Hi,
Trading
is very simple but far from being easy. I realized that because I've
been in your situation. It took me around 3 years to make consistent
profits (and not lose what I made).
The great
thing is that you're still trading after 3 years. The average trader
gives up after 4 months (National Futures Association).
If you are not profitable, it means you haven't put in place one of the things mentioned below...
Here are the parts to master:
1. Build a strategy and set your rules
It took me a long time to put together a trading plan but it is crucial. It should answer the following questions:
Why do I want to trade and/or make money trading?
What is my signal?
Where do I enter?
Where will I cut my loss?
Where will I take profit? (it's better to have several T/P in my opinion)
What amount will I risk? (should be a fixed % or $ number)
What maximum drawdown will I allow myself to get weekly/monthly? (the point at which you'll stop trading)
What timeframe do I trade?
When do I trade?
2. Build up your confidence
There's only one way to build up your confidence about yourself and your strategy.
It is practice.
If
you want to save time, I recommend you backtest. Either use a
backtesting software or any trading platform and track the trades you
would have taken with your strategy.
When you
backtest, make an effort to find the losers. This means it's better to
take more losing trades that you would in real life. Don't take the
trades that do not correspond to your strategy though.
When
you've done your backtesting, evaluate whether you have a positive
return. Also see what was your longest losing streak. That way you'll be
less depressed if it ever happen again (it will at some point).
3. Get the structure you need to trade live
Most
people never do step 1 and 2. Among those who do step 1 and 2, a lot of
people screw up when they get to live trading. The main problem is that
they do not put what they need in place to trade live.
A
lot of people, including my best clients, see themselves as free when
they trade. They feel too restricted by structure but it is essential.
Here's what you need:
- A trading journal in which you put screenshots of your trades and comments
- A set of routine (written down) that you execute every single day when you trade. It should include when you trade, what you look for, etc.
- Get in the right mental/physical state to trade. Trading is hard when you spend too much time looking at the live market. Make sure you get what you need (off time) to recharge.
- Support from other traders: this is very important because talking with other traders can boost your motivation and keep you accountable. I saw a huge difference when I surrounded myself with traders. I created a Facebook for traders. You can join here: Log into Facebook | Facebook
4. Understand trading psychology
This
is the easy part because it mainly consists of reading. However, you'll
definitely get some breakthrough ideas or ahah moments like I did.
Check out Market Wizards, Trading In The Zone, One Good Trade, and Millionaire Trader.
The main ideas:
- You can't know in advance what will be the outcome of your trade. A trade, whatever the setup looks like, has 50% chances of being a loser.
- Don't focus on profit, focus on exerting your trading strategy. "The key is making one good trade, one good trade, and then one good trade".
- Every trader has a different way of doing things, don't get in the circle of switching your trading strategy once you'e made your trading plan.
- Backtest everything
I
think that sums it all. It is what I did to become a CPT (consistently
profitable trader). If I can help you in any way just let me know!
From Your Quora Digest ·
I
have seen many platforms provide online Trading options also in India.
But I want to know why is it illegal and what could happen if I am
caught trading online?
FOREX
Trading in Forex-INDIA
Forex means currency pair trading. Within Indian confinement, we could trade anything bench-marked against INR.
It is legal to trade with Indian Brokers providing access to Indian Exchanges(NSE,BSE,MCX-SX) providing access to Currency Derivatives. Currently the trading instruments are USDINR,JPYINR,GBPINR,EURI
Trading in Forex -MAJOR currency pairs
A widely traded currency pair is the relation of the euro against the US dollar, designated as EUR/USD. The quotation EUR/USD 1.2500 means that one euro is exchanged for 1.2500 US dollars. Here, EUR is the base currency and USD is the counter currency.
But its not possible for an indian to trade in this pairs.
Reasons
Reserve Bank of India is short of dollar denominators. That means, in-case you trade eur/usd with "out of india" players and, if you loose you would buy usd from RBI and send it away. This leads to increase in current account deficit ( lack of foreign currency reserve).
If everybody in india trades forex with 'out of india' players, assuming the notorious nature of trading where 90% of traders eventually loose, RBI stands to loose alot of dollar. To compensate the outflow, our government will be forced to buy more US dollar, by selling INR at cheaper rates. Thus leads to devaluation of our INR.
Self-Interest of India
India is already buying crude and gold from foreign countries by paying in dollars. Whenever government needs to import, it has to sell inr and buy US dollar. Thus us dollar becomes stronger and our inr looses its purchase power due to lack of demand and over supply.
Forex trading with out of India players, if made legal will become the third demon to plague of already weak currency. That is why RBI allows Forex trading in INR based pairs, which is in turn traded within Indian citizens only. This ensures that no INR leaves country.
conclusion
One can trade usd/inr and eur/inr in such a way that inr gets negated and we eventually end up trading usd vs eur. This increases transaction cost. Then there is lack of liquidity as well. But if you are hell bound to do this, you are always welcome to get around this barrier and make your bets.
However if you send money to out of india, to FOREX brokers inorder to trade in any derivatives, Its illegal and liable for imprisonment, fine etc.
- The foreign exchange market is a global decentralized market for the trading of currencies. This includes all aspects of buying, selling and exchanging currencies at current or determined prices.
- Because of the sovereignty issue when involving two currencies, forex has little supervisory entity regulating its actions.
- The foreign exchange market assists international trade and investments by enabling currency conversion. For example, it permits a business in the United States to import goods from European Union member states, especially Eurozone members, and pay Euros, even though its income is in United States dollars. It also supports direct speculation and evaluation relative to the value of currencies, and the carry trade, speculation based on the interest rate differential between two currencies.
Trading in Forex-INDIA
Forex means currency pair trading. Within Indian confinement, we could trade anything bench-marked against INR.
It is legal to trade with Indian Brokers providing access to Indian Exchanges(NSE,BSE,MCX-SX) providing access to Currency Derivatives. Currently the trading instruments are USDINR,JPYINR,GBPINR,EURI
Trading in Forex -MAJOR currency pairs
A widely traded currency pair is the relation of the euro against the US dollar, designated as EUR/USD. The quotation EUR/USD 1.2500 means that one euro is exchanged for 1.2500 US dollars. Here, EUR is the base currency and USD is the counter currency.
But its not possible for an indian to trade in this pairs.
Reasons
Reserve Bank of India is short of dollar denominators. That means, in-case you trade eur/usd with "out of india" players and, if you loose you would buy usd from RBI and send it away. This leads to increase in current account deficit ( lack of foreign currency reserve).
If everybody in india trades forex with 'out of india' players, assuming the notorious nature of trading where 90% of traders eventually loose, RBI stands to loose alot of dollar. To compensate the outflow, our government will be forced to buy more US dollar, by selling INR at cheaper rates. Thus leads to devaluation of our INR.
Self-Interest of India
India is already buying crude and gold from foreign countries by paying in dollars. Whenever government needs to import, it has to sell inr and buy US dollar. Thus us dollar becomes stronger and our inr looses its purchase power due to lack of demand and over supply.
Forex trading with out of India players, if made legal will become the third demon to plague of already weak currency. That is why RBI allows Forex trading in INR based pairs, which is in turn traded within Indian citizens only. This ensures that no INR leaves country.
conclusion
One can trade usd/inr and eur/inr in such a way that inr gets negated and we eventually end up trading usd vs eur. This increases transaction cost. Then there is lack of liquidity as well. But if you are hell bound to do this, you are always welcome to get around this barrier and make your bets.
However if you send money to out of india, to FOREX brokers inorder to trade in any derivatives, Its illegal and liable for imprisonment, fine etc.
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