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chartsBeginning forex traders often approach the market with a number of problematic thinking patterns. People who are new to the world of forex trading almost invariably seem to think and act the exact opposite of how they should in order to make consistent money as a trader. The beliefs that you hold about what it takes to become a successful trader are ultimately what determine your fate in the market. Traders often make mistakes like believing they need to analyze increasing amounts of market data, or look at numerous time frames and a plethora of currency pairs, I am going to dispel these commonly held beliefs as well as a few others. This article will give you some professional insights to think about as 2010 comes to a close and we begin a New Year full of fresh trading opportunities, follow the tips in this article and your trading in 2011 will be much improved.

Accept that less is more; you don’t have to spend a lot of time analyzing the market.

• Step away from the computer screen

Once you determine what you are looking for in the markets, there is no point in sitting in front of your computer and burning your eyes out if the setup you are looking for is not there. Yet, many traders do exactly that; they start off looking for a setup on one time frame, then if they don’t see it there they go to a different time frame, then if they don’t find it there they start reading financial news or reading articles until they convince themselves of something, then they enter what will probably be a losing trade.

The easiest solution for this analysis-paralysis is to consciously force yourself to step away from the computer screen. Get a hobby, go to the gym, play poker, call up a friend, help out a neighbor; do anything to get yourself away from your computer once you have spent some time looking for your setup and determined it is not there. Many traders enter low-probability trades just because they want to trade, or they feel like they need to, this thinking will always result in lost money and lost time. Check the market at a pre-determined time, if your desired setup isn’t present, walk way, let the market show you what it is going to do rather than trying to out-guess it or vainly forcing your will upon it.

• Trade off the daily chart

Trade off the daily charts only when first beginning; either the setup is there or it’s not, don’t try to force a setup where there isn’t one, if it’s not obvious on the daily chart it’s probably not worth trading. Set aside a regular time each day that you spend looking at the daily charts of a few major currency pairs, any price action setup that is at a confluent level and well-formed will likely stick out like a sore thumb. After you master a price action setup or two, if you don’t see it on the daily charts after about 10-20 minutes of analyzing, there is probably no trade to take. You have to realize that if there is not a valid and obvious setup, then you walk away until the next day, don’t sit there and over-think and try to figure out a way to get into a trade, you are trying to control the market when you do this and it is impossible to control the market.

Understand the importance of trading journals and trading plans.

• Keep records like a business

It is critical important that you think about and treat your forex trading as a business. Many traders behave in the markets like they are in a casino just pulling the arm of the slot-machine over and over, with blind hope and greed in their eyes. The easiest way to avoid becoming this type of trader is to document your trades; keep a trading journal that includes all your trade parameters and also acts as a running track record. This track record will act as a physical reminder that forex should be treated as a business, if you can force yourself to do this, and to keep it updated before and after every trade you take, you will have something to help keep you accountable.

Work on really designing a nice spreadsheet that you become rigidly devoted to maintaining every time you enter and exit a trade, eventually you will find that you won’t want to blemish your trading journal with trading parameters that don’t meet your criteria of a valid setup; a trading journal will gradually allow you to enjoy being disciplined because the more you adhere to your trading plan and update your trading journal on-time, the more consistent success you will experience, and since its hard work to remain disciplined and organized, you won’t want to ruin all that you have achieved with one stupid emotional trade.

• Pre-defined trading plans

Keeping an up to date trading journal is not the same as having a pre-defined trading plan, but rather updating a trading journal regularly should be PART of your overall trading plan. At least in the beginning stages of your forex trading career, you need to have a tangible / written out pre-defined trading plan. This is not to say you need to “mechanize” your trading or make it inflexible, but it means that you need to devise a way to know what you are going to do in the market before you do it. For example, if you spot a valid pin bar setup on the daily chart, your trading plan might tell you to first determine the dollar amount you can risk on the trade and the logical stop loss level, and then you try to find a reward of at least 2 times your risk. Once you get your entry parameters setup, you then pre-define your exit strategy; “will I trail my stop as the trade moves in my favor or will I just set and forget it?” A forex trading plan is the guide you use to pre-define what you will do when a valid trade setup presents itself and after you enter it, this way you are not thinking and acting while in the market.

Focus your attention.

• Don’t analyze too many currency pairs

Specialization is how money is made at any profession in this world; simply put, you can’t be really good at everything, but you can be really good at one thing. Traders who try to analyze 40 different currency pairs on multiple time frames are trying to be really good at too many things. It’s just not possible to remain in the proper mindset when you are trying to analyze so many different variables, it causes analysis-paralysis. Stick to 3-5 of the major currency pairs, learn how they move and the little nuances about them, and stick to the daily chart only when beginning. Even after you get more experienced you will find that you gravitate towards a small handful of currency pairs, there is just no need to stress yourself out searching for setups in many different currency pairs, all you need is 1 or 2 good setups each week to make consistent money in the market.

• Master one setup at a time

Working on truly mastering one price action setup at a time is how you become a proficient and profitable price action trader. Rather than focusing on multiple setups when first starting out, pick one that you like the best and focus on mastering it on the daily charts of the currency pairs you look at. Once you are making consistent demo money on this one price action setup, for a period of 2-3 months, you can try it out on a live account, if you are still making consistent money on a live account with this one setup then go back to demo trading and try a new setup out, repeating the process until you have a few solid price action setups in your trading toolbox.

Be realistic with yourself.

• Don’t think you will get rich quick

Most beginning traders are unrealistic with themselves about how much money they can make given the amount of money they have in their trading account. You simply aren’t going to make a full-time living from trading forex with $1,000 in your trading account, at least not right away. If you truly manage your risk effectively on every trade, you aren’t going to make a lot of money really fast, and if you don’t manage your risk effectively on every trade, you might get lucky and hit some big winners, but ultimately you will give it all back in an emotional tailspin of trading mistakes.

The earlier on in your trading career that you accept that trading success is a marathon and not a sprint, the faster you will reach your goals as a trader. Most beginning traders want to make money so badly in the market that they inevitably commit emotional trading mistakes, which ironically pushes them further away from their goal of making consistent money in the markets. Accept early on that you won’t get rich quick from trading, and you will begin trading with a mindset that is much more conducive to making consistent money in the market. Your aim should be consistent profits, even if they are not life-changing amounts.

• Become a risk manager

Think of yourself as training to be a professional risk manager, not a trader or a gambler. The more you focus on managing risk effectively, the more money you will make, it is crucial that you learn to view each trade setup in terms of risk to reward. You should have a set dollar amount you are completely comfortable with losing on any one trade, this means you can sleep at night with that amount of money on the line, and not worry about the trade. As a risk manager you know that your price action setups, when traded correctly, will bring you profits over the long-term, therefore, any one losing trade should have absolutely no bearing on your psyche or how you perform in the market. To learn more about price action trading check out some of the great free information below, or to learn exactly how I trade with price action setups, check out my forex trading course.

Good trading as always – Nial Fuller

nialfuller

About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008.
Checkout Nial’s Professional Forex Course here.

Now I want to hear from you! - Click Here to Leave a Comment

46 Comments

  1. Nesbert tolana says:

    you the best

  2. Roland says:

    You seem to have the easy and sure way to success in forex trading. I now trustfully believe success is possible for me too. Thanks for the good works.

  3. Ken says:

    Thanks nial for the articles,especially this one in particular,you’ve outlined just about every mistake Ive not only made but am still making!…I think its time I started digesting some of your advice and actaully learn something for a change………again….thamks.

    Ken.

  4. Galen says:

    Hello Mr. Fuller

    Really good article even the second time around. I think I sliced off a pretty good size of humble pie; exactly what is needed. I am slowing myself down in life and this I am finding has an effect on my trading, at least I think it does.
    Again, a good article.

    Your student

  5. Jorge says:

    This is AU, thanks Niall for all the effort I know this entails, one day I will be able to send you your fees; but there are some real gems in these free articles, thanks again.

  6. azmiharun says:

    Happy New Year Nial, I just open my computer today and read your new lesson. I hope This is my year to go foward with the forex with your guidance.

  7. Tony says:

    Happy New Year, Nial. I will be buying your trading course before the end of January. You sound like the real deal. Thanks.

  8. dennis garriock says:

    Nail. Have a good 2011. If you are able to keep sending such
    information, I am confident I shall make the grade. I try to stay within your guide detail and still make mistakes.
    Everything I do wrong you have already warned me of.
    Thanks for all your help Dennis

  9. ironn says:

    Happy New Year to the best PRICE ACTION mentor in the biz! awesome article!

  10. Alex says:

    How long have you been looking over my shoulder Niall? Your description of a beginning trader and his or her attendant mistakes resonates with me so much that i feel such a fool. i avidly read and often re-read your articles which are invariably full of trading wisdom. I make this promise to you and myself that i will follow the principles outlined in this article until i have mastered at least one price action set up, execution and exit profitably, prior to advancing my trading to a new level of profitability and understanding which is what you are trying to get us to do. Thanks again Niall. I will be happy to pay for your course with the first few hundred dollars produced from successfully implementing your principles. Ultimately i seek to be able to ‘pay it forward’ like you are doing so well! thanks again.

  11. Robert Garrison says:

    Great lesson nial, Happy New Year

  12. inalex says:

    Hi Nail. Your article is a great resource to all trader,the price action setup is key you said it all. thanks.
    Happy new year.

  13. Bohumil says:

    Hi Nial,
    due to your articles you saved me a lot money.
    Regards
    Bohumil

  14. Jan says:

    Like always great article. Realistic and insightful. Thanks for the refresher. Keep up the great work.Happy new year and good trading.

  15. Frank Page says:

    Really good article full of sound advice. I know because I have made just about every mistake possible before becoming a competent trader. I wonder how many new traders will read your lessons and avoid making the same mistakes! Not many I think!!

  16. william guzman says:

    nial is a pleasure reading your advice i think your are the only one up there the tell the new trader the real deal i hope you never change you really care about given the people what they need i hope every one take your advice
    thanks and happy new year to you in yours love one god bless

    best reagard
    william guzman

  17. ernie says:

    It took me a long to even get to the point where I even understood tbe point of this lesson, I would have saved alot of money just following this advise, If you are new to trading you just got lucky.

  18. Simon says:

    Nial,

    Happy new year!
    Good artical, thanks again for the good advice, your trading guidelines helps me alot to stay focused and not get carried away!!

    All the best in 2011
    Cheers!

  19. Don says:

    Nial
    Please keep conversing with us. I can honestly say I am learning alot from you. I lost 40% of my trading account before I found your teachings so I am back to my demo account. Thank you for making me a beleiver again.

  20. Barbara says:

    This makes more sense than anything I’ve heard or read regarding forex. Wish I had you as a personal mentor!

  21. Dave says:

    Quite possibly your best article yet.Great stuff.

  22. Galen Tarrence says:

    Mr. Fuller

    I am excited because most of what your article expresses and other articles you have written I have now the experience to understand through trial and ordeal. I take your advice. It takes a few hard knocks on the head before I realize the inherent wisdom of your teaching.

    Your student
    Galen

  23. Michael says:

    Thank you again Nail,and have a great 2011

    Michael

  24. Jon says:

    Great advise! Keep on sowing those seeds Nial and happy New Year to you and yours.

  25. T Allen says:

    Thanks Nial – Great Article – Happy New Year to you and your family.

  26. Barry Hayes says:

    Happy New Year Nial

    Agree with every word spoken. With-out a trading plan, your going no-where, except broke.

    B.Hayes

    San Diego

  27. Martin says:

    Hi Nial,
    I’m allways eager to read your articles to get new great insights. It’s so great of you to share.
    Happy new year 2011.

  28. Kamal says:

    Hi Nial,
    complements of the season to you.
    I am a newbie in forex trading and I find your way of explaining quiet different and unique and I say a big thank you for the free stuffs .
    Can you pls sent me info about what i will gain if I join your course.
    What and what do I expect to get from this course.
    Thanks

    1. nial says:

      please email me via contact us section for more details.

  29. mgp says:

    Much more focused article for beginners and professionals. Thank u . Happy new year.

  30. Mike Hibbett says:

    A well written article. Will try to put it into practice. This being the hardest bit.

  31. Fanie says:

    If I were a rich man..dddd
    If I followed Nial’s … dddd
    I wish you all the best for 2011.

  32. Greg says:

    can i use your setups on other commodities, like grains, metals, e-mini es/nq etc…? thanks

    1. nial says:

      on the dow mini futures it will work on daily and on most daily charts, but make sure the charts are correct serttings (new york close)

  33. Tim says:

    Thanks Nail, good article.Its keeps in line with good trading,
    and how to learn to trade.

  34. ForexLover says:

    “Less is more” As a lazy person, which I am, I really love that phrase!! I’m more optimistic about 2011 now. :-)

  35. Jo says:

    Nial – Happy New Year to you – may you be richly blessed in 2011. Thanks for all that you share to help make us better traders. Very welcome and well timed article to set the mood for the new trading year

  36. Tyrone says:

    This advice is very simple yet very difficult to achieve for most people. Great advise…

  37. lok bahadur shahi says:

    thank u for this very useful article…happy new year….2011…

  38. FloorStalker says:

    Super plan Nial…a concise, clear, approach to what can be a shaky, unerving and costly business.
    Look forward to your Forex coaching through the coming years ahead…
    CCE
    Hastings, Minnesota

  39. David Rabbin says:

    Nial
    What a fine article full of insight Were you looking over my shoulder.I wish I had knwn you years ago
    Happy New Year and many thanks for all your help

  40. Robert Daley says:

    Nice article. A merry and prosperous New Year Nial. May the law of attraction make us rich.

  41. Nick says:

    happy new year Nial,
    thanx for this advice
    Im going to start a trading acc with 2000 dollars and will take this advice seriously.

  42. VTLSK says:

    Thanks Nial.
    Happy New Year to you and all.

  43. Uknowme says:

    hi nial,is really good to have you around always,been enjoying your informative lessons all this while,thank you!happy new year!

  44. dennis carroll says:

    Great advices Nial. Keep up the good work and a prosperous New Year to you and all fellow members.

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