Learn forex trading based on a forex system that is proven, tested and easy to use.You must have read Part I of how hedge fund managers develop forex trading strategies in a step by step manner. You should understand that hedge fund managers are always on their nerves edge as most of the traders are. They constantly look for trading strategies that work because market conditions keep on changing.

Hedge fund managers want to make good money while always on their guard if things go bad, how to get out of a bad position before it really hurts. You as individual investors also want to bet your own hard earned money in the hope of making capital gains.

There are two primary trading methods; ranging and trending. You should decide whether you want to focus on range trading or trend trading? Many hedge fund managers like to follow the trend. If you want to become a trend trader, than you need to understand how to predict and anticipate trends in currency pairs. If you want to be a contrarian trader and do range trading, you should understand what best times when currency pairs are ranging and how to scalp.

You should also decide the time frame that you will trade most. You should decide whether you will use the 5 minute charts, 30 minute charts, 4 hour charts, daily charts, weekly chart etc and why.

Do you want to hold your position overnight? If you are in a job, do you have time to trade in the evening or the night? What time best suits you? Make these things very clear in your mind before you start trading.

Learning the art of entry and exit is essential for your success. Should it be single entry, single exit? Should it be single entry, multiple exits? Should it be multiple entries, single exit? Should it be multiple entry, multiple exits?

You should understand the money management rules. Never ever put more than 1% of your equity at stake in a single trade. Learn to calculate the risk/reward ratio.

Now, take a test drive of the forex system by back testing and forward testing. Back testing can be done on Metatrader and other platforms that are freely available. Forward test your strategies on a demo account with live data.

A better method would be to open a mini account and try to test it live with a small amount of money. You will not lose much money this way but will be playing against your emotions.

In the end, trading is all about developing discipline and controlling emotions. You don’t get this feel in demo trading when you know nothing is at stake and you are under no stress.

Now it is the time to get intimate with your strategies. There are two main types of trading strategies—one has a high percentage of profitable trades and the other has a high profit factor.

The key factor here is to know what type of market environment your trading strategy performs well in and what type of market environment your trading strategy fails in, because only then will you know what works under what conditions and what does not work.

Understand how much drawdown you can afford on your trading account with this trading strategy. You can establish a bench mark figure using a back test. Decide before hand how much drawdown is acceptable before you pull the plug out of the trade.

The last step of thinking or trading like a hedge fund manager is self reflection. Oftentimes we become so absorbed with trading that we do not notice the obvious.

This is why it is good to spend some time on a weekly or monthly basis to go over or self reflect on your trading strategies. You need to fix a certain ROI for yourself and keep on tweaking your trading strategies until you reach that figure.

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