Despite all the statistical formulae, mathematical algorithms and detailed charts that are incorporated in Forex trading, reliable instinct and intuition are a successful trader’s secret superpower. When a general or an army fights a war, he cannot dictate the action of his enemies. The only instrument that he can control is his own mind and his own choices. Similarly, in the world of Forex trading- the market cannot be compelled to follow investors’ preferred trends.
To transform into a Forex trading expert, you must have the strength to control your mind and to discipline your behavioural choices. Anyone can conquer the ability to read charts and perform market analysis. Yet to truly be a trading master, you must be able to hone your intuitive skills to be able to assess the market conditions. This is what will set you apart in the real world.
Know Yourself and Know Your Goals
If you have developed the ability to manage your mind, then you must have gone through a rigorous soul searching process where you outlined your goals. Before commencing any new venture, it is imperative you know what your objective is. Once you have defined clear, succinct and quantifiable targets, then you must devise a plan that will help you fulfil them. Examine what trading methodologies suit your style. Different trading strategies have to be tackled in unique ways and come with varying degrees of risk.
To be a prosperous Forex trader, you must understand your nature and your mode of operation. For instance, will you be able to sleep with an open position on the Forex market? If not, then perhaps day trading is meant to be your path. Is patience a virtue you possess (along with the required funds to invest)? Then, you may contemplate going for a long-term trade transaction that you anticipate will accumulate in value over a specified time length. That would make you an ideal position trader. The bottom line is that self-awareness is key to success in this field- as is the selection of a trading plan that caters to your lifestyle.
Choose a Reliable Broker
A brilliant Forex player doesn’t trade without his most important sidekick: his broker and his trading software. Choosing a broker is a laborious process that requires extensive research. Comb the industry and analyse your software requirements. Of course, collaboration with a renowned broker is highly recommended. Educate yourself thoroughly about potential brokers that you consider and what their polices entail. Conducting trade in the spot market differs from trading on exchange-oriented platforms. Knowing your trading plan will facilitate your decision in being a well-informed one.
Stick to Your Trading Route
Whenever an army goes to war, it doesn’t go in blindly but goes in fully equipped with its battleplan and know-how. Similarly, as a Forex trader, you must be armed with all the information required to make your decisions whether to indulge in a certain transaction or not. There are multiple techniques to deploy when evaluating whether to enter or exit a trade.
Some speculators refer to the performance of the company in question or take into account the economy’s status. Then, they will use a chart to ascertain the optimal time frame to engage in the transaction. Other players choose to put their faith in variant forms of technical analysis and will apply a chart only to select a time period.
The Elliott Wave Theory and principle is an effective form of technical analysis that you can use to understand the cyclical movements of the financial market. Keep in mind that external factors such as economic events and financial patterns will act as indicators in the long term, yet charts will benefit you for the short haul. Hence, it is essential to know what your goal is and to stick to your chosen trading methodology like glue. Of course, keep a little room to amend your trading tactics as per need basis.
Time Your Trade Carefully
Ensure that your daily and weekly chart are in sync. If you are obtaining a sell signal from your weekly chart, then the same should be reflected on the daily one. It will help in reducing the margin for prospective errors.
Love Your Wins, Love Your Losses Even More
Yes, we all do love it when we have an auspicious trade. However, love your losses even more. Embrace it as a learning opportunity and review the conditions in which you made the trade. Most importantly, consider your trading investment as “holiday funds”. Once you go on a trip, your money gets utilized. Apply this thinking principle to your trading economic matters so you don’t get disheartened. Having said that, don’t leverage your trades more than a total of 2%. If you have EUR 1000 in your account, then you should not lose more than EUR 20 in your trade. Lower the short times or reduce the leverage of risk if it is more.
No Weekend Breaks
You may be thinking what can you possibly do, considering that the markets are closed on the weekends? Actually, there is a lot you can achieve within those two days. Break out the weekly charts and scrutinize it closely. Know it as well as you would know the back of your own hand. Look for news items or any trends that would leave an impact on your particular transactions. A trend could be creating a double top-yet leading industry authorities could be expecting a downfall. Such a situation is known as reflexivity: where a dual feedback circle affects traders’ opinions, which then influence the environment. It is crucial that you understand what the real situation is at hand.
Keep a Journal
Maintaining a trade journal is a great way to preserve a snapshot of all your trading transactions.. You can go an extra mile by adding notes whilst allocating funds to a particular trade. This will not only help you ameliorate your future deals but will allow you to track the thought process involved. Your chances of prosperity will rise considerably as you will be able to review your journal if any errors are made