Trading is something of a hobby for a lot of traders, and they approach it with the same level of disorganization as they do their stamp collection. Some hobbyists, on the other hand , take their actions seriously and act with military-like accuracy. For different types of people, both of those It could work very well with approaches and the variants in between. After all, psychology is an essential part of trading, and it is not reasonable to assume that everyone will trade the same.
That being said, even if it is not the primary source of income of a trader, it is difficult to get away from the similarities of trading and to manage a business. In fact, it has an uncanny resemblance to the kind of everyday work a financial manager or CFO does because of the very nature of Forex trading-handling currencies. Of course, managers have different styles, but there are certain necessary management characteristics that are common, and therefore very useful when it comes to trading, especially financial management.
Everyone wishes to trade like a boss, but for a manager, a boss is just another name. In fact, some of the best and most efficient traders happen to be really good at other things, such as math and journalism (to highlight two very different professions that translate well into trading). Not everyone who trades has a formal education or management experience. Getting a management theory can give you a trading edge, so it’s worth taking some time to look into it.
When it comes to finance, the boss is the Chief Financial Officer, so you’re thinking of becoming the CFO of your portfolio if you want to trade like a boss. So, what are some of the things that a CFO does that translate to trading well? Let ‘s start off with a manager’s four main functions:
With a plan, everything you do begins, and trading is no exception. This is where you work out what strategy you are going to use, in what markets you are going to use, and, most importantly, what you are trying to accomplish with your trading. Will you be a day trader? For a longer time, holding positions? How many average pips do you expect? How much money will you put in your account? On each trade, how much of your account are you going to risk? Where do you see yourself next month as a trader? Just next year? Decade Next? Ideally, you write it down; this is called a “business plan” when running a business; you can have a “trading plan.”
You’ve got to figure out how you are going to put it into action once you have your plan. What time of day will you be trading at? What currencies will you trade with? A great deal of this will depend on how the approach you’ve developed works. Do you have a strategy that nails the JPY completely? Terrific! Great! During the Asian session, you will be doing your trading, And you’ll have to organize how you’re going to do that. Write that down so you don’t forget it in your “trading plan”.
This is the fun part: where you are actually trading, placing orders according to your approach and closing, so you make a good profit. This is the part of trade that people think about most and is often the most written about: such as checking upcoming events and keeping track of levels of resistance (as you’ve probably already discovered, the tips section on Orb ex is excellent for this)
The most forgotten part of trading, probably, and this is where you go back and compare your outcomes with your plan, and make sure that everything meets expectations. It often doesn’t, which is why some traders are reluctant to do it, but it is essential that your plan can be adjusted so that it works better in the future. It is essential to check to see if your strategy meets expectations to know if it actually works-if it is, so you stay at it; if it is not, so you can get a better one. This is why writing down your plan is very helpful, so you can compare exactly what you plan to accomplish with your strategy.
When they make their decisions, they continually go over these four elements, and that also applies to good money management in your Forex portfolio. We’ll get into more detail on how to use each of these elements to maximize the results of your trading, so stay tuned!