Forex Trading relies on the use of intelligence and analytical abilities complete trades, but only these thing cannot help someone to become a good forex trader. Most of the successful traders have attributed their success to one more thing, which is hard work and discipline. Expert traders analyze their strategies and try to keep fear and greed at bay. Some of the tricks used by successful forex traders can be summarized as follows:
- Step 1: Choosing goals and trading styles
Before starting on a journey, you have an idea about the destination. The same is the case with Forex Trading. Before you start off with investing your time and money into it you should be aware of your goals and what are the means to reach those goals. This involves analyzing what you want out of Forex Trading and what kind of trading platform would help you the most in achieving those goals.
- Step 2: Try to choose a broker that you are comfortable with and which supports your way of trading
The most important thing to do while starting with forex trading is to choose a broker that is both reliable and offers a way of trading that is consistent with your style of trading. One should read the broker documentation carefully to understand which broker would suit him or her before taking any decision regarding the broker. Try to choose a broker that would allow you to do the necessary analysis you want to do. For example, if you like to trade off of Fibonacci numbers, be sure the broker’s platform can draw Fibonacci lines. Try to choose a broket that provides a good platform for trading.
- Step 3: Choose a strategy and consistently apply that strategy
Before trying your hand at Forex Trading one should always try to formulate a strategy and methodology that one is going to use. Some people may have a technical approach towards trading, i.e. they rely on charts and trends only to time a trade. Others may use a startegy that involves looking at the underlying fundamentals of company before timing a trade. One thing that one must keep in mind is that markets are ever changing so that methodologies that you are going to use should be adaptive to the change in the market trends.
- Set 4: Do not confuse yourself between direction analysis and intraday analysis
Most of the people become confused when they see that there is a conflict between the facts on a weekly chart and facts on an intraday chart. One should understand one thing that what shows up on the weekly chart as a sell opportunity may in fact come out to be a buy opportunity in intraday trading. Therefore you should try to use a longer time frame for direction analysis but instead use a shorter time frame when it comes to timing buy and sells.
- Step 5: Try not to get scared of small losses
One should consider the money one has in his or her trading account as leisure money that is not needed to pay an bills or any debt. This is because if one does not do this then one would not able to risk the money on good trades. Also remember that only leverage your trades to a maximum risk of 4% of your total account balance. This is so that you do not lose more than 4% of your account’s value in a single trade.
- Step 6: Calculate your expected revenue
Always try to calculate the expectancy from your system. This can be done by checking all the previous trades that have made you money in relation to all the trades where you have lost money. This would protect you from unneccesary loss and allow you to fine tune your strategy. You can calculate the expectancy by using the following formula:
E= [1+ (W/L)] x P – 1
W = Average Winning Trade
L = Average Losing Trade
P = Percentage Win Ratio
- Step 7: Perform timely analysis
One should always perform a timely analysis of the amount of money traded and the profits and losses one has incurred. This step should be performed regularly. Most of the expert Forex Traders perform weekly analysis. Also one should try to formulate new strategies on the weekend, when the market if closed, by looking at the charts relating to the previous week and by predicting future market trends based on intraday charts from the past month or so.
- Step 8: Keep records
A printed record of every move that you have made in the market would help you to realise your mistakes and help you to avoid them in future trades. Keeping records is the best learning tool and this is because when you look at a past transaction you tend to realize where your strategy went wrong and what needs to be done in order to avoid the same mistake in the future. Records help you to formulate new strategies and fine tune the old ones.
These are some of the things that would help you to become better and more refined traders. One always needs to remember that one can become a good trader only through hard work and discipline and there are no shortcuts to success.
As told earlier Forex Trading is not easy and the best way to make good money in Forex Trading is to work hard and diligently and try to learn as much as you can about the market. Though there may be times when one may think that he or she is not progressing at all in the field of Forex Trading, one must still not lose hope. Though trading in currency is hard, there are several helper programs available in the market to help beginners formalize strategies and earn profits without putting a lot of effort in market analysis, etc. These programs are known as Forex Robots. Forex Robots can be of help when there is need to use an algorithmic approach to balance losses and profits in trading. Some of the best known forex robots are IvyBot, Fapturbo, etc.