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In a recent article, I explained that I have started to trade Foreign Exchange markets (FOREX) once again, after a sabbatical for a few years.

And I also highlighted that it was interesting to see that the forex business has changed very little during those years, despite huge leaps in online trading technology, and so on.

Specifically, I referred to the fact that day traders always seemed to me to be far more disciplined in their trading approach than position traders, and that this still seems to be the case.

To recap briefly, establishing this discipline is a simple three step process:

1. Find the best trade, or trades, and make them
2. Ride it as far as it can go if its good or
3. Get out with minimal losses if it is not.

Day trading teaches that, with every second precious, you must plan ahead of time, in order to execute those plans at absolutely the best moment. Those rules still apply.

So, what I want to do here is see how these disciplines can be applied to position forex traders, who generally plan to stay in a trade for days rather then looking at a time span measured in hours, as would a day trader.

In order to do this, I want to take a closer look at how our “3 step program” might look in action when applied to a position trader, and how using that plan could give us a “time frame” to work with as position traders:

1. Locate and Evaluate Best Trades. (Say, 15 minutes)

Looking specifically at forex, since there are relatively few currency pairs that serious traders will follow, and taking on board that today’s technology will allow you to evaluate good entry points simply and quickly, it really should not take long to go through all the charts.

2. Calculations (Maybe 2 minutes per potential trade)

Once we’ve found potential trades, we’ll need to make a few calculations, aimed at one thing and one thing only.

That is, calculating the size of the trade that you are going to make, or the amount of money that you will commit to that trade. Whilst I am not going into any recommended methods of making these calculations at this point (there are many systems out there,, some of which I will delve into some other time) the key is, again, have a system!

This must not, categorically must not, be a “guess”, educated or otherwise!

You must have a formula or method of calculation that instantly dictates an ideal trading size, otherwise you are shooting in the dark, and your disciplined trading approach has just gone out the window.

Of course, your decision of how much to put into a trade will depend on many factors, such as whether you are planning to enter the market only if, say, three particular indicators all come together at the same time, or if two is enough, or whatever.

The point is that your system must be in place that, is A, B, C happens, then I will put his much into the trade, but if only A and B happen, then this much, and so on.

Have the system in place, be disciplined and stick with it is the cardinal rule.

Know why?

Because not having this system in place is one of the biggest time wasters in trading known to mankind. You have no system, and you can spend hours, even days, dithering about what to do, with how much and when to act.

And, guess what? How ever long you procrastinate, there is still absolutely no guarantee that you will be right!

Sorry to tell you this, but the end of the day, every trade is still just a guess. The real key is NOT how good you are at guessing. The real key to trading success is how well you manage your account for each “guess”.

Mastering whether you always guess right is impossible. Managing how much your risk on each guess is not only possible, but probably the number one skill that any new trader needs to learn, as it is the difference between success and failure.

3. Check trades (5 minutes )

Keep your eyes on the trades that you are already in. As your disciplined approach dictates that you will plan your entry and exit points in advance, you’ll only need the day’s prices to figure if you need to adjust any orders, or simply leave things as they are.

So, there we are. By applying day trading discipline to position trading, a savvy forex trader can literally do everything they need to do in less than 30 minutes a day, hard as it is to believe.

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