Profitable Forex trading requires a plan
Before I give you my five tips for better trading, you need to know one important thing…
… If you do not have a trading, risk, and money management plan. You may as well quit trading today.
If you want to be a successful trader, you must have proper plans in place to achieve success. A good set of plans will:
- Keep you on track and motivated
- Keep you from blowing your entire Forex account
- Help you to manage trades and risk
- Help you to optimize your trading strategy
If you need help putting together a trading, risk, and money management plan, check out my free Forex course. In the course I show you exactly how to put together the perfect plans, and I share my plan templates with you.
5 tips to profitable Forex trading
1. Use Support and Resistance
Support and resistance is one of those things that all newbie traders hear about but few use properly. I believe that all traders should place support and resistance areas on their chart. It doesn’t matter what strategy or system you trade, even if you trade EA’s, support and resistance is vital.
support and resistance areas tell you precisely where price most likely stall or bounce. Traders strive to achieve even the slightest bit of insight into what price will do in the future. support and resistance areas give you that insight. Just check out the chart below and see how accurately price reacts to the highlighted support and resistance areas.
Whatever trading strategy use the insight that Support and Resistance gives you can help make you more profitable. So start placing these areas on your chart. Check out my free Forex price action strategy to see how I place my Support and Resistance areas.
2. Plan Your Trading Week
Planning your trading week is essential. Sadly, many new traders do not plan their trading week.
Every Saturday I go through a simple two step process that prepares me for the coming trading week. It only takes me about an thirty minutes.
- I check and write down all major news releases that are due in the next week. This saves me from entering trades at the wrong time. I wrote a post about this last year which you should check out.
- I go through every pair I plan to trade in the coming week and do my price action analysis. This includes adjusting support and resistance areas and identifying key price levels. You can see my weekly price action analysis on this blog.
These two simple steps prepare me for the week ahead, and help me avoid stupid mistakes.
3. Mastering Forex takes time, a long time
I have said it a hundred times on this blog, Forex is a career, not a get rich quick scheme. You need to realize that becoming a full-time Forex trader, can take two to three years, and sometimes longer. If you are not ready to commit yourself to learning Forex, for at least one year, then you may as well give up now.
If you want to become a profitable trader, you need to understand, it will take a long time, and a lot of hard work. There are no short cuts, and no magic bullets in Forex.
I wrote about this recently in the get Rich Slow article. I also wrote another article recently in which I mapped the road to success in Forex.
4. Keep a Trading Journal
Keeping a trading journal allows you to track your mistakes, and learn from them.
Trading journals also help to you to recognize flaws in your strategy.
About two years ago I started to keep a trading journal. I tracked every single trade that I took. After six months, I noticed a pattern forming with some of my losing trades. Trades I opened just before New York close, had a 79.18% failure rate. Without a trading journal, I would not have noticed that pattern.
So, imagine finding all the little mistakes in your trading…
… I talk about trading journals in lesson 5 of the free forex course along with sharing my trading journal template.
5. Build Your Own Strategy
This tip may sound scary, but don’t worry. You do not need to build your own trading strategy from scratch.
I love my price action strategy, because it suits my style of trading…
… But does it suit yours? Maybe yes, maybe no.
Forcing yourself to trade a strategy that clashes with your personality, is not a good idea. The key is to take the parts of the strategy that work for your, and use them. It may take a long time, but eventually, you will be able to build a unique strategy, that works for you.
Where these tips helpful? Leave a comment below and discuss them or throw in your own tips!
Jason Ayala
Once again bro, Great Fricken Post.
All though these 5 tips seem ‘basic’ and elementary, as a developing trading, I’ve learned that its the basic and simple things that keep you in the game.
Journal is MUST btw, but so is making time to periodically REVIEW the journal…which is something I am still struggling with bth :)
Lastly I couldn’t agree more with point number 5. My strategy is actually a combo of bits and pieces from 3 that I learned over the past three years, and it finally seems to have all come together into one that I own.
Thank you
Nick
Journals are a must, I have been getting lazy recently and not bothering to mark trades in my journal. I think it is because I am taking trades from my phone more and more so I am not always at my desk.
Today I started using Evernote to record my trades which hopefully will make life easier as I can user Evernote from my phone.
Guvernor
‘Plan your trading week’ is a great idea that I haven’t heard before. I’ve been in the habit of taking each day as it comes and not looking any further ahead than that. Great post as always Nick.
Nick
I use to be the same but over the last few years I have begun to realise just how important having a plan is.
Patrick
Very well written! Good thoughts for sure.
Nick
Thanks Patrick!
Jack
Writing down your plan for the coming week in detail is something that I will want to do when I start my life trading (still using practice account). Thank you for all that you do on this site.
Nick
You may as well start now Jack. If you start now you will be well practiced at planning by the time you open a real account.
Greg
Excellent advice. I know that ever since I started using a trade log for every trade I take it has dramatically changed the amount of risk I will take and I only take trades that I have an edge on.
Nick
Greg it has created a similar change in my trading. I use to enter every set up I saw but now I only enter the strongest set ups.
Akande Sunady
though am new in this biz and i have been sourcing for advices, i can tell that you have been a good and excellent help to me, God in turn will reward you. God bless.
—Akande from Nigeria
Nick
Thanks Akande
Nick
Thank you for the sound advice!
Mozzy
Nick
No problem Mozzy, thanks for commenting.
Benfaida159
Nick,
Only signed up to your free course recently, and i’m already looking at the charts in a different
way. clearly explained how to look and understand the various types 0f candlesticks. Excellent
advice. I’m grateful for the regular tips you genuinely share with us.
Regards: Ben
Nick
Thanks Ben.
Dean
Thank you, Nick. This will be helpful. I am finding that the stumbling block for me is getting the S/R zones onto my charts. S/R lines, not too bad. Something about defining the top and bottom of a zone though just isn’t working for me (more like I’m not working for it). Would appreciate it very much if you could illuminate us a bit more on how you determine the boundaries of your zones. Thanks again, Dean
Nick
Dean, I am pretty sure that I mention in the Forex Strategy section that I do not really care where I place the zone lines. They are just placed roughly 10 pips on either side of the center line. It is not about precision it is simply about reminding myself that it is a zone as opposed to a precise line.
geoff
I am not a succesful Trader but I am going to be.
all the tips are good but the Ones most pertinent to my TRading is My Journal in particular and Building my own Strategy next.
Keeping my Journal is like having a Tutor always at hand that is a constant reminder of the rules that I made for my Trading Plan and like yourself Nick it has helped reduce the size of the losers and stopped me from Micro Managing my Trades. Everyday my broker sends me a daily statement with all of the previous days Trades which I analyse and put in my Ring Binder Journal today I rxd my Monthly Statement which showed 238 Trades over the Month of April confirming that at the beginning on a daily basis a lot of the losses where Oversize and because of Micro managing too many Trades made resulting in small winners and larger Losers.
now that my Trades are Set and Forget and manage at the close of the Candle according to the TFrame i am in the results are keeping me at Breakeven.
My Strategy is not yet completed and probably the reason for not Moving into Profit because of experimenting with what and doesnt work for me.
Great Website Nick and many thanks for providing it with your Insights and suggestions.
Geoff
Infa
All advises are very useful, right to the point! Every time you remind us how it is important to trade consciously by applying the knowledge- Im learning something newJ))
Julie
Nick – a great advice checklist. These 5 tips are so much more than that – they are a blueprint for anyone wanting to become a professional trader.
I think that I might be the student you mentioned in the 5th section. Yes, I do combine what I have learned from you with previous trading experience and training – it simply means that I trade continuations as well as reversals.
It works for me.
However, to your students who are completely new to trading I would urge them to stick to exactly what you teach them – and to move from your basic to your advanced course if they can afford to do so (It is worth every penny). They don’t need anything else.
It is obvious that I felt I needed more insight into how to read the charts even after 2 years of trading – which is when I started searching and found “forex4noobs”
So “NEWBIES” – yes, I’ve tailored 2 sets of information together as Nick said, but I would not recommend that for new comers to forex. Bear in mind that I was trading OK but in a limited fashion when I took Nick’s Advanced course. Now my trading has improved because of Nick.
These 5 forex tips should be taken seriously – get them right. Take particular note of the 3rd one. Imagine that you were training for any other profession – you wouldn’t become a doctor, a banker, a teacher or an engineer in a few weeks.
Also, go over and over Nick’s course material – you will learn something new each time.
rasul
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