Thursday, May 23, 2013

Positive Thoughts of Trading Forex

Any successful trader will tell you that he has made the mental decision to be as positive as possible in thinking, acting and doing, and that having a positive mind is critical in overcoming the setbacks brought on while trading.

So what can you do to become a better positive thinker?
  • Start off by, observing your negative thoughts and understand that you can change them. Once you start ridding yourself of those thoughts, you are thinking positively, and also creating a positive attitude.
  • Next, think and visualize yourself as already being a successful trader. Imagine that your trading experience allows you to easily notice changes in the market and react to them by making profitable trades. 
  • Imagine only positive results, Imagine the wealth you've created and the lifestyle it affords you. This type of thinking will help reinforce the ideas that first led you to the currency market and motivate you to stick with it.
  • Another easy method is to surround yourself with a positive environment. This can be your work space or the people around you. The world is filled with doubters and people who want to "help" you by destroying your dreams or shooting you out of the sky. Make it easier on YOU by surrounding yourself with other positive thinkers who reassure and support your Forex trading. 
  • Liven up your trading space so it's inviting and makes you want to be there. Maybe it's time to replace this crusty keyboard?
  • Help yourself by being a positive talker to others and about yourself. Speaking positively fills your head with positive thoughts and ideas. Negative self-talk only helps to hinder your potential as a trader and keeps you from growing.
  • Do your best to welcome the currency market's obstacles and view them as your opportunities for profits and success. Dealing with these obstacles will only help you to create a better trading experience. 
  • Small changes in the way you think about yourself, think about others and think about trading will go a long way in your overall success as a trader.

Choosing Your Trading Strategy

As a trader, why are we focusing on medium-term forex trading? Why not long-term or short-term strategies? To answer that question, let's take a look at the following comparison table:

Type of Trader Definition Good Points Bad Points
Short-Term (Scalper) A trader who looks to open and close a trade within minutes, often taking advantage of small price movements with a large amount of leverage. Quick realization of profits or losses due to the rapid-fire nature of this type of trading. Large capital and/or risk requirements due to the large amount of leverage needed to profit from such small movements.
Medium-Term A trader typically looking to hold positions for one or more days, often taking advantage of opportunistic technical situations. Lowest capital requirements of the three because leverage is necessary only to boost profits. Fewer opportunities because these types of trades are more difficult to find and execute.
Long-Term A trader looking to hold positions for months or years, often basing decisions on long-term fundamental factors. More reliable long-run profits because this depends on reliable fundamental factors. Large capital requirements to cover volatile movements against any open position.
Now, you will notice that both short-term and long-term traders require a large amount of capital - the first type needs it to generate enough leverage, and the other to cover volatility. Although these two types of traders exist in the marketplace, they are often positions held by high-net-worth individuals or larger funds. For these reasons, retail traders are most likely to succeed using a medium-term strategy.

Active traders can employ one or many of the aforementioned strategies. However, before deciding on engaging in these strategies, the risks and costs associated with each one need to be explored and considered.

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