The most important thing that you need as a trader is discipline and common sense. There is no Holy Grail in trading. No trading system or indicator will make you rich. But discipline when practiced patiently overtime will turn your small amount into a huge fortune. How to become a disciplined trader? One way to become a more disciplined trader is to keep a daily trading journal. This is what the traders at the hedge funds and big banks do. They meticulously keep a daily trading journal that details everything about their daily trades.
But for you as an individual trader, it is even more important and necessary to keep a daily trading journal. You see, you will be putting your hard earned money on the line. Do you won’t to lose your thousands of hard earned dollars in one sloppy trade? Definitely not! You must learn the necessity of capital preservation.
You need to plan ahead each trade that you make. You should have a strong reason to enter into a trade. You don’t enter into a trade on your whims or wishes. Once, you have a high reward to risk trade setup you enter into a trade. Before entering into a trade, you should have a contingency plan for the worst case scenario.
Manage risk first. Once, you have managed risk then think of taking profit. Learn to calculate risk and reward for each trade. Only enter into a trade when the risk to reward ratio is less than 1:2. Now, your daily trading journal should have the following three sections.
Currency Pairs Checklist:
You need to keep a daily watch on the currency pairs that you usually trade. Calculate their daily ranges with pivot points. See, how each currency pair is behaving. What currency pair is range bound and what pair is in a trend. Identify the support and resistance on the different timeframes.
Potential Trades:
In this section, identify your potential daily trades. Discuss the trading strategy that you will use in the trade plus what you will do in the worst case scenario.
Completed Trades:
In this part, you need to analyze each completed trade, what went well and what went wrong. Be merciless when it comes to admitting your mistakes. Try to figure out your mistakes and learn from them. Try these Forex Signals by two top gun traders in a friendly competition. Learn this powerful Fibonacci Retracement method FREE that pulls 500+ pips per trade.