Finance and Credit Professional

Creating a forex trading system with set rules and trading parameters is the first step you should take in separating yourself from the $90 percent of new traders that fail to turn a profit.

There are two main reasons why trading a system with set rules can work so well and make your trading much more profitable. First, as long as you do not break the rules of your system, you will never enter the market on a whim. You will only place trades when you see a verifiable reason for entering the market. Second, since all trading desisions are determined by established parameters, you will not need to deal nearly as much with your own emotions when you are trading.

The most important part of a successful forex trading strategy is the EXIT strategy, as determining when to exit the market is usually the most emotional of all trading experiences.

You will be continually be pulled in opposing directions by greed and by excitement. The part of you the is excited will be happy that you have earned a few pips on the trade and will want to exit with a guaranteed profit, whereas the part of you that is greedy will want to stay in longer to squeeze as many pips out of the market as possible.

Also, an exit strategy does not need to be too complicated. You can create a few simple rules based on the time-frame of the chart you are using. For example, let's say that you are using a 10-minute bar chart, you would probably enter trades and stay in the market for 1-12 hours.

So you could create a rule that goes something like 'I will try to get 45 pips on each trade, and i will exit the market if it goes against me by 25 pips.' Just coming up with an exit strategy like this is a very good idea because it eliminates the need to consult your emotions every time you are considering exiting the market.

Creating a system that is rather robust and mechanical is a good idea, because ideally what you want to do is completely eliminate yourself from the picture. Now I know what your thinking... 'I want to do WHAT?'

Well, you want to make your job as a forex trader only to CREATE and DEVISE effective and profitable trading strategies. You almost completely eliminate yourself from the trading picture because, once you accomplish your main job of creating a profitable trading system, all you need to do is methodically and mechanically execute it.

The reason why I say 'eliminate yourself from the trading picture' is because once you have done the hard part of devising a trading system that consistently captures pips, ANYBODY with a basic knowledge of the trading platform you are using could follow these rules and make money.

So long as you follow the system that you have devised, it will lead to completely emotion-free trading, and when it comes to consistently making good money on the forex market, emotions are the enemy.

Remember that what you want to focus on while you are doings your trading is not how much money you are making, but HOW MANY PIPS you are capturing into your account. It is subtle shifts in thinking such as this that, over time, will help you to become a very successful trader.

About The Author :

My name is Marcus Masters, and I have created one of the largest collections of free forex ebooks and guides on the internet at TheForexSurfer.com/reports.

You can also learn about my own trading strategy that I have come to call Forex Surfing, and how to make money riding the 'waves' of the global economy.

Related News

In debt-plagued US, summer camps teach kids thrift (AFP via Yahoo! News)
In a country where credit is king, US parents are sending their kids to summer "money camps" designed to teach the value of saving and the pitfalls of massive debt. ...more

Debt-burdened Ford records narrower loss (Houston Chronicle)
In a way, Ford Motor Co. is like a family with too much credit card debt: Without the interest payments, it would be in the black. Ford on Thursday announced a narrower loss — $282 million in the first quarter versus $1.4 billion in the first three months last year. But it paid out more than $341 million for the ...more

ImagiTrend Appoints First Member to New Advisory Board (PrimeNewswire via Yahoo! Finance)
WASHINGTON, Aug. 23, 2007 -- ImagiTrend, Inc. is pleased to announce that the Company has appointed Mr. Rajendra Prasad as the first member of its new Advisory Board. Mr. Prasad brings a decade of financial experience in investments and debt consolidation. ...more

League of Women Voters hosts Candidates Forum in Kill Devil Hills (Outer Banks Sentinel)
Kill Devil Hills mayoral contenders Sherry Rollason and Ray Sturza, along with uncontested commissioner candidates Jeff Finch and Bob Peele, put their best feet forward at a League of Women Voters public forum Oct. 3, in hopes of being elected next month. ...more

Mortgage Funds Dodging Subprime Bullet (BusinessWeek Online via Yahoo! News)
According to the Mortgage Bankers Assn., an industry trade group, delinquencies in mortgages of all types rose to about 5% in the fourth quarter of 2006, the highest level of late payments since the second quarter of 2003. Actual foreclosures edged up to 1.2%. In the subprime segment of the market, the scenario was decidedly worse. Delinquency rates rose to ...more