As
one trader successful women in our day, Kathy Lien has a myriad of tips that
can be distributed to the novice trader. One recommendation contained in the
trading book entitled High Profits in High Heels: Secrets from Today's Top
Women Traders. In the compilation work, he not only share impressions and
experiences as women traders who are still rare, but also the secret of success
with trading the following five steps:
1. Build a Trading Plan
The
very first step in creating a trading strategy is the planning. The biggest
mistake beginners is trading based on instinct or methods of other traders.
Although later works, oriented to the way trading is a "sin", because
you will have difficulty making the same profit when no longer receive
"tips" of the trader. Holds Successful traders can not be pinned if
you only manage a big profit in a trading position. Therefore, you need to
create a strategy that you understand the outside in.
Know
Yourself
"In
each of my presentation, there is always the question of indicators and time
frames are best. My answer is 'no'." Thus said Kathy Lien. According to
him, all traders have the same profit opportunities, both short-term traders,
long-term, technical, or fundamentalists.
The
key, find a trading style that suits your personality, and do not try to match
your personality with a particular trading style. Know yourself and know if you
are impatient, need quick results, like excited look at price movements even
though only 10 pips, or relatively more want to take a more relaxed approach
and have a long-term perspective.
To
find out, you can begin to develop a strategy to answer these three questions:
- Is my strategy will be based on the technical, fundamental, or both?
- Is my strategy will focus more on trading range or trend?
- Time frame what will I use?
For
the record, the determination may be based on the time frame you personality.
Time frame is great as H1 or more may not be suitable if you are the kind of
trader are impatient. Instead, you will have difficulty digesting low
volatility in a time frame such as M5 or M15 if you ate a trader who would
rather "go slowly".
Then,
you can continue to answer the following three questions:
- Pair what I'm going to trade? major or cross?
- Will I still hold positions above 5 pm or on weekends?
- Am I just going to buy a pair that gives me an interest swap?
By
answering the questions above, you can build the foundation of your trading.
Just so you know, there are some strategies that work better in certain
pair-pair. For example, the pair EUR / GBP is often chosen for the range
trading strategy. This means that the EUR / GBP is more appropriate for the
strategy of "buy low, sell high". Develop a trading plan will
certainly be easier if you can identify the characteristics of price movements
in a particular pair-pair, and pair it with the right trading setup.
2. Set Money Management
The
next step with regard to risk management. Why this should be the second? In
fact, to know when the right time to exit is equally important to recognize the
fitting moment for entry positions.
There
are different kinds of risk management methods that you can use. Here, Kathy
Lien did not emphasize where the best way, because it all depends on how you
use it. Averaging method, for example, when used with the aim of maximizing
profits might be a sweet fruit. But his case is different when applied in this
way when you're loss position, because you can actually increase the risk of
loss. For that reason, always know what you will do before opening a position
in order to take measures best exit.
Use
Trailing Stop
One
more tips in determining the exit is to engage the trailing stop. According to
Kathy Lien, the forex market is highly trending market. That is, prices can
move up to thousands of pips if trending in a certain direction, with little
retracement here and there. Because of this many fund managers to be a trend
follower. In a trend following strategy, trailing stop has a rather crucial
role because it is useful to maximize profit potential while also limiting
risk.
Kathy
Lien And what about yourself? In this book, he reveals his favorite strategy:
"I
like to open several trading positions with the size of the two lots. The first
target I usually there is at level" conservative ", or easily
achieved. As for the second target, I place with a ratio of 1: 3. When the
first target I was touched, I will move stop loss to breakeven level and
continually adjust the trailing stop line with the strengthening trend. the
principle is, do not ever let a win turned into a loss position. "
3. Test Trading Strategies
After
developing the method of entry and exit, the time had come to test the
reliability of the strategy. Remember, everything needs to be tested either by
the back test and forward test. The best way to make back the real test is to
apply a particular coding program. However, not all traders can use it, then we
discuss a common way, namely by reviewing the chart. Long time back test
usually depends on your trading strategy. The more complicated method you use,
obviously the longer the duration of the test.
Only
after you have finished doing back test, you can go to a demo account to
forward test. This stage is important to run even if you already have the
results of a back test. Why? What might happen in theory sometimes not similar
to reality. Especially when you use a breakout strategy or trading news, price
volatility certainly will not be easily predicted, and find the position of the
entry is certainly not as easy as reflected in the results of a back test.
When
you've managed to achieve a consistent profit in the demo account, then you can
move to a live account. In this case, you should not rush, because
"class" into a live account before printing the steady gains in a
demo account will only bring disaster to you later.
4. Understand Trading Strategies
In
addition to choosing a strategy appropriate to the character, you also need to
understand the correct trading strategy you use. Not just the way it works, but
also what kind of trading results to be imported.
In
terms of trading results, there are two kinds of strategies can be identified.
The first strategy succeeded in making many positions you end profit, but the
amount of profit per position lower. With such a strategy, the number of gains
and losses on every trade you more or less equal size. However, since most of
your profit position, then figure your overall profit expectations are still
positive.
In
contrast, the second strategy to make the most of your position was closed with
profit. But in a profit, your benefits can be very large in number. Thus,
whenever a big profit profits will be able to cover the losses of the loss
position. The second type is usually occupied by the strategies of methods
breakout and trend following.
Recognizing
this side will make it easier to measure the success of trading. Let's say you
take a breakout strategy. After all this time it turned out great profit
trading you are not too big, and even failed to cover the shortfall from your
loss. Such results clearly indicate the failure of the implementation of the
strategy. If you have this, then there is no other way but to go back to the
first step.
5. Develop Trading
If
you are able to get past the fourth stage, then the next left is development.
Although already in the last stage, it does not mean you can relax away. In
fact, it is precisely at this stage you need to be tried, because developing a
trading is a process that continues all the time.
Learning From Kathy Lien
"Every
week, my partner my trading hold a session of self-reflection, where we talk
about trading like what we have done. We also discussed the mistakes that we
made, is there a pattern of defeat could be traced, or is there something that
could fixed ", so said Kathy Lien.
Trader
women who had worked in JP Morgan's own experience of being in dialogue with
one trader at an event. "He said that the strategy of his trading very
profitable, but there is one outstanding issues; strategy always fails each
have a news release. Believe it or not, he asked for advice to me. My answer is
simple, if you can profit in a normal market but failed when No news release,
then avoid trading in these times. I'm convinced now that the trader has to
understand. Although simple, but that sort of thing sometimes need to be
submitted with a really clear ahead to be understood ", so he says.
Kathy
Lien returned an example by expressing 'rants' other traders: "There is a
trader who told me that he has not been able to successfully use the strategy
of breakout. After I wondered, then caught sitting case. During this time he
was looking for a breakout at the end of the American session and the beginning
of the session Asia, two sessions the market's most rare moment of breakout
her. I then advised him to adjust the trading hours in the early European
session, and only by doing so, the level of profitability increases are significantly,
adjustments are small like this is precisely capable of making a difference
big".
Conclusion
Trading
success always starts with planning. Develop a trading plan could not
indiscriminate. You need to recognize your character as a trader, a new look
for the right strategy with your personality. After that, there are steps set
risk management, test and understand the strategy, also continue to develop
your trading. Although impressed by the long and tiring, but all five of the
above stages could be a determinant of your success in the future. Then, have
you implement these steps? If yes, there is at what stage are you now?
