CATCH THE PIPS... & THE DOLLARS WILL FOLLOW...

I just read a book talking about the Holy Grail in trading... and the answer is...

A TRADING PLAN...

Not a surprise answer I suppose, but then this is the one that most novice traders tend to neglect, including myself.

I don't want to rewrite everything on what has been discussed in the book, but the key points are:

1. You must know why you are trading
2. What is your daily, weekly and monthly target, inclusive short terms and long terms goals as a trader
3. How do you plan to achieve that exactly?

In short, it is also about patience and discipline.

PATIENCE - to carefully analyze the market & wait for the right signal to enter
DISCIPLINE - in following your own pre-define system and schedule

One more thing, majority of new traders are so much focusing on dollar gains instead of sharpening their skills in getting the pips out from the market.

When dollar gain is in focus, risk management will go haywire. Why?

Say for example you are aiming to gain USD200 per day. There are for sure many ways for you to get this but of course, this is very much depending on your available margin as well.

20 std lots = USD200 per pip = You need 1 pip only
2 std lots = USD20 per pip = You need 10 pips only
2 mini lots = USD2 per pip = You need 100 pips
2 micro lots = USD0.20 per pips = You need 1000 pips... pheewww...

These are just examples.

But you can see that if you're so much focus on the dollar instead of pips, you would enter the market blindly without knowing what sort of risk that you are facing.

Yes it feels great when you have a 2 standard lot position that goes with you instead of a 2 mini lots position. Say you are 10 pips in gain, you are 200 dollar ups instead of 20 dollars.

BUT...

Imagine the reverse side. Can you stand the pain if it happens?

20 pips down with a 2 mini lot position would only cost you 40 dollars instead of 400 dollars with a 2 standard lots size.

So, in summary... instead of focusing on the dollar gains (sure thing it's all about dollar gain), focus on scoring the pips so that you would enhance your trading skills from day to day... The dollar gains and risked during any single trade are simply multipliers and should be taken care under your money management calculation... the best risk at all time is 1%...

Have A Nice Trading Week...