Trading Life – Christopher Weaver shares his trading life
My experience as a forex trader has certainly taught me a lot. Some of the things that I have learned are completely relevant to forex trading, while others are seemingly less relevant to the “world of charts”. I believe that one of the most important things that I have learned, which is relevant to both, is to always know the desired outcome I am looking for whenever I set out to accomplish something. This approach has two major benefits. The first is that it allows me to assess my actions more effectively. In other words, it becomes much easier to identify if my actions support my desired outcome because the desired outcome is clearly defined. Example: If my desired outcome is to become a heart surgeon and to achieve this my action is to enrol in law school, I will never become a heart surgeon because my actions do not support my desired outcome. Clearly I would need to study medicine and undertake the relevant post grad education to become a heart surgeon. Although this is an obvious example, understanding exactly what I want to achieve makes the analysis of my behaviour less difficult. This, in turn, increases the probability of my success. The other benefit of defining my desired outcome from the start, is that it removes confusion and gives a greater level of clarity to my thoughts as I focus in on exactly what I am hoping to achieve. This clarity enhances my decision making process.
The two benefits of this way of thinking go hand in hand. When I specifically define my desired outcome from the start, my ability to make good decisions improves , as does my ability to analyze my actions effectively. And, if my thinking is clear, I am more likely to be taking the most appropriate action in the first instance. After all, when was the last time you met a successful person who was confused and unable to define what he was looking to achieve? I can’t imagine there are many people like that.
You may be asking yourself, how will any of this benefit me as trader? Allow me to explain. Several years ago I was responsible for writing and teaching courses to groups of up and coming forex traders. While teaching these courses, I realized that many, but not all, of the students fell into one of two categories. The first category of students had not defined their desired outcome as forex traders at all and were basically just running around aimlessly pretending they were going to develop into world class traders. The second category of student was different. Although they had defined their desired outcome specifically, in my opinion, it was the wrong outcome to desire. This group of students desired only to make lots of money. On the surface this approach seems pretty reasonable. Why else would anyone trade if they didn’t want to make lots of money? Unfortunately, their approach failed to address what I like to call the “first law of trading” which states that you “must have money to trade”. A trader can be armed with the best trading strategy the world has ever known, but if he has no capital he cannot enter the market. So, if you must have money to trade, your first goal must be to protect your money. If it is clear in your own mind that your desired outcome is to protect and preserve your capital, then your actions are likely to be consistent with that desire. From there it is possible to focus and make wise and informed trading decisions that are in line with your personal trading plan.
Successful traders understand the importance of protecting their capital because they understand that without it, there is no opportunity to trade. Successful traders also have a strong understanding of who they are as a trader. They know exactly which currency pairs they trade, whether they are a trend, counter-trend or range-bound trader. They will also know whether they are short, medium or long-term traders. All of these things must be set out clearly in your trading plan and adhered to if you plan on building a well established and sustainable trading account. Too many traders jump into the forex market with no real plan or are just simply looking to get rich quick and it rarely ever works.
Profitable forex trading is the result of respecting the market and protecting your money. A trader who has the discipline to restrain from being greedy and taking unnecessary risks so that he can preserve his capital normally has the patience required to master the art of forex trading.
– Christopher Weaver is a technical analyst who has spent considerable time trading and studying the trends and movements of the Foreign Exchange Market. As well as having written books and trading manuals on the subject, Christopher speaks around the world about forex trading.
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