Forex Trader: Goals

The importance of short and long term goals in trading can not be stated clearly enough. Coming into the forex market you will be thinking all sorts of ideas like being able to make a million in one year, you need to clear your head of this for the moment and focus on two goals.

Now I’m not saying you can’t make a million in this business, you can make a whole lot more than a million, but without using goals to get you there, you may well get frustrated and give up. These goals have to be realistic, one for the coming month and one for the coming 6 months to a year. Always keep your goals easily within reach, once you have reached your goal create a new one, but still within reach. For example when I first began trading my monthly goal was to finish in profit even if it was $1, a profit is a profit and that is better than 95% of traders out there. Once I achieved a profit every month for 3 months in a row I created a new goal. My new goal was to finish the month with more than 15% increase in my account size.

Do you see how reachable goals keep your feet on the ground and give you something to focus on? Trading in the forex market is all about knowing your edge and exploiting it to gain profits over the long term. A casino has a very small edge yet they make millions and never loose in the long run, do you know why? It’s because they are consistent, they are playing their edge consistently and the law of averages states that they will always come out on top.

If you are coming into this business with the idea that you will be able to avoid losing trades then you are badly mistaken. Losses are part of this business and you must accept them openly like bills you pay in any business. Always keep in  mind your short and long term goals, remember you are playing the odds and they are highly stacked in your favour, far more than any casino. Just because you have a losing trade today does not make you a bad trader it is simply the laws of averages playing out. If your system has a 70% winning edge then you know out of every 10 trades you will lose3. If you step back to think about this logically as a long term business it really becomes clear that discipline and consistency are essential if your edge is going to play out in the forex market. Trading the forex market is possibly the most profitable business in the world.

Try to keep in mind that you are learning a skill that will change your life forever so if you have trouble in your first few months of trading don’t worry about it. Remember a doctor or surgeon has to study, practice and work for at least 10 years before they receive a large salary. Here are the steps I followed when coming into this business, even though I did feel a little held back, I believe it saved me a lot of money that I would have otherwise lost to the market. 1. Demo trade until you have at least 2-3 months with each month ending in profit following your trading plan. 2. Move to a mini live trading account with $500-$1000. This stage is not like trading a demo account, It’s real money and greed and fear come into play.

I personally recommend you trade this account until you at least double the starting capital while using strict money management of no more than 5% risk on each trade, preferably 2%. 3. Ok now you have doubled and over you original starting capital and even though it has taken you a while you feel on top of the world. It’s time to 35 increase the account size and take it to the next level but I would keep the account under $20,000 until you have proven once again that you can double your starting capital. Once you double your capital again you will now have in the region of $40,000 which is a fair size. It is now up to you how you fund you account but remember don’t put all you eggs in one basket.

If you don’t have capital to fund your account once you get to stage 3 do not worry, using the money management outlined earlier you can build your small trading account using compounding and you will be surprised how fast it will grow. Following these steps enabled me to learn to build wealth in this business without losing a large amount of money, I hope they will do the same for you.

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