SETTING YOUR OBJECTIVES IN FOREX

[neotrend]

SETTING YOUR OBJECTIVES IN FOREX

“The crowd, the world and sometimes the grave step aside for the man who knows where he is going, but pushes the aimless drifter aside.” Ancient Roman saying.

I agree with the above quote, and I believe most of us reading this article will too.
To walk the path to successful investment we need to have direction. I can not over-emphasize the importance of setting an objective before trading at all. Designing objective is a major part of system development.
There are 3 parts to setting an objective. They are as follows:
I. Self-assessment
II. Define your objectives
III. Trading ideas

I. SELF ASSESSMENT
This is the first step to setting a realistic objective. A trader has to assess himself/herself for TIME, RESOURCES, SKILLS & CAPITAL.
TIME: This is important because the amount of time you have available will determine the kind of trading system you will have to develop. Those who have full time job will definitely want to use a fairly long-term system, probably just to check the market in the evening.
RESOURCES: What are the resources you have prior to trading? Did you have full access to it? (Patience is part of your resources)
SKILLS: You need to check the skills you have that can be of added advantage to trading in the market. Skill like, Mathematical skill, computer skills, knowledge of trading mechanics e.t.c. these are all part of the skills you should check for.
CAPITAL: Capital is another thing you have to look at before setting your objectives. The amount invested should be directly proportional to the expected ROI . You need to give yourself enough protection by coming into the market with capital that will make sense for good position sizing.

II. DEFINE YOUR OBJECTIVES
This section is probably the most important part of developing a trading system. Until you know where you want to go, you can never get there.
Most of the time we spend in developing a trading system should be spent on defining and developing our objectives.
1. What is your edge as a trader?
2. How much money are you willing to invest?
3. how much of that money are you willing to sacrifice to achieve that aim
4. How much risk can you afford to take on a given trade?
5. Did you need to live off that money that you make?
6. Can you stand regular withdrawals from your trading capital to pay your monthly bills?
7. Will you need to employ somebody to assist you?
8. What amount do you expect to make weekly, monthly, monthly or yearly as a percentage of your trading capital?
9. How did you expect your system to perform in various kinds of market?
e.t..c

III. TRADING IDEAS
This last part has to deal with how you want to trade. It has to do with your understanding of some concept in the market. Market entry, Market exit and money management should be the specifics of your trading ideas.
1. What kind of market do you want to trade?
2. When do you want to enter the markets?
3. What will be your criteria for exit
4. How do you plan to take your profit?..use stops or trail?
5. What is your understanding of money management?
These are the questions we should have clear answers to.
Once we have a reasonable and clear answer to these questions, our probability of success in the markets will be exponentially increased.
Establishing clear trading objectives are the foundation upon which all successful trading is built.
Have a splendid time trading.
Thanks
neotrendfx@yahoo.com

[alexander james]

This is a very informative post. To become more successful in currency trading, I agree that we should assess ourselves about our objectives and skills as well our knowledge about the market so we will know our position in forex trading.

[neotrend]

Thank you mr James. knowleged about the mrkt is very crucial, but do most traders wish to have it?..

[bestforexpartners]

Thanks for sharing this valuable post.
Forex Market is emerging as huge market in the world. It is market where trades participate in the trading of curencies. Forex trading is very risky due to leverages available with very less money you can gain more or there may be a big losses as well. Forex trading has many financial frictions.

[mr.gardner]

Thanks for the informative posts. It very well organized. In order to meet these objectives you should be able to control your emotions. I think this is the most essential part of becoming successful trader. You must always know the motive and reason why you entered a trade and never give up from your initial idea. The biggest losses that I experienced are mainly because I was not sure about my analysis and tried to chase the market and I was closing and opening trade because of the emotions and uncertainty. When you know why you entered a trade and you are sure about it, it gives you much more confidence and you may avoid losses from thoughtless trades.

Good Luck!

[Learnforextradingin30days]

very insightful, great post thanks

[Fxpipper]

Nice post and have to emphasize the "direction"..one reason most newbies fail is that they fail to take this into account.