Forex Trading Success - There is Only 1 Obstacle to Profits Overcome it and Win!

Consider this - everything about forex trading can be learned yet, 95% of traders lose money so if this is so what is the obstacle to success? This is the subject of this article.

The obstacle to success in forex trading is you! This might sound odd but it's not, because while the information about how to successfully trade is available applying it requires mental discipline and most traders are unprepared for this. Further explanation will make this clearer.

You can learn a method in just a few days. We would suggest a simple one based upon breakout methodology and we have covered this in our other articles, so simply look them up.

One point top make clear is - simple methods work far better than complicated ones, as they are more robust with fewer elements to break.

Do not be duped by people trying to sell you complicated methods or "sure fire" / "holy grail" trading robots - build your own.

Now you need to think about this equation:

Simple Robust Method + Disciplined Application = Forex Trading Success

If you don't have the discipline to apply your method you don't have one! Now trading discipline is achievable but it's not easy to be disciplined, so you need to make sure that you note the following points.

You Need to Know How and Why Your System Works

If you don't, you will never have the confidence in your system to follow it with discipline.

Without confidence you wont have discipline, its as simple as that.

This may sound obvious but to many traders think they can blindly follow someone else and win and of course as soon as a few losses occur (and they will) they throw in the towel.

Even if you follow someone else, you must know how and why the system will win and have confidence to follow it with discipline.

You also need to keep in mind you are going to look stupid at times as the market wrong foots you - but if you are disciplined take your losses and run your profits, you will be trading the odds and win over time.

The fact is 95% of traders lose and as we said at the start of this essay, they don't fail because they cant learn - in most instances they fail because they learn the wrong knowledge or don't have the discipline to apply it.

Learning the right knowledge is easy, having the discipline to apply knowledge is much harder.

You have to create your own set of rules and apply them for long term forex success - if you can do this you can be a winner.

Forex Money Management - Incorporating the 80-20 Rule For Triple Digit Gains

Forex money management is the hardest part of forex trading and most traders simply make errors that doom them to failure. Here we will look at how understanding the 80 / 20 rule and using it in your trading system can make you bigger profits with less risk...

The 80 / 20 rule is simple and states:

That a small number of causes (20%) is responsible for a large percentage (80%) of the effect. The principle was named after the Italian economist Vilfredo Pareto, who noted that 80% of income in Italy was received by just 20% of the population. The value of the Pareto Principle in life and forex trading is - it tells you to focus on the 20 percent of your trading that really matters.

Most traders simply trade too much and the 20% that matters are really just the high odds trades - get rid of the marginal and low odds trades and trade high odds set ups only.

The fact is many traders think the more they trade the better and the more chance they have of enjoying currency trading success. Most try trading the market noise and try forex day trading or scalping - but they are doomed to failure and get wiped out. Trading profits are not correlated to how often you trade, as you are only judged on being right with your trading signal.

If you trade 100 times or twice all that matters is the amount of money you put in the bank from your market timing.

I know traders who trade just a few times a year and make somewhere between 100 - 200% just simply because they wait for high odds trades, hit them and hold them.

Trading less, is more time efficient and more profitable.

Look at any new traders account and they will be over trading and if you make the mistake of taking marginal trades you will lose.

Money management is all about protecting the account equity you a have and if you focus on high odds set ups only, you are going to increase your profit potential overall.

The 80 / 20 rule works in forex trading just as it does in all areas of life and if you use it in forex trading you will focusing on making money and that at the end of the day, is what forex trading is all about.

So think about it, apply it, watch your profits soar and your account equity risk decline and get on the road to currency trading success.

Forex Money Management - Deal With Volatility Or Lose Your Equity

Many traders have forex trading systems that can pick the direction of the currency correctly but they continually get stopped out by volatility and cannot stay with the trend. Here are some money management tips to help you stay with the trend and enjoy currency trading success...

A typical scenario which occurs for most traders is they enter a trend with their currency trading signal the price retraces, takes out their stop and then the trend immediately goes back the way they thought, piling up thousands of dollars and their not in!

If this has happened to you, you're not alone. Most traders have this problem and volatility is the cause.

Of course prices don't trend in a straight line otherwise currency trading would be easy - they constantly retrace against major trends. Quite simply, you need to employ money management rules to keep you in the major trend and not get stopped out so here are some tips.

1. Don't Trade the Market Noise

If you want to avoid getting caught by random volatility avoid short term trading strategies such as forex scalping or day trading. All volatility in a day is random. So if you place stops using daily support and resistance you are wasting your time.

Forget day trading and look at long term trend following.

2. Be Selective

You don't get paid for how often you trade you get paid for being right with your trading signal and getting your market timing right. The big high odds trades don't come around every day and you need to be patient to wait for them. I know traders who trade less than a dozen times a year, who make triple digit gains and you, can to.

You will also find many of the best trading moves come from breakouts and you need to look for these.

3. Use Breakouts.

Most major trends start from breaks of highs and lows and pick valid ones (check our other articles for more information on breakouts) When a break occurs your stop is obvious below the breakout point. If the breakout continues do not trail your stop to close! This is the major error of most traders in any form of trend and we will discuss this next.

4. Moving Stops

Most traders fail to win because they trail stops too soon. They want to restrict risk so much they create it by bringing their stop within normal volatility and getting bumped out the trade.

Make sure you leave your stop until the trend is well underway and trail outside of random volatility.

A good way of doing this is using the 40 day Moving average as a stop. Sure you miss a bit of the trend when it turns - but you can't predict that anyway, so there is no point in trying. If you caught 50% of every major trend you would be very rich.

5. Deciding Risk per Trade

Today you can get leverage of 200:1 or more but for a small trader to use all of this is madness.

Sure your gain will be huge - but your stop has to be so close, you are guaranteed to get stopped out. De-leverage and use 10 or 20:1 and risk more per trade.

In forex trading you have to take a risk and you need to be outside of daily volatility with your stop, or you're going to lose. Risking more to your stop means your chances of winning are higher, if you hit high odds trades and that's what you need to do.

Volatility can destroy your account quickly, if your forex money management doesn't handle it.

The above tips will work. In the next series of these articles we will look at how to measure volatility and look at standard deviation of price, which is essential forex education for any trader and a great tool to help time trading signals - the Bollinger Band.

Many traders think forex money management takes care of itself, it doesn't and you need to get protection for your trades and deal with volatility to win.