Day Trading for Dummies

OK, now that I have you attention for a few moments let me first say that I have about 8 years of experience with trading the FOREX or currency market.  I have learned from very successful traders and I have a pretty good understanding of how currency trading really works beyond the hype.  If you are asking yourself the million dollar question of why you should you believe me or anything I say I would answer that with; Frankly you shouldn’t.  Just hear what I have to say and ask yourself if it makes sense to you.   When I first started out I did not know who to trust or believe and everyone wanted $5000 to teach me anything.

Now I cannot teach you all the little terms and nuances of trading in a couple paragraphs but what I can do is give you a brief overview of how to really make millions trading the FOREX.  Now first off I will say that most people will not make millions trading.  It’s not because it is such a giant mystery and trading is really hard, it’s usually because trading requires you do things that most people are incapable of doing.   I would say that 90% of trading is having a mastery over yourself and not special tools.

Let me give you a quick example of how challenging trading can be.  This a real world example that I learned from a very credible source; you guessed it the source is ME.  I remember spending 2 weeks setting up one of best trades where I use support and resistance over many days to try and predict large movements that will make me money.  I remember watching the charts for 18 hrs a day just waiting for the correct entry.  Then the time came I put in my trade and my heart was beating like crazy.  You see the market was going up and my trade was that the market was going to turn around and head south.  After about 30 minutes I realized that I had a winner, a big winner.  I took a $1000 trade and turned it into $8,000 in about 5 hrs.  I was so excited and I felt like the biggest genius in the world.  After about 12 hrs of of taking profit and watching my account grow I got out of the trade.  However this is only half of the story, you see what I did next is where human nature kicks in.  I noticed after I got out of my trade that it looked like the market would reverse again and start going up.  I put in another $1,000 trade and set my limits so that even if I was wrong I could get out and not get killed.  So I put in my trade and watched the market go down.  I watched my losses starting to add up and I was so over confident from the last trade that I told myself that this is normal but eventually it will go up and I will be proven correct and make another small fortune.  Here is where I lost my mind;  I decided that I was getting really close to my point where I needed to take my medicine and just get out of this trade.  But I decided that I was a trading genius and I was not wrong.  So I stayed in trade and removed my stop loss or exit strategy.  Now this by itself is horrible but I made it worse.  I realized I needed to go to the store and I left my computer for 20 MINUTES. When I got back home the market fell through the floor.  I had lost not only my $1,000 but all of the $8,000 I just made in 20 minutes.  I was so devastated that I turned off my computer for a week and contemplated never trading again.

Now I know some people will think that this will never happen to them.  But after this experience and then talking to many traders afterwords I found out that every successful trader had a similar story.  No matter what you think, when you are in the situation you will be amazed the choices that you make.  I am not a greedy person but I thought I was super smart and I broke my own rules.  But enough about me the point is that mastering yourself is the real key to trading.  You have to have rules and follow them.  You have to have money management and almost be robotic about your trades and your non trades.

This brings me to my golden strategy for getting started in trading and truly making a TON of money.  Now what I am going to tell you will sound extremely simple but I guarantee you it will be hard to follow.  OK, if you have noticed I have a bunch of advertisements that talk about robot trading. I promise you that if you are not extremely experienced that having an automatic trading system WILL help you while you are learning your craft.  So yes I want you to buy the system but let me tell you how to really use it to make money.

OK, the first thing you want to do is get familiar with the system.  So go through all the training and sign up with a FOREX broker to get a live account.  Now after you get that squared away I want you to get a Forex demo account.  This account is not a play account; this account is for testing your new system and testing yourself.  You NEED to write down what you think your trade or trading strategy will do and then test it on your demo account.  The key is too test your strategy completely.  You have to resist the urge to tweak the system once you are in a trade.  You need to watch the market and get a feel for how it moves and how slow it can be at one moment and how fast it can be the next.  How unpredictable it can be and when things are going your way and how to stay calm.

During this process you need to have a predetermined end date.  More than likely you will love your new strategy and be in a hurry to try it with real money. DO NOT do this; trust me this is the kiss of death.  Stay with the demo account and really understand your strategy and start to journal your feelings, negative thoughts and expectations.  You have to be patient and this is your real key to success.  Now as far as money management I will give you something that is standard to follow and you can change it over time.

Money management for beginners is real simple.  Do not try to make more than you are willing to lose.  So if you have an account that is $5,000 and you can lose $750 without committing suicide then this is all you should be trying to make.  So if your strategy is so great and you can place a $300 trade and turn it into $750 then that is all you can trade.  You cannot trade $3,000 to get $7,500 because the rule in trading is if you can make it you can lose it.  So NEVER trade more than this and NEVER over trade.  If you are risking $750 then no more trading until this trade is complete.  If you lose $750 then your next trade you can only risk $600 (15% of your account).  This is a very basic money management system and you can devise something else for your own personality but this money management system can keep you out of big trouble in the beginning. Also if you are making a 15% profit (losses and gains) every month on a $5,000 account you will have $23,000 by the end of year 1.  Then $125,000 by the end of year 2.  Then $665,000 by the end of year 3.  Then by the end of year 4 you will have $3.5 million.

So there you have it!  In trading you can make 15% a day not just in a month but the trick is too not risk your bankroll.  Your strategy even with a robot making trades for you should never put too much of your bankroll at risk.  If you can follow this then you will make a TON of money.  If you violate this then you risk your bankroll and will be forced to start over again.  Now there are many more advanced strategies but this is the overview.  Over time you will learn more advanced techniques and strategies but never let someone else convince you that risking more of your bankroll than you are comfortable with it acceptable.  Money management and patience is the key to success.

In the next few months I will put together some videos on how to trade and other types of money management and strategies to really enhance your success.  The object in trading is to get to the finish line.  Take your time and stick to safe trading practices.  Never let other traders convince you that they have the perfect trade.  They are hiding their losses (trust me);  stick to your plan and try everything on the DEMO account first.  Everyone has losing trades, the trick is to win more than you lose and never take it personally.

Good Luck and I hope to see you on the other side.   [ J. Reeves;  Forex trader and site owner]

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