3 Steps to Make it in Forex: 1) – Do the Minimum/Survive; 2) – Do the Possible/Win When You Can; 3) – Then Do the Impossible/Become a Consistent Winner
Skerdian Meta • 3 min read
Many people, when they start trading for the first time, try to jump the steps of evolution and expect to make millions pretty quickly. They try to get winning trades one after another and when they don’t, they get anxious and often depressed. If things start going wrong, they start changing their trading strategies and get confused, even experienced traders do get confused and start questioning their strategies and themselves when they go through a difficult period. But usually the problem is that we skip steps of becoming experienced when we are new, and we skip steps of trades when we are experienced.
Three Steps for Every New Trader and Every New Trade to Be Successful
Do the Minimum/Survive
For new traders, the first thing they should think of is surviving. Many “Take off with a leech up their bum”, as a saying goes, and aim at becoming successful overnight. Some double and triple their positions after losing trades in order to make what they lost and some more; some question everything and change strategies like some people change phone numbers. Really, what’s wrong with those people who change phone numbers every month? But what they must do is the minimum, just survive. If you don’t lose you will eventually win, right? They should try to keep themselves from losing trades. That means taking into account different aspects of their trades. which takes us to the minimum required for experienced traders.
For experienced traders every new trade is like a new trader. Sure we know a thing or two, but no trade is the same as any other. So, first and foremost we should look at the possible things that might make a trade go wrong and try to eliminate them. What are those things?
- Pick the bottom carefully – When trying to enter a trade, we should look at major indicators like support and resistance levels, moving averages, trend lines, etc. These indicators are where trades reverse or a trend starts. We should wait until the price reaches these indicators and not rush into a trade.
- Get confirmation of a reversal – If the price reaches one or more of these indicators if they are clustered close together, then we should get confirmation that this is the end of the pullback, supposing we want to go with the trend. A good confirmation would be the stochastic indicator being oversold at that time or reversing candlesticks such as dojis, pins, hammers etc.
- Watch the price action – Also, we should see which side the sentiment is the strongest. When an asset is on a bullish trend and pulls back to a support indicator such as the 50 SMA (yellow) on the German [[DAX30]], we should watch the price action for some time to see if the bearish momentum is over. If buyers are not making new lows, then that’s a sign that the momentum might be shifting to the upside.
- Give the trade some breathing room – This is pretty important as well. We like to minimize losses and many new traders make the mistake to place stops too close to the entry point. Financial markets are volatile and forex is not an exact science, so we must give trades some room for safety until the momentum shifts properly to the other side.
3 Great entering levels for DAX buyers
Do the Possible/Win When You Can
These other two steps are simple and have mostly to do with our personalities as traders. If we are new in this business or if we are on a losing streak, that’s when we get most emotional and find it difficult to keep a clear head. A winning trade in such cases is like a drop of fresh water in a desert and we tend to get overconfident when we get a winner. But we must refrain and enter only when the stars align for us, as in the previous step. It’s better to get one winning trade in a day or two, rather than piling up on losing trades. Accumulating winning trades one at a time builds up confidence, just like “One apple a day makes the doctor go away”.
Do the Impossible/Become a Consistent Winner
If we keep it simple and pick the right time and level to enter trades, then soon we will be accumulating winners one after another. Sure, we have to pick the exit point as well, but if we pick the right entry and the right time, then chances are that we are either going to end up with a winning trade or with a break even. If this happens to often, then we will soon end up being consistent on our trading. We will build confidence eventually and do the impossible for some, become a consistent winner.