Forex Trading - Rules of Thumb 1

Set up and Implement specific goals and objectives

Few things are more important to your Forex trading success than having set specific goals and objectives for what you are trying to achieve. It is amazing to me how often we hit our targets, meet our objectives, and reach our goals best when we speak aloud and write them down.

For any business to be successful it must have measurable objectives that you are actually able to achievable. In trading, the primary objective is obviously to make money, but it is important to have other objectives that are not strictly cash-related.

We must always remember that reward and risk go hand-in-hand in trading and that we can’t expect to achieve high returns without planning and bracing for high risk (draw-downs).

Your objectives and goals have to be very specific to you, but they must also include the following characteristics if they are going to be useful:

• Be measurable in accordance to completion and timeframe involved
• Be realistic and achievable
• Be worth the time and effort involved
• Be positive

As an example, here are some actual objectives (Please bear in mind that this is only a partial list):

• Create 2 new positive-expectancy trading systems each and every year
• Seek to make less errors implementing your trading systems each year
• Work to achieve a return to maximum draw-down ratio of 1.5:1
• Take 2 weeks vacation from trading during each year

You should also note that only one of them is meant to be about making money, and that has a measurable objective that is very similar to a draw-down, and it is not guaranteed. If you know what you are trying to gain in your trading, and when you are trying to achieve it, the whole of your efforts will be more focused on meeting your objectives.

This also helps to guide you to only pay attention to things you really want to achieve with your time and resources that you have available. This will also give you a way that you can effectively measure the success and progress of your trading strategy.

Generally traders who have well-defined objectives will be much more successful than those that do not have pre-defined goals.

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