Premeditated Investing
To do anything successfully, you must have a plan and a deliberate method of accomplishing the task. Trading is no different. There are rules, strategies and acceptable methods of boosting your opportunities to become successful and financially profitable. The bottom line - know how you are going to handle a trade before you make your first move. You must develop your own personal strategy, one you develop that has a history of success. You will want to "trade" this strategy using a demo account until you are certain that it will work effectively for you.
There's no way you can tell the future to know what direction any particular trade will ultimately travel. So, if you believe there are "geniuses" out there who can prognosticate marker direction, forget it. But there are techniques you can use to get a general feel for how a particular issue may trade. Study the technical and fundamental topics that relate to the stock or FOREX pair and learn how to read the charts and use the various tools associated with your charting platform. You may also want to get involved with a trading group. You'll be surprised how this support can help you learn the basics quickly.
Even the professional traders make trading errors, but they usually do no worse than break even because they are disciplined, and use a controlled approach and proper money management in their trading style. Money management and definite control of the risk are the key components to successful trading. This is a task that must be mastered as soon as possible if you ever expect to profit in your trades.
Determine the trend and don't fight it. You no doubt heard the phrase, "The trend is your friend." There is no truer statement. You must determine your trading style, the timeframe you're working within, and the direction of the trend as it relates to these issues. Once you establish your position, decide on a timeframe (active, swing, position), and determine the trend. If you do this, your chances of success become more achievable. It's never been more important to get an education in trading. We have seen some huge shifts in market direction recently, and if you know how to handle these trades, you could be developing a solid financial portfolio that will serve you well for the rest of your life.
This is not a "get rich quick scheme," but rather a method of developing financial security over time. If you get impatient, your emotions will take over and that is never good. One more thing; I hope you enjoy trading your accounts. If you love what you're doing, the money will more than likely follow. Your priority isn't the money; it's the challenge of trading. Have fun with it and you'll more than likely start to see profits in your portfolio.
The markets have been fairly volatile recently, but that's the kind of activity we want to see when trading currencies. This volatility generates movement, which creates profits. Don't get frustrated and don't quit. Develop your plan and build your financial security using a deliberate and non-emotional process of trading your portfolio. Believe me, it works!
Happy investing!
Originally published in James Dicks: Buy*Sell*Hold magazine.