forex trading

Is it all about Trading Strategies?

Daksh Murkute | | |

Traders that are just starting out on their trading journey just focus on finding a strategy that fetches them decent returns and they start trading live right away.

 

But is that it? Is trading all about finding the right strategy and jumping into the market straight away? Not really.

 

There are several other things that you’ll need as a trader and these are so important that if not followed can lead to failure even if you have the best strategy.

 

In this blog post, I’m going to tell you about all the things that you’ll need as a forex trader and how can straight away put yourself ahead of the 90% of the novice traders. So stick around till the end.

Contents

 

 

Is it all about the strategy that you use to trade? No, it’s not and there are a couple of other things that you’ll need if you want to trade successfully.

 

Along with a trading strategy, you’ll need risk management, trade psychology, and the right mindset.

 

 

Why trading strategies are not enough?

 

Why trading strategies are not enough?

 

Let’s not deny the fact that strategies are not full proof. Tell me one strategy that works all the time. I’m sure you can’t because there is not a single holy grail strategy.

 

I mean even if you trade reversal strategies, breakout strategies, or even order block strategies, they will fail at times and you just can’t expect to keep trading them day in and day out and churn profits.

 

What’s the reason for this? The reason is that markets are not the same all the time.

 

Each strategy has a type and that’s the type of market it would work best in.

 

A strategy like RSI Divergence may work best in a ranging market but you can’t expect it to work equally well in a trending market right.

 

Say that you have developed a nice trend following strategy and you managed to spot a trending move and you even made good returns out of it.

 

Now, will the market always keep trending up or down? Maybe and maybe not.

 

There will be times when the price goes from a trending phase to now getting stuck in a range.

 

Now tell me, will your trend following strategy work well in this type of market or in such market conditions? I don’t think so.

 

That’s why it’s not just about trading strategies and you just cannot expect to become a successful trader just by having a strategy in your arsenal.

 

 

What else does it take?

I hope that you’ve now understood that you cannot stay dependent on just your trading strategy and that you need more.

 

I mean, you can expect things to go well for some time just by relying on the strategy, but it will be short lived.

 

Why will it be short lived? Because once market conditions change and your strategy fails, you’ll incur losses and it will keep denting your capital as you are only there in the market with your strategy and nothing else right.

 

This is where the first thing comes in and that’s risk management.

 

1. Risk management

 

What else does it take? Risk Management

 

What is risk management? It’s all about managing the risk that you take on each trade and making sure that you live to trade another day.

 

In other words, it means that you do not risk frivolously on any given trade that if it is a losing trade, it does not wipe out your account.

 

There’s a general thumb rule that I always talk about in my blog posts and videos, never risk more than 1% to 3% on any given trade and you are good to go.

 

But is that all, do you just need a strategy along with risk management and you’ll get ahead of the herd? Not yet and this is where psychology comes in.

 

 

2. Psychology

 

What else does it take? Psychology

 

Now say that you already have a strategy and are already in a trade, what should you do?

 

Theoretically, you should just let the trade play out and shouldn’t do anything till then, but does this actually happen? No right.

 

This is what psychology is. We’re humans and we’ve got our gut feeling, emotions, and all sorts of things that make us take decisions.

 

But in trading, you need to keep emotions away, take no decisions based on gut feeling, and have the right psychology.

 

I’ve seen so many traders go bust just because they couldn’t get the right psychology and I can also tell you that the best traders have developed this psychology and that is the key to successful trading.

 

So strategy, risk management, and psychology are pretty much what you need to trade. But there’s one more thing that’s equally important and that’s having the right mindset.

 

 

3. Right mindset

 

What else does it take? The Right Mindset

 

What do you think trading is? Is it a thing where you can earn tons of money quickly? If you say yes, don’t I’m sorry but you’re doing this with the wrong mindset.

 

There’s always a right mindset to approach things and as traders, it’s even more important, or else you’ll be expecting the stars and won’t even end up on the moon. It’s just an analogy don’t take it in the literal sense.

 

So what’s the right mindset? It’s having the right expectations. Trading is not a get rich quick thing. It’s not a golden treasure where you’ll become rich overnight.

 

To be completely honest, it’s a slow process and if you take it slow, then I’m telling you you’ll get ahead of the herd very fast.

 

 

Bottom line

So look, if you want to stay in this game for a long time and are not looking for a short term income fix, then all that I’ve talked about in this blog post is literally the key to it.

 

It took me some time to figure it out, but when I did, it put me on a completely different path and it only led to success.

 

I want you to know that your strategy is not everything and that there are other equally important aspects in trading.

 

Don’t forget to share this blog post with others and also feel free to ask any questions in the comments section below and I’ll get back to you as soon as possible.

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