By — Casey Stubbs
Today I am going to dive into an advanced Forex trading discussion with the goal of changing your mindset about some fundamental ideas in trading, trading plan components, and discipline in trading. I will also be starting a discussion in the comments section because your participation will truly help you in understanding the topics discussed and give trading basics for beginners. The comments will also help to bring the discussion to another level than what I could do on my own by just writing an article. To get the most please read the article carefully and then add your comment or questions. In addition please share this article using social media because this is a discussion on Forex trading that could change many people’s lives.
If executed properly Forex trading can be used to accumulate great wealth for a person that develops a trading plan and executes it. Most people that start trading think of getting rich quickly which is faulty thinking. Instead, people should be thinking long term on how to use Forex trading to accumulate wealth. I will be discussing the key elements that are needed in order to use Forex trading to accumulate wealth. The main components that a trader must possess to create wealth are: using trading as an additional stream of income, having a trading plan, and using discipline to control emotions.
Additional Stream of Income
Many traders that start trading Forex crash and burn because they start out thinking they are going to quit their jobs and be full-time traders. While this is a great dream that I encourage people to pursue, it is better to look at trading more objectively. The idea I have embraced that has helped me, is to use trading as an additional stream of income that can be used to accumulate wealth for you if you are following a specific long-term wealth creation plan. The income generated from trading will grow much quicker if you have additional income coming in from other sources, such as a job or business. That way you can use all of your trading income to be added into your trading and that will work to compound your profits. One additional way to help boost your Forex trading wealth is to add to your Forex account on a monthly basis. The idea of saving monthly income to be used to generate more income is one that has been used by wealthy people for generations. If you are going to be wealthy you must think like a wealthy person and that means having a vision and a long-term plan. Once you have a substantial trading account that can pay you the amount of income that you need to live comfortably then that is the right time to become a professional forex trader, but not before.
You Need a Plan
I hope that you might be thinking a little differently now about how you manage your trading. Now that perhaps you have a new mindset on how to generate wealth with Forex trading, let’s talk about how to develop a plan and execute it. It is important to manage your money with a complete plan on how you will spend your money and also what you will do to increase it. That’s because there is more to making money on Forex trading. The plan should be comprehensive and cover all areas of your life. We say that money management is important in trading but it is important in your life as well. Actually, you should have good management skills with your personal money first and then bring that into your Forex trading. I don’t have time or space to talk any more about that in this article but there are many resources on the web that talk about how to create the best forex trading plan.
Trading Plan Components
The first thing you need to start creating extra income with your Forex trading is to have a written Forex trading plan. I say written plan specifically because the plan must be written with specific rules so that the trader can be accountable to that plan. Many traders will say that the plan is in their head but that is not enough to be accountable it must be typed or written and displayed near your trading computer so that you can view it and review it on a regular basis. A complete Forex trading plan will have 4 elements to ensure that it is fully functioning to give your the best chance for success. The plan must contain a Forex strategy that explains how to enter the market and also how to exit. In addition to a Forex strategy, the plan must contain money management rules. The trading plan should also include the goals you have for your trading, both long term and short term goals. You will have to review your trading plan regularly to make sure that you are following it correctly and to make any adjustments as necessary.
Discipline in Trading
Finally, It is important that you understand that to create wealth by trading you must have Forex discipline to follow everything that you have planned and learned. A trader must use their discipline to be completely free from emotions that might stop a trader from executing their plan. Emotions such as fear and greed can enter into a trader and cause them to move away from their Forex trading goals and when they allow that to happen traders usually end up not reaching their goals. Emotional thinking is disastrous to your goals of accumulating wealth using Forex trading, that is why I am emphasizing the importance of discipline. I am writing this as a warning so that you can avoid unnecessary losses that will get you off track. To set yourself up for success in maintaining discipline I recommend that you practice self-reviews on a weekly basis to determine if you actually followed your plan with discipline or rather allowed your emotions to get you to make bad trading decisions. If you still are not practicing discipline than get an objective person to review with you and hold you accountable for your trading. I still to this day share my trading decisions with some trusted traders that I associate with so that they can encourage me to stay on track.
In conclusion, Forex Trading is a tool that can be used to accumulate wealth if you have a well executed long-term plan. Many traders enter into trading with objectives that are much too aggressive, with no real plan. If traders use trading as an additional income stream, with a solid trading plan components and exercise the discipline to carry out that plan then Forex trading can be the right tool to generate massive wealth.
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