Often traders feel like the market is going against them on every trade. As if there is some force behind the market that reverses price action once you take a trade.

A great thing about the Forex market is that it has such great liquidity, meaning that price action cannot be control by a small number of traders, allowing much more trading to be carried out based purely on technical analysis, as opposed to shares where it’s largely based on news, or fundamental analysis.

But while it is important to suppress those emotions that lead to bad trading decisions, system chasing and consistent losses not consistent profits, it is also true that sometimes you need to trust your instinct.

Trust your instinct. Pic: Joe Nangle

Many new Forex traders don’t know where to start when they look at a price chart. Once this hurdle has been overcome through taking one of the many Forex trading courses out there, a certain ’sixth sense’ will develop about the markets. You’ll start to develop a ‘feeling’ about where price action is likely to go, or whether particular levels of support or resistance are likely to hold.

This is an important aspect of trading and is built up based on your experiences of watching price action. You will find that you will learn to spot, more quickly, previous levels of support and resistance and will make decisions about taking trades that you previously wouldn’t have been aware of.

It’s only with practice that this ‘higher level’ of understanding of price action on the currency pairings comes about and it’s useful if you’re able to get a better understanding by trading alongside others using the same or similar trading styles.

Pic: Alosh Bennett

This simple fact – that 95% of traders fail – has lasted well over the years, despite even more sophisticated tools emerging. There are countless Forex bots around that claim to win every time, numerous systems that guarantee profits. Yet still most traders take the wrong turn and lose it all.

To a certain extent Forex is simply logical. You can apply technical analysis approaches and come up with a straight forward, logical answer to the common question, “when should I buy or sell?” There are those that don’t use a logical approach to trading and lose but far more traders let their feelings influence their trades. It’s human nature.

All Forex traders will always face losses, whatever system, bot or ’secret’ they use. It’s easy to say you’re going to be disciplined about trades, too, but when it comes to crunch time there’s money on the line and no-one likes loosing money. You have to be strong mentally to succeed as a trader.

So how do you get to that point? How do you make yourself disciplined as a trader?

The answer is that you need to learn good risk management and you need to practice consistency. Don’t even think about trading with real money until you have spent a good two months using the same system consistently, without fail. It’s not so much that you need to test the system out, but that you need to prove to yourself that using the same system consistently will bring you the success you desire.

Of course I’m going to tell you that it’s this type of approach that is taught in LiveConnect, but that’s how Jarratt taught me and it worked! If you’re not convinced, check out the webinar this Saturday!

Pic: koalazymonkey

For example, every morning the first thing I do before I even look at price charts is to check what news is coming out during my trading session. I look for the high and medium impact news announcments. I’ll often set up alarms using my phone to remind me 10 minutes before the news comes out. I also make sure I have my Twitter client open ensuring I don’t miss my own scheduled tweets that alert my followers 30 minutes prior to each news announcement.

The second, and most important, action of the day is to check the market flow. I personally only trade one pair – EUR/USD – so I only need to do this once. Knowing the direction of the market, or bias, is crucial to choose whether you’ll be looking for long or short opportunities. Jarratt has a great video within LiveConnect on how to determine market flow.

Once I’ve figured out the direction I’ll be checking price action for clues as to where price might go. For example, whether price is near levels of previous support or resistance or if market flow is close to reversing.

Then I’ll plot my fibonacci line and look for points to trade from according to the bias for the day. That’s when I set my orders and wait for them to be filled.

Trading in this way ensures I have a hassle-free start to the trading day and helps me to be confident that the trades I’m taking are low risk and high reward, just like I was taught.

I found it interesting because the original post talks about a new trader who, after one trade (a profit-making one), was prepared to move from a demo to a real account.

Luckily his friend was there to stop him and he subsequently wiped out his demo account.

The lesson to be learned is that until you are supremely confident in your own trading abilities you shouldn’t trade real money. I asked LiveConnect’s Jarratt Davis what you should look to achieve before you can be confident enough to trade real money. He said, “traders should stay on a demo account until they have acheived  a steady gain on their account over a minimum of 2 months using the same system consistently.”

Of similar significance is Jarratt’s suggestion of using one system consistently. Many new traders are guilty of system chasing which is ultimately the product of impatience and results in long-term losses in Forex trading.

Are you a confident trader?

Pic: Robert Thomson

That’s why making it down the road to Forex success requires two things;

• your route,
• and passengers.

First, you need to work out the route you’re going to take – this is your strategy. Any strategy needs to be guided by some basic principles and rules, too. Your forex journey is going to be a lot smoother if you can follow some basic rules.

For example, going too fast is dangerous and could cause you to have an accident. Then you might be left without a vehicle to continue your journey. You will have wiped out your balance and have to start again. Going too fast is risky, you need to keep your risk small. So you should set yourself a limit that you don’t go over – no more than 5 trades at a time, for example.

Another good rule is to stick to a certain trading session. Depending on the time zone you live in, or the hours you have available to trade this might be;

• the London session (8am-5pm GMT),
• the New York session (1pm-10pm GMT),
• or the Tokyo session (12am-9am GMT).

The second thing you need (and I do believe you can’t do without this) is passengers. People to go on the journey with. These people should be ones who know the rules and the route you’re going down and can help you stay on that route and within the rules that you’ve set.

You can also learn from your passengers – they might have a suggestion or two to help you along on your journey. That kind of support is invaluable for keeping your mind on track. It stops you from wondering off the road down dark lanes you’re not sure of in search of a possible shortcut.

That’s why Forexmentor launched LiveConnect. Jarratt’s videos help you to figure out your own trading style based on some solid principles that have made him a successful professional trader. Forex Mentor’s Jarratt has made the journey and now you can get on the road with LiveConnect at your side. Make your way into the chat room and you’ll find yourself on a coach full of other traders including Forexmentor’s Vic Noble and Jarratt Davis all taking the same steps, reinforcing each other and you.

Sign up now or explore the benefits.