Learn How to Trade Forex - The Steps to a Trade

 Posted: March 17, 2009 | Categories: Forex Training  

Trading is a concept that is very simple: just buy and sell. But to properly trade the forex, or any market, one of the first aspects a trader realizes is that each step of a trade is a small but concise process in itself that requires attention.

The proper implementation of each of these steps is what determines if the trade is actually profitable, and the training program at The Forex Trading Institute precisely teaches you how to follow these steps.

Step One: Determining market direction

Markets can trend, go up or down, or they can be sideways. In the forex, the market is in sideways conditions 80% of the time, so the first step for a trader should be to assume that the market is sideways. After making this assumption, a range bound strategy would be ideal to apply to the market.

The advantage is that range bound strategies work on both sideways and trending markets. Trending strategies only work when there is a trend in the market, which is only 20% of the time. Thinslice Trading teaches you several strategies designed to make profit in sideways markets, keeping in mind that they work in trending markets as well.

Step Two: Entry strategy

A precise entry strategy ensures that the trader is able to identify a clear entry point based on a set of rules. This entry strategy should be a black and white process; either the setup is a good trade, or it is not.

Clearly identifying the correct setup and following the appropriate rules to identify this setup is what will yield a higher probability of the trade actually working out. The Forex Trading Institute’s training program is a simple but effective approach. It clearly identifies if the setup is a good entry point or not, making it easy for the student to clearly understand how to identify good trading opportunities.

Step Three: Exit strategy

This is how the trader gets paid. This step is just as important as the entry strategy. A fixed profit objective, 20, 30, or more pips is a reasonable profit objective if the typical price move is 50 pips, and that is the goal of the strategies used in ThinSlice Trading. This is what is called a scalping method.

By using a scalping methodology, or trying to get a piece of a price move instead of the complete move, ThinSlice Trading is able to increase the chances of the trade succeeding. Most beginning traders try to identify the top and bottom of every move, which usually leads to overtrading.

Following these three steps in the way The Forex Trading Institute instructs its students, by properly identifying the direction of the market and having clear entry and exit strategies, is what will mark the success of a beginning trader. Many traders tend to overlook the details of each step, or sometimes overcomplicate each step, which leads to overtrading.

Instead of overtrading and going for the top and bottom of every move, it makes more sense to identify clear setups with a high probability, and trade more lots.