Hello Friend,
Here's a pop quiz for you:
Imagine you are now a forex trader, following a particular system in your trading. One fine day while you are trading (maybe it's "Liberation day") you notice that your system isn't producing the results you desire.
What do you do?
(A) Keep trading, and tweak the system here and there while you trade.
(B) Fix the system. Analyze it, adjust it, and even redesign it if necessary. Test the changes in your Demo account.
We will discuss the answer later in this email. For now, let's look at why you need a "system" for forex trading...
We are all human beings, and our actions are largely governed by our emotions -- no matter if we admit it or not.
But emotions are a deadly "enemy" for forex traders. Your actions based on emotional noises (a better name for this is "gut feelings") are actions that are NOT proven to produce results. They are NOT optimized for success, and NOT well-planned to limit your risks.
Therefore, you need to guard yourself from making trading decisions based on emotions -- or what you call your "gut feelings".
How? By having a system.
A system helps you in these two ways:
(1) It provides a consistent methodology with a win/loss ratio of more than 50% -- in other words, higher winning chances.
(2) It reduces the influences of your emotions. Your aim is to apply your system in a disciplined manner, consistently, without variation, in spite of your emotional noises.
A trader must feel confident with his/her system. At the same time, he/she must be open-minded enough to fine-tune it as new insights and techniques are gained over time.
This is what differentiates a successful trader from a mediocre one.
I provide a list of guidelines for you to help in designing your system in the Forex Business Work Plan that comes as a bonus when you sign up for the Forex Foundation Course:
Find Out More Here.
There are 22 aspects (very detailed, really!) that you need to think about when you design your own system.
These pointers will help you to:
- Define your trading strategy,
- Set trading strategy rules, and
- Create a performance estimate for your projected trading net revenue.
Find out about it by clicking here.
Best Regards,
Jody Samuels
Jody Samuels and The FX Trader's EDGE Team
jody@fxtradersedge.com
P.S. I did not forget to discuss the answer for the quiz.
Whenever you make changes to your system, it's always good to test and prove it, before you put it into play (with your hard-earned cash!)
Also, it's easy to be overwhelmed by emotions if you have to alter your system while monitoring your charts. I am sure you understand this isn't going to work well, don't you?
P.P.S. The secret I talked about in the last email is not only important for your trading, but also for your life in general.
It doesn't only differentiate a successful trader from a mediocre one, but also differentiates a successful person from a mediocre one.
More about this in the next email. You don't want to miss it!
Disclaimer: Trading is risky so only risk capital should be used.
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