I started the positive leg of my trading journey the minute I took my first trading class. Just like numerous other graduates of the trading school, I sat through a trading workshop and listened intently about the true nature of global markets and how the professional traders of this world adapt and weave their way through with consistent profits and few headaches, says Sam Evans of Online Trading Academy.

Looking back, it shocks me when I think about just how much I thought I knew about the markets! My perceptions of trading back then were so very different from the reality I was introduced to and now know so very well. I was no different from any other hungry novice trader and it was so refreshing to have my eyes opened to a whole new logical approach to trading. One of the key aspects of the presentation that I could really relate to was after our lunch break when we were introduced to Online Trading Academy's powerful structure of education, called "The Seven Pillars of Trading." The Seven Pillars is a unique summary of the tried-and-tested skill sets that any rookie speculator needs to learn from in order to get the results they are looking for. For this week's article, I would like to run through each of these seven pillars, making them specific to the world of forex trading so we can all fully understand the main requirements and skill sets necessary to make it as a consistently profitable trader in today's financial arena.

Pillar One: Macro Fundamentals

It all starts here for any trader, investor, or market speculator; no matter what asset you choose to work with. Understanding the main aspects of the fundamentals will help us to gain a bigger-picture understanding of how these factors shape and influence the actions of willing buyers and sellers. Personally, I do not base my trading decisions on the economic factors alone, but that does not mean that I choose to ignore the fundamentals altogether either. It can be of great benefit to any market professional to understand such things and why certain markets have positive and negative correlations with others and why certain news releases have a greater impact on prices than others. I would say that one particular benefit of forex trading is that it is, by far, easier to follow the fundamentals as we are focusing more on specific national economies as opposed to a whole variety of individual companies like in stocks. Always use some kind of economic calendar before placing your trades-I call this "looking left and right before you cross the street." By far, it's better to be safe than sorry.

Pillar Two: Technical Analysis

Trading forex without charts is like driving blindfolded. Even if you are the world's greatest fundamental analyst, you still need entry and exit prices when taking positions, and this fact alone means that any serious-minded individual needs to understand how to read a basic price and time chart to keep things planned and precise. Taking charting a little deeper we can then start to recognize repeatable patterns in behavior, and as my own mentor, Sam Seiden, has always said, the chart, in essence, shows us the footprints of the buyers and sellers. The footprints then offer us objective areas for buy and sell opportunities. The art in charting is to develop a simplistic and coherent ability to read the charts without confusion and bias, allowing us be drawn to only the lowest-risk and highest-potential-reward trades available. Think of technical analysis as a means to plan your move ahead of time, rather than as a means to react to the movements of price as they are happening. Less is more in charting, and don't be baffled into thinking that there is any system that works all of the time, as you will be greatly disappointed. Pick your technical tools, get familiar with them, and be consistent. In time, the charts will show you the entry points instead of you staring so intently that you create a high-risk trade for yourself, which often results in yet another loss.

Pillar Three: Execution

Execution is always intrinsic in the grander scheme of things, and a trader should be confident and competent in their ability to place orders in real time and manage their trades. Your broker should offer you a whole plethora of orders like limits, market and stop limits, and especially if you are looking to place longer-term, set-and-forget setups, you will need to have access to OCO (order cancels order) and OSO (order sends order), in which you can create multi-bracket orders to not only enter the position and place a stop loss, but also set up profit targets and final exits all ahead of time. This way you are fully protected in your trades at all times, even if the PC breaks down or you experience an Internet access failure. You should be trading through a forex dealer who gives you the fastest fills and offers a fully automated execution desk to boot.

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Pillar Four: Live Data Feeds

There is simply no excuse for any forex trader to not have access to live charts. This is the biggest market in the world and we can even get real-time price feeds and charts for forex pairs and prices for free on Internet sites such as DailyForex.com and FXStreet.com. The complete forex trader should always use the charts that their broker provides to execute trades, as these prices will match their execution prices. In the case of trading forex futures contracts, this becomes a true direct access market, with all volume and trading going straight through the Chicago Mercantile Exchange (CME), giving traders discrete order placement, first-come, first-served status on pending orders, and true market volume. For the serious intraday currency trader, this really is the way to go.

Pillar Five: Risk Management

As I have said many times before, trading is not really about making money, but instead, it is all about capital preservation. Without money in the account, you can't trade. Always risk small percentages of your account and use decent risk/reward ratios, which, in time, will provide you with a buffer to cover the losses that you will endure. Risk/reward ratios are far more important in the longevity of a trading career than hit rates. I always say to my students that trading is not about how you win, but how you lose. Lose small and win big is the idea, and if you are disciplined enough, you can still make good money with as little as a 30% success rate. This is one of the only businesses in the world where we can get paid for being overall losers, but only if strict risk management principles are adhered to at all times.

Pillar Six: Psychology

To me, the mind is where the biggest battle will ever take place for a trader. In this game, you can easily become your own worst enemy if you don't keep your emotions in check at all times. Some experts would say that after your trading strategy has been defined and the risk management principles are put in place, trading then comes down to as much as 90% psychology. Only we can stick to our plan of action and remain calm, unemotional, and patient during the peaks and troughs the markets have to offer. Money is only at risk when trades are placed, and after a few losers, the fear factor can play funny tricks on your account just as much as greed can, too. Learn to not follow the herd like a sheep and be decisive in your goals and trading. If you do what everyone else does, then you will typically get what everyone else gets.

Pillar Seven: The Trade Plan

Someone once said to me, "A goal without a plan is nothing more than a wish." Never a truer word said in forex trading! This pillar is the culmination of the previous six and becomes the more important piece of the puzzle. Your trading plan should be written to compliment your personal aims for trading, as well your own character and make up. It should be based on the capital you are working with, the style of trading you are looking to carry out, and your own tolerance for risk. I like to think of the plan as being my instruction booklet of sorts for my trading. It tells me what to do, what to look for, and how to behave in all market scenarios. It is designed to keep me on track and disciplined to the extent that I should never have to ask myself "What do I do now?" Consistency comes from measurable results, and sticking to a detailed plan of action will help a trader to keep track of their performance at all times. Fail to plan, and you can plan to fail.

By Sam Evans, instructor, Online Trading Academy