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3 Tips To Make You A Better Trader

Trading is an art as much as a science, probably more so. You need to have the mental strength and stamina to be able to handle making and losing money on a day-to-day basis. Trading with a practice account will help you learn the basics of the market, but will not give you that mental and psychological strength and stamina, the skills you need most. Here are a few things you can do.
1. Look at the trade from funded forex sides. Are you looking to buy a certain pair? Try to imagine the feelings you have if you were to SELL that pair. What feeling do you have when looking at the opposite side? Remember these feelings and you will notice improvements as you become accustomed to the feelings of both sides.
2. Decide to make money, not to be RIGHT. Many people have an obsession with being right. Remember, trading isn’t an exam, it’s for you to make money. Just because you are down on a trade doesn’t mean to have to stay in it to prove anything. Cut your losses if your trade looks bad, or your feelings go from confidence to HOPE. When this happens, you are putting yourself in dangerous position and setting yourself up for more losses.
3. You don’t HAVE to trade. Many of us log in at the same time everyday looking for set ups. This is great. You will develop a sense for the pairs and stay in tune with the market. But just because you spend an hour looking at set ups doesn’t mean you have to trade that day. The hour isn’t wasted. You don’t have to frantically look around for a trade just before you have to go to work or bed. This seems like common sense, but you’d be surprised at how many trades you get into just for the sake of being in the market. Be comfortable with being flat.
If you risk too much, you can lose too much.
We often talk about the money management aspect of a trade. Naturally, we recommend using a 1:2 risk:reward ratio, which means to look for two pips of profit for every pip risked on a trade. But often the question of how big of a position to open and how many different trades one should have open at once will come up. It is an important part of trading and money management. I always recommend risking no more than 5% of your account balance at any one time. That includes all open positions. If you have 10 different trades open at once, each risking 5% of your account balance, then you are really risking 50% of your money at one time. That is too much and opens you up to a possible large loss if the market turns. Buying the GBP/USD and then buying the EUR/USD is really not that different. The GBP and the EUR will react to different events and one can be stronger than the other, but you are basically still selling the USD. So to keep your risk manageable, I recommend opening one trade at a time. If you have a $10,000 account balance, you can risk 5% or $500 on your next trade. If you want to buy the EUR/USD and are risking 100 pips, that is a risk of $100 per mini lot. So you can open five mini lots for a total risk of $500. If you are risking 100 pips, you should look for at least 200 pips in profit to maintain your 1:2 risk:reward ratio. What I like to do is to move my protective stop up to the breakeven level once the market moves halfway to my target. So if you buy the EUR/USD at 1.4000 and place your stop at 1.3900 and your limit to take profits at 1.4200, I recommend moving your stop up to your entry level of 1.4000 as the market trades up to the 1.4100 level. At this point, you theoretically have no risk in the trade as one of two things can happen….you can win the 200 pips or break even. That means you can now use that 5% risk and open a second trade. If the trends are strong and you continue to move your stop to breakeven as the market moves halfway to your limit price, you can have multiple positions open at once. But no more than one trade can be a losing trade as the others should have their protective stops at the breakeven level. This way we trade more when we are winning and less when we are losing, which is key to long-term success.

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