Common Forex Trading Mistakes and an Easy Practical Approach to fix them.
Hi folks,
I would like to share with you guys my simple trading
system. This system, I consider simple and stress free because before I
discovered it, several years of studies, research and practice have been
invested into it with the sole objective of finding something simple that
anyone can trade profitably with by following the simplest self explanatory
instructions.
Now, let us analyze what this system constitutes.
It constitutes just a set of 2(no) 2EMA custom indicators
but with magic settings on the best time frame. I call them magic settings
because the custom setting coupled with the correct time frame is
what gives signals that maximize the move on every trend- after having eliminated
the usual lagging and repainting properties common with ordinary indicators.
But, that is not just all that makes my system a profitable
and unique one. What makes it desirable is the fact that it is simple and
stress free.Consider the following
benefits.
1.
It eliminates the need to stay tensed and
glued to your system 1hr, 10hours or 24 hours just watching your eyes off, waiting
on a potential set up or signal. It needs only 5mins to enter a trade and then
you are off!
2.
It eliminates the need for any complex
analysis or any further analysis once you get a Heroic signal.
3.
It eliminated the need to have your PC or
Laptop on either, waiting on some sound alert to catch the big moves.
4.
It eliminates the pain and regret associated
with missing powerful market moves.With your Heroics signals, one never misses a market move as you are hooked
24/5 on the market just by having a mobile Metatrader 4 installed on your
phone(I phone,Blackberry,I pad or Android)
5.
You get a tested money management formula
that ensures you make consistent monthly profits and never lose your capital or
account balance.
6.
Eliminates the possibility of paying
recurrent hundreds and thousands of dollars to signal providers.With
Heroics system, all you need is to download the 2 indicators which are
already programmed,(see download link below)then you feed your phone
with constant 15-20 signals every month.Each signal can give 50-350pips.
Before we continue, allow me to share with you these common
trading mistakes and for you to recognize in your own best discretion how the Heroics system is a great help to
fix them all.
COMMON TRADING MISTAKES.
No money management
The main difference between an amateur and an experienced
trader is their approach to money management. Professional traders recommend
risking a set percentage of capital and never altering that percentage. Risking
a set of percentage of your total capital on each trade is an advantage in
times of repeated loses because it reduces their impacts. Amateur traders often
disregard this and increase their stakes as they begin to loose more. This type
of scenario inevitably leads to loss after loss.
Not knowing your market
A common mistake made by novice traders is to begin trading
without having sufficient knowledge of their chosen currency pair(S) and how currencies
are influenced by global events. Learn as much as you can about how different
financial markets impact each other and how they correlate, i.e. stocks, bonds,
commodities and forex. This knowledge would enable you to make better informed
trading decisions when various economic figures are released. It is also
important to identify the type of market that is prevailing to allow you to
adjust your strategy accordingly and thus avoid entering into loosing trades.
The more informed you are, the better your chances of trading successfully. Be
aware that some markets participants have different intentions from the ones
you have, for example, hedgers often look for good average prices on large
orders in order to risk manage their portfolios. This is in contrast to
individual traders who seek to maximize profit on each trade.
Not monitoring you positions
It is crucial that you monitor any exposure you have in the
Forex market. Having a close eye on how your trade(s) is/are doing will help
you maintain control of your trade(s) and help you follow market movements as
they happen. Staying up to date with market developments is a good way to
maintain and expand your level of knowledge an understanding of the Forex
market. Be aware that the Forex market trades 24 hours a day, so making use of
pending orders may be crucial if you want to leave your PC.
Now, allow me do a
little pause on the common trading mistakes and expatiate a little on point number four
of the aforementioned benefits of the Heroics system so that you can have a
clear picture of what I was saying there. In quote, it said
“It eliminates the pain and
regret associated with missing powerful market moves. One never misses a market
move as you are hooked 24/5 on the market just by having a mobile metatrader 4
installed on your phone (I phone, Blackberry, I pad or Android)”
Heroics system was
designed with the intention to suit the goal and style of a swing trader.
Someone who wishes to catch the biggest move the market can make. Such moves
can last from several hours to days. With this, we need not worry about the
ranging market or news releases because our money management is sound and in
control.
A trader’s experience, in my somewhat poor analogy, can be seen as
someone who embarks on a journey by train. He intends to make a trip by train
from say London to Paris. While for some, they stay all the way on the trip
till they get to the last stop in Paris, some will decide to keep making stops,
getting off each time the train stops at a sub station in several smaller
towns. And in order to continue their trip from where they had earlier stopped,
they would have to wait for another train to join to Paris. With
Heroics train, you are on a one way trip to Paris or better said you are on a
one way trip to catching and maximizing every powerful market move as it
happens because you are always on the train.
Let us continue with
the common trading mistakes as I am yet to give more details on my trading
system.
Using too much leverage
One aspect of the Forex market that attracts many traders is
the opportunity to trade on margin, in other words, leveraged trading. Trading
with a small initial deposit will still make it possible for you to open
relatively large positions, so it is important not to overdo it when selecting
a trade size. Forex is usually traded with a high degree of leverage, which
means you are able to provide 2% or less of the actual amount you are investing
whilst sustaining profit/loss as if you had invested the whole nominal amount
yourself. This can work for you as well as against you. The possibility does
exist that you could sustain a loss equaling to some or even all of your
initial investment. It is also possible to loose more than you initially
invested in your trading account. We do have risk management systems that are
designed to help prevent unmanageable losses although these measures sill
require a responsible approach to trading.
Not using stop loss or not using stop
loss orders appropriate
Many new traders hold
on to loosing positions far too long thinking, or hoping, in some cases that
the market will turn around. They also tend to get out of winning positions far
too quickly to lock in an immediate profit, which eliminates the chance of
greater gain. Although, it is tempting to have this mind frame, you must have
the patience to enter only those trades which you think are opportunistic and
follow this up with the discipline to either cut this trade quickly if it turns
against you or run with it because you believe in the trade.
No discipline
Disciplined traders who stick with a tested trading plan
consistently will, more often than not, profit over those who trade
inconsistently because constant second guessing ruins the profitability and
eliminate the benefits of having a trading plan in the first place. It is
crucial that you plan your trades and trade your plan rather than randomly
picking out trades on a whim because the latter is no more than punting with
only the hope of winning as opposed to having an edge in the markets through the
use of a solid, consistent trading system. It is important to maintain
consistency with your trading system and follow it up with good analysis of
your own processes in order to have a better idea of where you are going wrong.
Let us do another pause on the common trading mistakes, to briefly
expatiate on the point number five of the benefits of the Heroics system. We
must know that if we are always connected to the market, we have the
opportunity never to miss any powerful move as they happen and by that we
already have a system to always stay hooked to the market moves 24-5 all year
round. For that, I assure you, you don’t need to be in a hurry to give room to
the demon of greed just in a bid to make quick big profits. You can raise a
$10, $100, $1000 etc trading account over a small period of time just by making
consistent gains. With the Heroics system, we have already a system that can safely,
comfortably and consistently make us 30-60% profit monthly, we should be happy
with that.
By the way,open here to get free $100 trading account without any initial deposit
You can start real live trading with the funds in this account and
withdraw any profits made.It is not obligatory to add more funds but you
may add more funds if you wish to earn better profits.
Now for each trade entry, to get the lot size to enter a trade with, we
should use this standard money management formula.
Say we have a $1000 account and we wish to enter a trade using the
Heroics signal, we would go like this:
Account balance or Capital- divided by- 1000 or 2000pips = 1 lot or 0.5 lots. That means we are risking only 0.5-1% of our capital on every trade entry. Let’s not forget that the pip value differs from broker to broker. Some have 1pip= 1USD.Like Instaforex .
Account balance or Capital- divided by- 1000 or 2000pips = 1 lot or 0.5 lots. That means we are risking only 0.5-1% of our capital on every trade entry. Let’s not forget that the pip value differs from broker to broker. Some have 1pip= 1USD.Like Instaforex .
For your stop loss orders, it is advisable to use 50 pips minimum and
apply the trailing stop at say 50-80pips.These stop loss,trailing stop and
take profit values are just my own
recommendation. You may use your own values at your own best discretion. Each
Heroics signal in most cases, gives from 50- 350pips. So, say we
averagely and at a worst case scenario after deducting our losses, make
between
350-500 pips each month, which is already 35-50% consistent monthly
profit by
religiously staking 1% of our capital on each Heroics signal we enter.
Having said all this.
Now, let us continue to the concluding parts of the common trading mistakes.
Trading on emotion
Keeping calm and maintaining a balanced state of mind is
crucial when trading in order to remain focused on relevant events. It’s
important to always remember that the market’s actions are nothing personal.
It’s quite an easy thing to say but very difficult to do especially in the heat
of the moment when you have to make a split second decision. Novice traders
tend to trade with their emotions and forget all the things that they have
learned.
Random decision making
Traders should know where they intend to open and close
their positions before entering any market, based on a particular system they
are following. Setting this ahead of time helps traders to focus on their
system and eliminate second guessing. It can also reduce losses by having stop
loss orders in place. It is important to keep in mind that the market may not
always agree with where you place an order.
Trading without a strategy
A significant amount of time should be spent on deciding on
your strategy before you place your first trade because this will make it
easier for you to concentrate on market events. Most novice Forex traders begin
trading without having sufficient knowledge of their chosen currency pair(s),
how currencies are influenced by global events and how they plan to take
advantage of price movements. It is important that you observe the market price
action and try to identify trading patterns before risking your capital, with
your observations helping you formulate a trading plan and a trading style.
Your trading strategy should take the following into account
Planned frequency of trading.
Time of day when you plan to trade.
Technical indicators you plan to use.
Buy and sell signals you plan to use.
Estimated risk and reward for each trade.
A daily stop limit to
protect your capital base.
We have been able to share this article on common trading
mistakes Thanks to Winning Trader’s Journal.
Now, continuing with the concluding details on the Heroic system. After
your mobile MT4 have been installed on your I phone, Android or Blackberry, be
sure your phone also gets email alerts that sounds. You can dedicate or open a
new email address just to get the Heroics signals if your email box is always
bombarded with emails that gets your email alerts sounding too often. This is
simply to ensure each email that arrives in that email box is a Heroic signal.
Or like I do, simple make use of an application (likedrivesafe) that announces
each email that arrives on your phone.
You will need a VPS (virtaul private server which cost just $10 a month to host your Mt4 windows desktop platform. Open here to see VPS. This is to ensure the Heroics custom indicator is always hooked on
the market 24-5 (Mt4 platform) in order to always feed your phone with Heroics signals. You may ask for help
from me or from the client support of your Broker if you need help on how to set up and run your VPS.
After installing, the 2 II EMA Heroics simple custom indicators, then
here, you must enter these settings on your Mt4 windows desktop platform to
ensure you get email signals on your phone.
On the top left corner of your Mt4 platform go to tools, then select
options, inside options, select email and tick enable then enter the following
values.
SMTP SERVER - smtp.mail.yahoo.com:465 or smtp.mail.gmail.com:465
SMTP LOGIN- Enter your email address (yahoo or gmail) for receiving
signals. E.g. blablabla@abc.com etc.
SMTP PASSWORD- Enter here your yahoo or gmail password
FROM- Enter here your yahoo or gmail address
To - Enter here your yahoo or gmail address
Then click on test. If everything is well done, a massage box will pop
out showing “Message was successfully queued! Look at journal for more
information”. Click ok, go to your journal under terminal you will find a line
that reads “mail: ‘test message’ has been sent”. You would also get the test
message on your (blablabal@abc.com)
email. Ensure your laptop internet is connected while doing all this. Then
click the Ok. You may now restart your platform.
Now you are ready and all set to begin your one way “London to Paris
trips” When a Heroic buy or sell signal arrives on your phone, it would read
like this: HEROICS EMA ENTER BUY or HEROICS EMA ENTER SELL.
Attached below are the (2) IIEMA Heroics custom indicators. See Chart pictures showing Heroic custom indicators signals.
Practice with them,
entering trades on your Mobile Mt4 platform, whenever you get a Heroics email
signal on your I phone, Blackberry or Android, signals already powered by your
desktop MT4 running on VPS. Know that,
If we wish to secure our trading capital and equally make consistent profit, it
is paramount to enter trades using the money management formula already given
i.e. divide your trading capital by 1000 or 2000pips. The value you get is the
lot size to enter a trade with.
See free versions here. Download here and here
Note that these indicators may be freely found on the internet. They
are originally not my own personal design. Only the already mentioned magic numbers and email text message
are my intellectual capital and that, i have not published freely on
the internet.Good-luck!
