the moving average line, traders use them because they substitute trend lines. They are perceived as dynamic trend lines. Traders do not need to draw trend lines on the price charts as prices are coming in nor when they choose a different instrument or timeframe. Once attached on the price chart, the moving average will follow the price closely, making it a fairly reliable indicator for traders of all abilities. Successful traders use them and we will be pleased to teach you how to use them too.
Indicators are secondary tools
Remember the legend of the Holy Grail? Long hard hours spent seeking that one special goal sometimes at the expense of everything else in life?
Many traders will fall into the trap of looking for the “holy grail” in the financial markets. Looking for that magical indicator that will guide them in gaining huge profits from the markets, Hours and days are spent working towards that goal. Many articles are read and many books downloaded. After numerous periods of unsuccessful trial and error they settle for a combination of two or more indicators to accomplish that goal. Unfortunately, the more indicators used, the more a delay will be experienced, The truth is that indicators are secondary tools. They are a derivative of price and as such they follow with a delay instead of leading. Let go of your belief that indicators are your Holy Grail. Successful traders know how to do that. FXTM offers extensive seminars and webinars to guide you in the understanding and proper application of indicators.
You’ve heard the expression “Don’t put your eggs in one basket?”
Well the same applies to placing all your money on one trade. Experienced traders know very well that there isn’t one special technical indicator to rely on. Instead they use them to confirm their signals. They follow the price closely and they mostly rely on high probability price patterns to trade. That is, to buy and sell. Price patterns are mostly subjective and it is during those times that traders consult a set of indicators for confirmation. Only amateurs put all their eggs in one basket when it comes to indicators, because, ultimately, price is the boss. Successful traders know this and follow price.
Volume is not available in forex
Volume is a very important element of technical analysis.
In fact, it is actually a leading indicator. It alerts traders of impending turns in the market or even the continuation of a prevailing trend. Experienced traders use volume to confirm breakouts, reversals and continuation pattern
Volume is always rising in the direction of the trend and falling during a retracement. At breakouts, volume is rising, thus confirming the “health” of the price direction. In a range, volume hints at the direction of the breakout. Foreign exchange lacks this information since it is a decentralized market as opposed to the stock market which is as we all know a centralized market. Successful traders know that and never use volume indicators in forex. At FXTM we can help you understand that there is more to market action than volume. Join us in our free webinars to learn more.
Do not expect to become a successful trader after reading one book
Can you imagine a surgeon reading a couple of articles and books and then performing lifesaving heart surgery?
Would you trust your money with an accountant who once-upon-a-time read a couple of articles on book keeping? Probably not, So why would you read one book on forex and think you are an expert trader? There is no shame in being a beginner and asking questions. Would you trust your education of trading the financial markets to just any trainer? We at FXTM boast the highest levels of education and training and we offer this to our clients completely free of charge. Our trainers are world renowned, highly educated and professionally accredited. Their enthusiasm and passion for educating traders and forex industry professionals is welcomed across the globe on a regular basis. Don’t just read one book and jump into the markets let our respected educators help you to trade better.
Determination, discipline and knowledge are imperative to succeed in the markets
Determination is a common characteristic amongst successful traders.
They never give up and they always strive to succeed with hard work and a strong belief that they can accomplish any goal they set. They are determined and have the drive to overcome any obstacles on route to success. Do you believe that successful traders don’t have any setbacks? That they won all their trades every time? They didn’t, they are just determined to succeed eventually. Knowledge is of course another common trait of successful traders. They spend hours learning the rules and tricks of the trade. They invest in themselves before they start trading the markets. Successful traders know very well that knowledge is power and they never stop learning. Knowledge for them is a continuum. Success goes hand in hand with discipline. Following the rules of your trading strategy, honouring protective stop loss and take profit levels according to your plan is a must. You do not need to be a guru to master determination, knowledge and discipline. Let FXTM help you reach your trading potential.
Never allow the markets to flatter you
In Aesop’s fable “The Fox and the Crow”, the fox was wandering through the woods looking for a bite to eat.
His sharp nose led him to the foot of a tree where his attention was caught by a crow sitting on a branch holding a piece of cheese in her beak. “Good morning beautiful crow” the fox cried. The crow returned the greeting by nodding her head but kept her beak closed. “What an elegant figure you have” said the fox. “What shiny feathers and splendid wings you have. Such a charming and wonderful bird should have a very lovely voice, since everything else about you is perfect! Could you just sing one song and I will hail you Queen of birds?” So, the crow opened her beak to sing the loudest caw while the cheese fell straight into the fox’s mouth! “Thank you” said the fox, as he walked away to enjoy his breakfast. Many traders play the role of the crow while trading the financial markets. They are so busy basking in the glory of their former success that they don’t look ahead to see what may be coming. Don’t get flattered by a streak of winning trades. Stay humble and alert when you trade the markets.
Trading is studying the crowd’s psychology
Psychology is a huge part of trading and the financial markets are governed by mass psychology.
Investors seek comfort. They feel relief and security when they know that their views are shared and endorsed by almost everyone else. They feel comfort when they buy and sell like everyone else. Think of it as adult peer pressure or the need to conform to society’s ideals. In other words, they follow the crowd’s mindset and have the need to belong to a group. Once in a group, individuals surrender to mass psychology. Decisions are not rational anymore. Be cautious when the masses enter the market because this usually means that the end of the trend is approaching. Successful traders know what the masses are doing by studying the price charts. Price charts unveil the crowd’s trails in the market. We can train you to do exactly that and help you gain confidence in your own decisions.
Technical analysis unveils the crowd’s trails
Technical analysis is primarily the study of price charts for the purpose of identifying price trends in the early stages of development. It is based on three principles:
1. Price action discounts everything
2. Prices move in trends
3. History repeats itself Technical analysis is effectively the study of mass psychology, because you are looking at how other traders are reacting to the financial markets. Learn how to read price charts from our highly qualified trainers and spot the crowd’s trails. Once you do, you will be surprised at the difference it will make to your trading decisions.
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