Stepping into the glorious world of the finance market is like getting on a roller coaster. First, there's the station. Everyone boards, straps their seat belts on and you are pulled higher and higher until you reach the apex of the summit. You're released down a free for all. As you careen into bank turns, with G-Forces pushing you further into your seat, you speed past the station, into a corkscrew loop, only to be dropped again backwards and arriving on air-pressured brakes, into the station. Welcome to commodity Forex trading. This market has more ups and downs than any market, so before you think you are ready to buckle in, there are four trademarks that should be a good barometer to see if you are ready to jump into the world of Forex trading;
- Avenue
- Philosophy
- Judgment
- Performance
Avenue
Let us first step into the front seat and as you look ahead, all you see in this a large ramp and the sky. When trading, you have to approach it like a roller coaster, you cannot see the whole, but you can plan for what is in front of you and then project for the future. A few good questions to ask yourself: do you want to be in front of the computer every day? If you construct a weekly chart, are you more comfortable with overnight risk? Would you be willing to go against your already established position? These are basic questions that give you a general idea of the future. In addition, a concrete mode of trading is essential for establishing a solid routine, to gain an edge. Once your routine is established, it is essential that test these strategies, that results in a positive outcome. All strategies do not yield 100% positive outcomes. Consequently, you are looking for a ratio of 2 positives to 1 negative (2:1). This inherently leads to how to move progressively in your outlook of the Forex markets.
Philosophy
Now as the car is being pulled up its ascent (trading decisions are starting to be made), you look to your right and left and begin to see more clearly the financial road ahead of you. At first you become antsy, your heart races and you are wondering, why? However, patience, self-control and resolute detachment are the key to conquer the Forex trading market. Patience, allows you to watch indicators, to see if you need to wait out the current trading opportunity, or prepare for the next one. Secondly, self-control allows you to breathe in and out, steady your heart rate, have belief that you are safe and secure. Conversely, it can be difficult to stay disciplined in stop losses, but remember you set up a stalwart routine, that should sustain the fluctuations of the market. This is where your clear sense of direction (indifference) is key; pay attention to your charts, if you have entrance and exit levels, there is no need to jump off a ride that has just begun.
Judgment
The coaster is now descending and you see turns and loops ahead, the first loop and curve caught you by surprise, but as the ride progresses you begin to get a sense of where the wind breaks when entering a turn, or picks up when entering a barrel loop. This same principle applies when trading, understanding that an oil trade differs from a corn trade. Both of these markets have different personalities in the market. Imitate the big guys, see what larger corporations are doing, and consider it when trading.
Performance
To become a successful trader you have to have impeccable risk control. Once you stepped into that car and decided to go for a ride, you understood the inherent risk. When entering commodity futures trading, you have to get your trades going in the right direction, as you first begin. As a result keep your expectations reasonable. If this is your first attempt, tracking, and pacing where your stops are, can give you clear information.
- Profitability
- Loss
Be reasonable. All in all, you made it back to the station, there were continuous loops and turns, but that is the nature of Forex trading. Commentators will say, trade or sell today, to gear the overall market a certain way, but adhere to your philosophy and trust your judgment. Small losses are inevitable, and take them quickly, so you can stay on track to be profitable. Avoid big losses. Remember every trade decision that you make in the Forex market, will always test what path you need to take (avenue), the purpose of making that particular trade (philosophy), why you made that decision (judgment) and its overall potential earnings (performance). Buckle up, stay calm, and master every twist that may come your way.
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.