An Easy to Follow Forex Strategy Building Guide

Becoming a reputable Forex trader requires having a successful trading system. To the average Forex trader making more than 5% a month is highly unlikely. The only guaranteed way to become a reputable trader is to develop a good trading system. In this article I will answer your question: How can I become a reputable Forex trader? After reading this article, you will better understand what you should look for as a professional Forex trader.

A trading system is a simple way of saying, how does a forex trader decide when to enter or exit the market and how much leverage should he use on each trade. There are 3 elements to a successful trading system. The trade entry timing, trade exit timing and deciding on the proper leverage. When determining the over all value of our system we will be monitoring these 3 properties.

1 - When to enter the market

The quality of your system is going to be reflected by the amount of time you as a professional Forex trader are willing to commit to trading your system. For instance, if you are generally available during the hours of 8am to 4pm then it would not be logical to develop a system which enters during the hours of 2am to 6am. Deciding on which hours you are willing to commit towards trading Forex will determine the quality of trades you make on a regular basis. It is also going to influence the quality of life you live on a daily basis. Needless to say there are countless traders who spend nearly 24 hours a day watching their monitors in fear that they will miss the next big move. This is not how I would describe a high "quality of life" and this is definitely not the path towards becoming a reputable trader. If you have experienced chart gazing for more than 10 hours straight then you know what I say is true. Your lifestyle should be one where you are able to enjoy the pleasures of living a full and abundant life without having to constantly look at the clock.

2 - Exiting the market

Once you have entered a trade you should already have an exit strategy in place. This strategy on when to exit can include variables such as duration: I will not stay in any position for more than 2 days regardless of whether I am in a winning or losing position. Your exit strategy may also be price based: I will close this position out when a certain value of profit or loss is achieved. A combination of the above two mentioned criteria can be used. A number of other exit strategies including the use of technical and fundamental indicators can also be used, however the important thing to keep in mind is that an exit strategy must be in place before ever entering into a trade. You are not making things up as you go along, or if you are you're definitely missing the big picture. Trading is about the long-term view. If your goal is to become a reputable Forex trader you need to make a plan before you enter the market and dedicate yourself towards sticking to it. If you do this you will be well on your way to achieving your goal.

3 - Use proper leverage

No table can stand on 2 legs alone, leverage is undoubtedly the essential 3rd leg to any successful trading system. As a Forex trader knowing how much leverage to use on any given trade can be the life or death of your account. The level of leverage you want to use should always be predetermined long before you enter the trade. For instance many fall into the trap of adding or decreasing their position size at the spur of a moment simply because they have the fleeting feeling that something good or bad is about to happen. These two actions when carefully planed ahead of time may be sound in strategy, however it is essential that your trading rules are written before your trade is placed. It just cannot be emphasized enough, emotional trading will lead to disaster. It is incredibly easy to be fooled by your emotions, we are all expert rationalizers whether we know it or not. Being aware of what your system is and how it should be traded will help safeguard you from the changes your emotions may attempt to exert on your system. If your emotions succeed at adjusting your system even in the slightest, your entire strategy could go out the window. By creating a plan which includes when to enter, when to exit and how much leverage to use you will become free to execute your trades without the fear that your emotions will get in the way. This is how expert Forex traders move around in the market.

The joy of mastering your emotions allows you to experience them without the fear that they may end up controling you, this is a large part of becoming a professional investor. When emotions start making the decisions for you, the system you are trading will begin to change. Yet when emotions are seperated from your trading decisions, you will be free to experience them as they come without fear of loss. Our goal is certainly not to turn man into machine, or to remove that part of the human spirit that allows us to experience pain and pleasure; the goal of every Forex trader is to create a lifestyle which promotes an inner sense of accomplishment. By sticking to the above 3 points you will find a new path unfolds before you, one which will lead you to Forex trading success.

Article Source: http://www.contentspool.com

An expert Forex trader managing accounts internationally, Aaron Stokes brings guidance to Currency Traders sharing his insights on topics such as leverage, system development and technical analysis. His managed Forex program offers returns in excess of 10% per month. Aaron Stokes is currently ranked in the top 10 on Google.com For more information visit: www.forex-cipher.com

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