PREPARING TO TRADE

Preparing to trade is not a linear process; you’re always preparing to trade. But we are focusing here on key steps to take that promote a winning mind-set. These steps are effective because they are rituals of behavior that reinforce practices:

1. Scan yourself. The most important scan to undertake is a self-scan. When you wake up in the morning or right before you come to the screen after a break, observe your own state of being.

2. Take a walk and clear your thoughts.

3. Read the Financial Times while you’re having a cup of coffee or your favorite morning beverage.

4. Turn your cell phone off.

5. Scan fundamentals and select the currency-pair’s predominant direction of your next trade.

6. Scan monthly, weekly, and daily charts for key areas of support and resistance.

7. Check the trade-weighted index charts for each currency pair (www.iboxx.com).

176 PUTTING IT TOGETHER

The result of following these steps is more than formulating an evaluation of market conditions. The process generates greater confidence in taking on the trades that follow and the trader mind-set is ready for the challenges ahead.

Following are 10 key principles to guide the beginning experiences of forex trading:

1. Trading in simulation is effective as a learning tool only if it is guided by a sound methodology.

2. Training to trade needs to approximate the actual level of capital intended to trade.

3. The first 50 real trades are all test trades.

4. The first 100 real trades should be at no more than 2-to-1 leverage.

5. Losing trades are as valuable as winning trades: Don’t fear losses—learn from them.

6. A trading plan won’t work if it’s somebody else’s.

7. Success in trading is more than just profitability—it is repeatability.

8. There is no best time to trade there are only best patterns to trade.

9. Analyze the market by yourself before you read someone else’s analysis.

10. Don’t waste time looking for better trading platforms; focus on better trading.

SUMMARY

Ultimately, it is a personal decision when one is ready to test one’s skills in real trading.

The best approach is to look at simulation as a first step in testing one’s real trading—not as the end of training but as an evolutionary step in becoming forex trader. Therefore, simulation and real trading need to occur in a context of principles that guide the trader.

These principles reflect a commitment to achieving excellence in trading.