What is your Motivation for Trading Currencies

If you think it looks like a fun and exciting thing to do – you need to change your view of currency trading quickly – Why? Because it's a business and this is one business which you shouldn't find thrilling because currency trading relies on keeping your emotions out of trading and if you find your heart beating faster and a rush of adrenalin coming over you, when you execute a trading signal in the market – your emotions control your business and this will prove disastrous in currency trading.

In some businesses it's good to get excited but currency trading is a lonely business, where you need to be detached and disciplined.

Realism from the Start

Once you have the mindset not to see trading currencies online as a fun occupation, you won't get greedy and try and build your business to quickly which is a fatal mistake most new currency traders make. The excitement for them is using huge leverage, while trading constantly in the market to try and make money but this is a gamblers mentality – there after the “big trade” of course they never get it and just lose – they may as well have gone to the casino.

The serious traders knows, his trading plan must be realistic and use leverage sensibly and trade only when good trade set ups appear. So what is a realistic amount of money to make trading currencies.

If you look at any successful business, a business which can turn in 30% profit per annum is seen as a great business and I think this is a good profit figure to aim for and generally, the best currency traders I have seen have done between this level and 100% per annum at the top end. Aim to make 30% on your trading strategy each year and you will soon be making big returns, especially with compound growth working for you.

The Power Of Compound Growth

Anyone looking at any investment should be realistic and many people say that 30% doesn't sound like a great return but it is if you are patient which you need to be with any business or investment. If you were to make 30% on $10,000 you would double your money in just 2.4 years and have $20,000 and of course in another 2.4 years, you will have $40,000 or a 400% increase on your cash in under 5years, if you don't withdraw any money and in under 10 years, you have $80,000 which is a great return on any business.

Currency traders are in so much of a hurry to make money, they over leverage their trading accounts and quickly lose. The serious trader knows the power of compound growth and makes sure he uses strict money management and is patient because he knows, currency trading is a long term business and compound growth will kick in and make him a great return on his investment.

Deciding Your Method Of Trading

This is really down to you and there are many different methods of trading which make money – you can trade on the fundamentals and news or use currency trading technical analysis and you can combine the two methods of analysis as well – it doesn't matter which method you use (although we would recommend charts due to its simplicity and time efficiency ) but the key is to work out what your edge is in the market and why you will emerge a winner.

Your Risk Reward and Your Trading Edge

You should get your strategy and then decide what its trading edge is and any business has one and exploits it to make money. The edge any business has may be different and its the same with your currency trading strategy – you won't have the same edge as me but you can still make money. In business Apple doesn't rely on price – it relies on its branding to sell and it's very good at it. While it's not the cheapest, it sells huge volumes of product. On the other hand, other companies make money just selling product as cheaply as they can – there are many different business models which make money but any successful business, knows it's advantage, has confidence in it and applies it with a disciplined approach to make money with it.

Yours could be - you are great at holding long term trends or good at swing trading overbought and oversold levels -the method is not important, the key is knowing why it will make you money and having confidence in it.

In your business plan you need to work out what yours is, calculate how much money it can make and this means doing some testing. Testing is just to give you a guide to how much money your system can make in terms of - the risk reward on your trading. It will help you work out the number of winning and losing trading signals and average profit or loss per trade. It's a rough guide but you need to know, how much your strategy has the capacity to make over time and try and hit this figure annually.

Keeping the Plan on Track

You should review your trading plan annually and look at areas in which you could have done better with your trading strategy and any key errors you made. Shorter term, you should also have a check list of criteria in terms of entering trading signals and stop loss levels of individual trades and also, the performance of your overall account. All successful businesses do this and work to a goal and assessment of past performance is always used to improve performance in the future.

A trading Plan for Success in Forex

A trading plan will help you work out how much can make trading currencies, your likely draw down and if you update it regularly, you will be focused on keeping your plan on track to lead you to long term currency trading success. All businesses plan and always keep in mind, the old saying If you fail to plan, then you plan to fail". A business plan is essential in Forex trading and you need one, to ensure your trading strategy gets positive results - so start planning for long term success, trading international currency markets.