Five Key Focuses of a Successful Forex Trader
Trading can be a very long confusing process but with the proper techniques and knowledge you can be very successful in your trading. The Apiary Fund, a proprietary trading firm has realized based on their trader statistics that (a) position sizing, (b) risk tolerance, (c) price action, (d) trend recognition, and (e) supply and demand are five key focuses of a successful trader.
Position Sizing
The Apiary Fund has noticed that one of the most important factors in trading successfully is the position size. The position size for Forex is measured in the lots. Lots are broken down into three types: standard, mini, and micro. A standard lot is equal to 100,000 units of the base currency. A mini lot is equal to 10,000 units of the base currency. A micro lot is equal to 1,000 units of the base currency. The lot sizing might be confusing to a beginner so I will give an example. Let's say that you put an order in the Forex market for one standard lot. For every pip of movement on the chart you will either receive or lose $10 depending on the direction of that move. To fully understand the importance of choosing the right position size we need to understand risk tolerance.
Risk Tolerance
The definition from Investopedia for risk tolerance is "the degree of variability in investment returns that an individual is willing to withstand." The risk tolerance is different for each trader. Some traders are willing to risk their whole account while others only want to risk $100. Let's say you have a $10,000 account. Your risk tolerance would be the dollar amount of your $10,000 that you are willing to risk. Typically traders will risk 2-3 Percent. If you determined your risk tolerance is 2 Percent then you would be willing to risk $200. After determining your entry position you want to set a stop loss at your $200 risk level. Traders that manage their risk trade much more efficiently in the market.
Price Action
Price action is a type of trading where a trader makes his/her trading decisions on a basic, bare bones pricing chart. In other words, your only real indicator is price. Trading price action is achieved by learning to read trends, reversals, breakouts, consolidation, etc. Regardless of the strategy you trade it is still very important to understand price action.
Trend Recognition
A big part of price action is trend recognition. A trend is a general direction in which something is developing or changing. In Forex a trend is fairly easy to recognize. An upward trend is when the price is stair stepping upwards creating higher highs each time. A downward trend is when price is stair stepping downward with lower lows. Determining trends is extremely important so you can position your trade correctly.
Supply & Demand
Lastly is supply and demand. Supply and demand is best explained by imagining a lawyer scale. One side of the scale being supply and the other being demand. When the demand goes up the supply goes down and conversely when the supply goes up the demand goes down. Locating strong supply or demand areas can play a huge role in being a successful trader.
If you want to be a successful trader, master these five focuses of a successful trader. To receive help learning these five focuses then join the Forex Trading Platform they teach these five focuses of a successful trader in great depth.
Position Sizing
The Apiary Fund has noticed that one of the most important factors in trading successfully is the position size. The position size for Forex is measured in the lots. Lots are broken down into three types: standard, mini, and micro. A standard lot is equal to 100,000 units of the base currency. A mini lot is equal to 10,000 units of the base currency. A micro lot is equal to 1,000 units of the base currency. The lot sizing might be confusing to a beginner so I will give an example. Let's say that you put an order in the Forex market for one standard lot. For every pip of movement on the chart you will either receive or lose $10 depending on the direction of that move. To fully understand the importance of choosing the right position size we need to understand risk tolerance.
Risk Tolerance
The definition from Investopedia for risk tolerance is "the degree of variability in investment returns that an individual is willing to withstand." The risk tolerance is different for each trader. Some traders are willing to risk their whole account while others only want to risk $100. Let's say you have a $10,000 account. Your risk tolerance would be the dollar amount of your $10,000 that you are willing to risk. Typically traders will risk 2-3 Percent. If you determined your risk tolerance is 2 Percent then you would be willing to risk $200. After determining your entry position you want to set a stop loss at your $200 risk level. Traders that manage their risk trade much more efficiently in the market.
Price Action
Price action is a type of trading where a trader makes his/her trading decisions on a basic, bare bones pricing chart. In other words, your only real indicator is price. Trading price action is achieved by learning to read trends, reversals, breakouts, consolidation, etc. Regardless of the strategy you trade it is still very important to understand price action.
Trend Recognition
A big part of price action is trend recognition. A trend is a general direction in which something is developing or changing. In Forex a trend is fairly easy to recognize. An upward trend is when the price is stair stepping upwards creating higher highs each time. A downward trend is when price is stair stepping downward with lower lows. Determining trends is extremely important so you can position your trade correctly.
Supply & Demand
Lastly is supply and demand. Supply and demand is best explained by imagining a lawyer scale. One side of the scale being supply and the other being demand. When the demand goes up the supply goes down and conversely when the supply goes up the demand goes down. Locating strong supply or demand areas can play a huge role in being a successful trader.
If you want to be a successful trader, master these five focuses of a successful trader. To receive help learning these five focuses then join the Forex Trading Platform they teach these five focuses of a successful trader in great depth.