So where do we begin? Where are you right now in your journey? Most people without affluent backgrounds and the good fortune to have had the necessary education to naturally progress into forex seek out training such as the education that ditto trade provide.
Today we are going to look at how the everyday man or woman can progress from mundane dead end job to full time forex trader and the steps that this may entail.
A lot of people make the mistake of thinking that forex is an all consuming time engulfing process that is only suited to those who have nothing but time and money. With the ease of access to information today this simply isn’t true.
The first step in becoming a full time trader is to become a successful part-time trader. Part-time trading can allow for an increase in trading efficiency and There is less chance of over-trading your account due to your trade analysis time being more constructive and precious.
Being a Part-time trader can leave you with a more simplified outlook on the markets with less uncertainty where money is concerned. The time invested is less, although decision making still needs to be critically thought out and strategies surrounding the time available to you must be adopted. Part time traders must identify a simple yet effective strategy and make use of entry orders in order to be present in the market when they must attend to their real life commitments.
So… what strategies can a part time trader employ?
A strategy that can be effective for people with little time to trade is rooted in trend following. We will now look at a some DNC or Donchian indicator based strategy that can serve to aid you trade more efficiently and in less time. The tools involved in identifying trades for this strategy are fairly intuitive even if you have never traded forex before. The essence of this method is that the trader will place orders to enter into the market at strategic price points so that you need not be watching the markets throughout the day.
In order to implement this strategy you will need to choose a pair and set the price chart to the daily time-frame so that each candlestick represents one day. We then need to identify a strong trend and some strategic price points on the chart.
Let’s now add the DNC indicator to the chart. if you do not have this indicator it’s freely available online to add to your trading platform. The DNC indicator consists of a upper lower and middle band. The upper band represents the 20 day high, the lower band represents the 20 day low and the middle band is the average between the two. You can adjust the parameters to less or more days if you wish but we will be using 20 days for our example.
The DNC indicators parameters will calculate the highest high and the lowest low price for the previous number of bars set by you. For example If we set the input value of the DNC indicator to 20. This means the highest high price and the lowest low price for the past 20 days worth of trading or 20 candlesticks if you are set to daily time frame.
One way we can use the Donchian Chanel to trade is by paying attention to the market price and it’s relativity to the middle band.
When price is below the middle band we can look for opportunities to short the market and when above we can look for long opportunities. Now that sounds fairly vague but if you look closely at the behaviour of the market surrounding the middle band you can see more often than not it offers opportunity at entering trades during strong trends, and That is the optimum phrase here, during strong trends, you may want to lower the time frame in order to pin point these opportunities and retracerments.
Secondly we can look to trade in the direction of the market when new 20 day highs or lows are established. This is a classic breakout strategy and Here we see a new 20 day high presenting itself and it’s a fantastic long opportunity as we see by what follows afterward. This is not a stand alone strategy when using the DNC indicator and more serves as an entry trigger to support your other analysis. When long term ranges like this are broken the trend tends to continue.
Thirdly the DNC indicator can help us to ride out massive trends. If we are short this market and we used a new 20 day low to enter or trigger this position, we could trail our stop loss until the middle band is compromised. These huge moves don’t necessarily occur often but they do occur and over time statistically you will end up benefiting from one of these colossal breaks.
These strategies are not limited to the DNC indicator and are rooted in trend following strategy. Other trend following indicators include Bollinger Bands and the keltner channel. These strategies are not to be used alone and other analysis must be considered. we operate as traders by pooling a wealth of evidence in order to make our decisions, however that being said this should help significantly cut down on your time spent analysing markets for potential entry.
As I mentioned earlier part time traders will need to make use of pending orders when away from their trading desks. Provided your goals are reasonable and your market analysis is thorough, you will not need to constantly baby sit your trades and allow them to conclude naturally even if that involves suffering a loss.
Making the move from part time trader to full time trader is a big commitment.
Full-time traders have the unfortunate burden of generating a lively hood from their work and there is often an overload of financial information to absorb. This can become a daunting prospect for those who are not ready mentally to become professional traders.
Those successful enough as part time traders would ideally have to have.
1. Built up profitable and long standing strategies.
2. Be making consistent profits on a monthly basis.
3. Making enough profits to pay all of their financial commitments as well as making additional income to reinvest back into their trading account to allow for compounded growth.
Only then may they consider becoming a full time trader and leaving their conventional job behind. The added stress of now having to make money may be to much for some people so in addition it is definitely wise to have saved some finances separately to cover your financial commitments should the worst become reality.
I hope you have enjoyed our discussion today ladies and gentleman please sit back and contemplate what you have learned today and remember Contemplation is the key to learning.