Here is the Skinny on Trading Success.

Look at the chart below, these are the key systems that you need in place for Consistent Profits In Currency Trading or Commodity Trading. You need a Good money Management System, one that slows you down when you are trading poorly, and Revs you up when you are doing well.

Your Money Management system also should keep you in the trade for optimum profits. Once you have your Money management in place  you can test your Trading System. As long as the system that you have developed, has a positive expectancy, you will be able to trade the system with Confidence.  When you do you will get Consistent Profits.

If there is a flaw in any one of these steps you will fall into the negative loop funnel.  For example with system one Money Management. If you have no Money Management that will bread confusion while you are trading and give you stress. Stress will cause you to become frustrated. When you are frustrated that produces non adaptive behavior. Non Adaptive Behavior produces poor decisions. Poor Decisions Produce Losses.

If you have not tested you system and don t know that it has a positive expectancy or what its parameters are you will once again fall into the negative loop funnel. You will once again produce stress. Stress will cause you to become frustrated. When you are frustrated that produces non adaptive behavior. Non Adaptive Behavior produces poor decisions. Poor Decisions Produce Losses.

Of course the same situation will happen if you have no confidence. The reason you have no confidence is because you lack the first two steps. In order to trade effectively and consistently you need to trust yourself. That trust can only be accomplished when you have tested you system, and have a solid Money management system in place.  Reason?  You have an escape plan and exit strategy and you now know you will not drive yourself into the financial abyss.

Article Source: http://www.articlesbase.com/day-trading-articles/forex-trading-the-small-steps-needed-for-success-3804020.html

About the Author

Thomas Strignano is a retired Chief Foreign Exchange Trader for a major Italian Bank. His 20 plus years of trading (Market Making) in the commercial Forex market makes him an expert in the field. He has developed his own proprietary trading systems and tested them real time in the interbank market. He has trained a number of Forex traders to be profitable, some who are still active at Major International Banks. Tom s major focus is on market timing techniques with technical analysis, forecasting(future) pivot points for major market moves. His overall objective in trading Forex, is use of good Money management, low risk, high reward positions. Please see http://www.tomstrignanoforexexclusive.com