Financial Investment Success largely depends on a key factor. That is- Rest. Wait… Don’t be shocked! Not yet! By “rest” we didn’t mean lying on the bed or sitting idle on the sofa. Here rest means Hard work; R= Risk Management, E=Entry (with care), S= Stop loss (having stop loss in every trade), T= Take profit (Always set a goal for your success).
If you want to reach any type of Financial investment success, you have to put every factor into perspective. We know that the market is dynamic by nature, it is very important for us that all traders follow some established rules governing their operations. This essentially means that fixing some aspects of trade, be careful with trade associated emotions, and thus gives an edge to succeed in their chosen investment.
REST for Financial Investment Success
In the following paragraph, we will explain why it is important to set the above parameters if someone wants to reach financial investment success.
This is an easy aspect of trading which is overlooked by millions of traders around the globe. It will be wise for any trader to become aware of the risks involved with any particular trade decision. Before taking a position in the market, A traders must know how much money he can lose in trading, and before placing the trade he must make sure that the loss is within his comfort zone. Without proper risk management in place, a trader can not think of financial investment success. There could be so many different systems of risk management in the Forex investment arena, however, we can show you a very nice model that requires a trader to risk a fixed percentage of his capital in any trade he may take. The goal here is to increase the profitability during spurts of luck and reducing all potential losses when losing trade emerges.
Read a few more articles from “Chapter 9 : Money Management” from free Forex learning course Forex Trading for beginners:
|Lesson 1||Money Management Tips in Forex Trading|
|Lesson 2||Good Forex Trading Technique|
|Lesson 3||Using risk-reward ratio in Forex trading|
|Lesson 4||How to use leverage in Forex Trading|
|Lesson 5||Forex Trading Risk management|
Entry with Care
Based on my own experience that I have gained over the years, I can say that I have come to believe it is also very important that traders have a fixed input for their every trades. This might seem a bit confusing for you; however, let me explain- it is quite simple. Anyone who has been around the Trading Arena for a while, should know that round numbers are the good levels of support and resistance in the chart. These are numbers ending for example, 1.4200, 1.4250, etc. The reason behind this is that most of the large investors and traders tend to base their entry and exit in round numbers, which causes a change in the market trend in price levels. Having said that, not all round numbers will serve as input price, but when you are in the vicinity of a bullish or bearish market, that tend to serve as input levels nearly perfect.
Setting Stop loss
Before entering into a trade decision, it is important for us to pre-determine the levels of stop-loss and need to actually place the stop-loss order while placing an entry order. Remember one rule! You should not move stop-loss price further after entering a trade, under no circumstances! Try to develop a mentality to take losses lightly. No need to drag your stop loss towards the entrance or against the direction of the current market trend as a way to minimize the potential losses. We have seen many traders make a big mistake that involves the idea of stop-loss. Basically, this means that the trader determines a stop-loss level, however, they actually do not put the stop-loss order, but are willing to manually close the position when price reaches that level. Please guys! This approach is not acceptable if you want financial investment success! If you already know the price range you are willing to leave your trade, why can’t you simply put a stop-loss order with the trade? It’s as simple as it sounds! You know- Market volatility can change instantly, it can even change the price hundreds of pips in a couple of minutes. For example: the September 6, 2011 during the intervention of the SNB, all Swiss francs pairs moved over 800 pips in less than 5 minutes! Now suppose, you were not using stop-loss price and went to get a cup of coffee only to return five minutes later and see your real account in red! How is that? LOL!
For further explanation, Read this article: Forex Trading winning mentality
As it is essential in the case of stop-loss, it is also necessary to have a take profit price level before entering a trade. Never let your emotions take control of your trade decisions. That will deceive you to believe that the current market volatility will remain in your favor beyond the take profit level, which causes you to become greedy and, you will change the TP level for more pips or even worse, you remove it completely! That’s what called trading like an insane! All you need to do is set your goals and make sure that you are also logical while trading with focus. The market usually shows models of repetitive prices, and you can benefit from this reading price action and putting TP levels according to it.
You can learn more on this from another article: Emotional Weakness of Forex traders
Conclusion : Financial investment Success
So, I believe that you have a complete idea about REST and how it may help you to reach your Financial Investment Success. Remember! When you set the “REST”, You can really rest a little and then leave the rest to the market!