Trade mangement Currency Trading.

Trading and money management professions are expensive to learn an not everyone who attempts to learn succeeds.Those who do succeed may profit handsomely.In this respect the trading profession is no different from the medical, engineering,technical,artistic,sporting and political professions.
Trade management ( Two approaches).
1) Scaling out approach.
Putting on the entire position upon the initial entry and then liquidating positions, of that positions (a) to cover costs (b) take a small profit (c) and finally to ride the trade as far as it will go with what remains of the position after partial liquidation.
2) Pyramiding approach.
Build the position by entering a position of it to test the waters.If the initial position becomes profitable, you then add to the position in stages until you have put on the entire position.
Much of any acceptability of the approaches depends upon your personal comfort level in handling risk and your financial capacity for handling risk Muraleedharan http://stockscentral.blogspot.com and http://spiritualcentral.blogspot.com

Currency Trading is a Specialised Knowledge.

Knowledge will not attract money, unless it is organized and intelligently directed through practical plans of actions, to the definite end of accumulation of money. Knowledge is only potential power.It becomes power only when, and if, it is organized into definite plans of action and directed to a definite end.The meaning of the word 'education' is to 'develop within'.An educated man is one who has developed the faculties of his mind, that he may acquire anything he wants, or its equivalent, without violating the rights of others. Knowledge has no value except that which can be gained from its application towards some worthy end.Successful men in all domains never stop acquiring specialized knowledge related to their major purpose, business or profession.The order of the day is specialization. Hence in order to succeed in currency trading you should acquire and practice the knowledge and skills required for currency trading.How long one has to practice? The answer is ' till you succeed' using P3R principle which is discussed elsewhere in this blog series.Do you have the resources to pass through the learning curve which leads you to build expertise in currency trading? The answer is 'You have to decide whether you have it or not'.This is the hard truth of the reality.But once you pass through the learning artist's phase and build your expertise, you can enjoy the wonderful results too like the legend of value trading' Warren Buffet'.You should get specialized in currency trading and get specialized in a single currency pair of your choice so that you can become an expert in that one pair which is enough to give you financial freedom. Muraleedharan http://stockscentral.blogspot.com

The Cardinal Rules of Currency Trading.

CUT YOUR LOSSESS

Decide your trading float, set your maximum loss,Calculate your stop loss, calculate your position sizing before you enter into the trade .You should 'plan your trade and trade your plan' with utmost discipline to generate consistent profits from currency trading.Once you have set your initial stop loss, you have ensured a mechanism to cut your losses short.

LET YOUR PROFITS RUN

How do you handle your profits, once the trade moves in favor of you? There are two types of exits. The stop loss exits and trailing stop exits.Trailing stop is the one you implement once you are in a profitable situation.Trailing stop losses will allow you to follow a trend as it develops and exit the position at trailing stops or at the point (Target) where you can realistically maximize your profits. You should have a way to look into your profits.Profit management is equally or more important in currency trading.This form of trailing stop is adjusted on a periodic basis according to a mathematical formula that keeps it moving upwards as the price moves upwards.The key to trailing stop is that you need to continually make adjustments to it,make sure that the stop is moved in your favor.With a trailing stop loss in place you will be able to let your profits run and let your trading system deliver the maximum profit.Stay with the trend as it develops and let your profits run.Then when the price turns you can exit.You have to monitor your position.Theoretically these lines look very simple.But when you are in the trade you will find it difficult to manage your positions.But practice over a period in the right way makes you comfortable which appeared uncomfortable in the beginning.Good trading readers.Muraleedharan http://forexcentral.googlepages.com

Method, Money and Mind

Trading is a life experience , it is not like any other business.As you become a better trader, you become a better person. But as you evolve it is difficult to look back at where you were.Dr.Alexander Elder describes about three M's. Method, Money and Mind.Method refers to how you find your trades- how you decide what to buy and sell.Each trader needs a method for choosing specefic stocks, bullions, commodities, currencies, futures, or options as well as rules for ' pulling the trigger' deciding exactly when to buy and sell.Money refers to how you manage your trading capital.You may have a brilliant trading system , but if your money management is poor, you are guranteed to lose money.You have good system, money management and if you dont have the commitment and discipline to stick to your system and money management , then also you are sure to lose in the currency markets.Hence Mehtod, Money Management and your Mind are important in trading.Traders go through three stages of development.In the first stage they are more focussed on Method.Those who survive that stage get focussed on both Method and Money Management. Those who survive that stage add one more component, Mind and all the three put together the trader will be able to make consistent profits from the market.Those who reach that stage become more relaxed, quieter, not jumpy in the markes.They are focussed well on money management and risk orientation.Their trading system is in place, they are at peace with themselves and they spent more and more time thinking how to allocate their trading capital in order to reduce overall risks.This takes years of experience to reach this stage.Forex trading is not get rich quick scheme.Like any other profession in medicine, law or arts , to become an expert trader and to trade for living also takes time.Muraleedharan http://forexcentral.googlepages.com

Trading Plan for currency Trading.

Your trading plan consists of your entry , stop loss exit , profit target exit and risk to reward ratio.You have a set up you trade and entry trigger signal.Before entering itself you should plan for two exits. One is a stop loss exit and the second is a profit target exit.Your risk to reward should be 1:2.5 for swing trading in my opinion.Imagine you have an entry signal where your stop loss need to be placed 2 dollars and your target is only 1 dollar. This is a high risk condition and you should pass on the trade even though you have an entry signal. You should wait for low risk entries.When a trader becomes risk oriented that is the stage in which currency trader can pull out consistent profits from the market.If you have multiple trades you can plan for two profit target exits one with 1:1.5 risk to reward ratio and move the stop loss to entry point for the other remaining position to let the profits run.By moving the stop to entry level you have cut your lossess. Here you have incorporated all the three simple rules of trading in your plan ie 1)Cut your lossess 2) Let the profits run 3) Trade selectivity.You have become risk oriented and you take only selected low risk entries.Muraleedharan http://forexcentral.googlepages.com