The key for success in forex trading is consistency. This simply means having the ability to stick with your system regardless of the market conditions and apply its rules to each trade that you make.
Obviously, you should first choose a system that is back tested and you are sure that is profitable in the long run. The selection of a trading system is crucial but it is perhaps less important than being able to follow your system after you enter a trade without letting your emotions effect you.
Below are a few reasons why being consistent and emotionless is so important when you are trading in forex and additionally why you should never change a tested system when you are experiencing a series of losing trades:
First of all there is no system that produce 100% winning trades, every trading system will have what you could call winning runs and losing runs … periods when everything or nothing seems to go right. If a system produces on average 70% winning trades, statistically you will not have 7 winners in every 10 trades all the time. Sometimes you will have 4-5; sometimes you will have 9 or even 10.
Depending on your forex trading system, it is even statistically possible that you will have a run of 20 losing trades. The temptation at this point to switch systems will be overwhelming but this is exactly what you should not do.
Think about it. If you drop out when you are down, and switch to a forex trading system that looks better (probably because it has just had a winning run) you will be always moving in at the high point, and pulling out at the low point. Losses are inevitable. You would never do that with an individual trade. So do not do it with systems.
If you are liable to be swept away by the distractions of the moment, you may be feeling a little down at this point. Nevertheless, do not worry. Even if you have always had a tendency to act on impulse, it is not a fixed part of your personality. Being consistent is a skill. It is something you can learn.
Practice with a demo account, by trading on paper and by starting small when you do start. You will find that as your confidence in your system grows, so does your ability to be consistent. Hold on to that confidence any time that you have doubts.
If you believe that you cannot control your emotions and you are not able to be consistent for yourself, automated forex trading software can be the solution for you. Once you set the rules and principals of your forex trading system, the software will implement your forex trading system in the real market in every detail every moment that it is active, regardless of what happens. That is why most people call this kind of software, robotic systems.
You’ve got great insights about forex trading system, keep up the good work!
You’ve got great insights about Forex System, keep up the good work!
Good insight! Follow your system under any circumstance. There will be times you have consecutive losses. That is all right. Give your system time to work if you want results.
As a software developer, I face the problem that every trader want to see trades each and every day. If system doesn’t trade for a few days, they’re starting to complain why it doesn’t trade…Patience is a characteristic of a good Forex trader.