Step 5: Identify your mission and set your goals
(A) With everything in life, if you don’t know where you’re going, every way will lead you there. In terms of investments, this means that you need to sit down with your calculator and determine what kind of return you need to achieve your financial goals.
(B) Next, you need to start understanding how much you need to earn with trade and how often you need to trade to achieve your goals. Do not forget to take into account the loss of trades. This may make you realize that your trading methodology may conflict with your goals. Therefore, it is critical to align your methodology with your goals. If you trade with standard 100,000 lots, your average value of a pip is about .10. So how many pips can you expect per trade? Take your last 20 trades, add up the winners and losers, and then determine your winnings. Use this to predict the returns of your current method. Once you know this information, you can find out if you can achieve your goals and whether you are realistic or not. (For more information, see How does the leverage effect affect the pip value?)
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