If you are an avid trader, you are probably using Forex testers and MT4 to practice your discretionary trading skills on a daily basis.
However, are you always practicing virtual or simulated trades with these forex practice software? This may be the reason why you are not improving your trading skills.
In this article, we will discuss how to steadily improve your trading skills.
Discretionary trading skills improve with practice
I think it is safe to say that you are basically on the right track if you are practicing diligently.
This is because discretionary trading is something that becomes easier and easier to win continuously as you improve your “skills (proficiency).
So basically, I would like you to continue practicing and improving your skills.
Some practices are effective and some are not
Now, I have used the expression “basically” many times here, but what does that mean?
It means “if you are practicing trading effectively.
In other words, if you continue to practice trading incorrectly, you will never improve your trading skills, and worse, you may even become a bad trader.
What does wrong practice look like?
First, let’s talk about the wrong way to practice.
The first method is to “start trading in the real market with a perfected trading style“.
To put it concretely with Forex, you deposit money into your Forex account, look at the charts in accordance with the trading rules, take a position, and take profit or loss according to the rate movements, and repeat the practice over and over again.
This is not practice, but rather a bad habit that will be hard to cure later on.
Unfortunately, many FX traders call this kind of trading with real money “real practice” and repeat it day after day.
It is true that “using real money, even if it is a small amount, can help you gain experience” is an understandable reason.
However, this is only possible if you have already acquired the skills necessary to gain experience, and it would be reckless to suddenly practice with real trades when you have not acquired any skills.
Car License Story
If you have a driver’s license, I want you to think back to when you were going to driving school.
What was it like to sit in the driver’s seat of a car for the first time?
The steering wheel and gauges in front of you, the view through the windshield, the pedals under your feet, everything was new and exciting.
Was I really going to be the one to drive this thing? And you might have been freaking out.
If you had a license for a manual car, you would have started by practicing the half-clutch.
To begin with, it is very difficult to move forward a little bit.
With an AT-only license, even if you didn’t have that kind of difficulty, it would have been very nerve-wracking and difficult to take a slow lap around the course.
Your eyes would be glued to the road, and you would find yourself leaning to the right, then to the left, and dizzying around curves, and your shoulders would probably be stiff.
Practice, practice, practice again
When you are finally able to move forward normally, the next step is to practice turning at intersections.
When making a left turn, the driver must check for a roll-in, and when making a right turn, the driver must pay attention to oncoming traffic and pedestrian crossings.
Once they are able to turn at intersections, the next step is to go through S-curves and cranks many times to acquire a sense of the vehicle.
In addition, they practice driving under slightly different conditions, such as starting on a slope and parking in a garage.
Even after all this, they still cannot practice on public roads. In addition to practicing, they must also study traffic rules.
After repeating this process many times, you will finally enter a stage where you will continue to drive the driving school’s course, aiming for the integration of each skill.
Then you can finally take the “provisional license test”. Even though you have practiced a lot up to this point, you are still only allowed to take the “provisional license”, that is, the “test”.
After passing this test, you are finally allowed to practice on public roads.
This is the way practice should be
The skill of driving a car is divided into a number of parts, each part is practiced, and when all the parts are in place, they are integrated into a single skill – this is the process of effective practice.
The same is true of discretionary trading.
You divide your trading skill into its various parts, practice each part, and then integrate each skill into a single skill.
In this way, you can imagine how dangerous it is to suddenly put money in a forex account and start trading.
I have money!” even though I have never driven a car before. and suddenly buy a Porsche or a Ferrari, get into it, and try to drive around anywhere you want. Then they crash into a block wall in their neighborhood and end up saying that cars are dangerous.
Let’s break down the trade skills and practice
Think of improving your discretionary trading skills in the same way you would practice in a driving school.
That is, you break down your trading skills and practice them one at a time, gradually integrating them into a single skill.
Specifically, you need to practice chart analysis skills, position manipulation skills such as entry and exit, and mental skills to trade with equanimity.
The individual skills can be further divided into a number of component skills.
For example, the skill of chart analysis is–
- The skill to determine if there is a trend in the market.
- The skill to establish a line of sight.
- Skill in finding support and resistance on large time frames.
- Skill to recognize chart patterns such as double tops.
- Recognizing characteristic price action.
It is divided into many skills like this.
There are articles on individual chart analysis skills, some of which are listed below.
We also have an article on books that can help you learn about forex mental skills and eliminate problems.
How to practice decomposed trade skills?
Now that we have broken down the skills of discretionary trading, how do we practice each of those skills?
The first tool to practice with is forex practice software such as ForexTester. Preparing this is the starting point for practice.
Reference FX Practice & Verification Software Recommendations (Standard & Free)
Reference MT4の複数時間足チャートの検証＆練習におすすめのインジケータ
Once the tools for practice are in place, we can actually start practicing, and specific methods of practice have been identified by educators and researchers in a variety of fields.
Here are some books that I have referred to and actually found very useful.
（Kindle版あり）- ダグ・レモフ, エリカ・ウールウェイ, ケイティ・イェッツイ
- 練習法の名著が文庫版になって登場。
This book, “The Laws of Successful Practice,” explains what effective practice is, and also provides you with plenty of know-how on how to design and practice that effective practice.
By reading this book, you can avoid unnecessary or bad practice, and design and practice simple, effective practice.
Here are just a few of the essentials of this book.
- Concentrate on the 20% that produces the greatest value.
- Be thorough until you can do it unconsciously.
- Find your strengths and hone them.
- Improve only through repetitive practice, not actual competition.
- Separate skills and practice them individually.
- Name and share skills.
Just understanding the essence of this book will change your trade practice from today.
If you are currently doing nothing but playing the real game, you may want to read this book and redesign your trading practice.
If you are feeling stuck in your current practice, you should especially try to incorporate these helpful research findings.
I hope your discretionary trading practice turns out to be a rewarding one.
That’s all I have to say about how to break down and practice your forex trading skills.
Reference 『成功する練習の法則―最高の成果を引き出す42のルール』
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