The Secret Keys to Currency Trading

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. Each trading system is made essentially of 3 key components. Leverage is a key component, so to also are Entry & Exit timing. 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. The quality of your every day life is going to be influenced by this as well. We all know of the traders who aren't able to pull themselves away from the screen, there is a thin line between addiction and dedication; the fear that they will miss the next great trade opportunity is highly based on an indecisive trading strategy. 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 trade entry times must be comfortable for you to implement into a leisurely lifestyle.

2 - Exiting the market

Once you have entered a trade you should already have an exit strategy in place. This exit strategy may be based on duration: I will exit position after 10 hours whether in profit or loss. Your exit strategy may also be price based: I will exit position when either a profit of 15 pips is reached, or a loss of 15 pips is reached. 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. Follow this principle and trading success will be right around the corner.

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. A dangerous place to find yourself might be adding lots to a losing position in the hopes that it will turn into a winning trade, or compulsively closing out half of your position before your target is met. It may turn out that trading in this way can bring advantages as well, but only when this strategy is already a part of your trading plan. It must not be executed compulsively. It just cannot be emphasized enough, emotional trading will lead to disaster. Emotional trading will cause you to increase or decrease your leverage based on how you feel in the moment, and in that moment your emotions will trick you into throwing your entire trade plan 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. Professional fund managers use these techniques to make million dollar decisions every day.

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. A reputable Forex trader is not a zombie, or a machine that turns out trades without thinking or blinking; the goal of every Forex trader is to create a lifestyle which promotes an inner sense of accomplishment. Putting these 3 keys into practice will evolve your trading style and help you to achieve the level of success which a few international elite traders enjoy on a daily basis.

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