Forex Articles

How to Substantially Improve Your Forex Trading Performance
by Following Two Simple Rules

By Andrew Searle

Summary
This article is aimed at helping both new and experienced traders to improve their trading performance by following two simple buy highly effective trading rules. Thousands of traders throughout the world continue to lose money by trading Forex, but by applying these simple rules their performance could be greatly improved.

It is a well known fact that the majority of people who indulge in forex trading lose money.  A quick Google search will produce hundreds, if not thousands of articles written by people offering their wisdom as to why traders lose money, as well as tips on how not to do so.  I have been one of those authors in the past. However, in this short article I will explain two very specific things that traders can do to actually improve their trading performance.                

My advice is so simple that you might think this is too obvious, but for the thousands, if not tens of thousands of people who have lost money by trading forex will probably agree that what I am advising is highly relevant. My advice here is based on the assumption that you are using a tried and tested forex trading system, or methodology of some kind or another.
1) The first bit of advice is: Enter a trade only when there is a confirmed trading signal using your system.
2) The second bit of advice is: Exit a trade only when there is a confirmed exit signal using your system. 

This advice may seem a little odd, but to the many thousands of people who have lost money trading forex, this should make a lot of sense.  Why?  Well the vast majority of people who use a forex trading system DO NOT IN FACT FOLLOW IT!  Most traders actually do one of the following:
1) they do NOT enter a trade when there is a clear entry signal from their system;
2) they enter a trade when there is NOT a clear entry signal from their system (this is usually the biggest account killer!);
3) they do NOT exit a trade when  there is a clear exit signal from their system (this is the next biggest account killer); and
4) they exit a trade when there is NOT a clear exit signal from their system.

Whatever the reasons traders give for following one of these four alternative actions - and there are many of them - the fundamental reason is a psychological one, whereby emotions have an overwhelming effect on a trader's actions, causing them to do anything but follow the two basic bits of advice I gave earlier.  If you are an experienced trader, ask yourself the question:  do you really always follow the two bits of advice I gave earlier, or do you tend to do one of the four alternative actions just described?

In summary, trivial as it may seem, if you want to improve your trading performance, these two very basic but highly important bits of advice should be followed. By doing so, you are likely to see a substantial improvement in your trading performance over time. By not following this advice, traders will continue to be swayed by their emotions to do things that they should not do, which will result in smaller profits and greater losses.