How to Be a Successful Forex Trader

How to Be a Successful Forex Trader

The Ten Commandments of Forex

Planning is the key to earning profits in the fast-paced world of forex trading. While many beginners focus on committing individual strategies and trends to memory, the expert trader knows that preparation requires discipline in every area of life. With the collected wisdom of veteran traders we have assembled the ten commandments of forex trading.

Use a fast internet connection

It is no secret that the forex market is driven by high-tech solutions. Algorithmic trading bots may have helped to improve the probability of executing a successful trade, but they have also reduced the duration that every window of opportunity remains open for. If you access a trading platform with anything other than the fastest available internet service, you will miss out. This is one commandment that every veteran trader lives by: in 2016, almost a quarter (24%) of experts said that their best trade of the year was only possible thanks to a fast internet connection.

Stay on top of the news

Information is crucial to learning forex trading. While the web has made it easier to access market data and breaking news, learning how to interpret and apply that information is a technique mastered individually. Smart investors collect intelligence from multiple perspectives rather than relying on a single source, and they develop instinctive responses to market data from around the globe.

Plan to perform

Planning precedes every profit. Intelligent forex trading demands a long view of both the markets, and your own goals. Identifying the precise moment to unlock profits, hedge against uncertainty, or to accept a minimal loss, are all fundamentals of daily forex trading. It is knowledge that is hard-won through first-hand experience of the markets.

Master the morning

With around-the-clock trading it can be tempting to burn the midnight oil and work late into the night, especially when you are succeeding or trying to recoup a loss. But discipline is at the heart of every profitable investment strategy. Early nights and early mornings – with time set aside for exercise and mental well-being – will earn you more profits over the course of a career than late nights and marathon trading sessions.

Eat efficiently

Rest and relaxation will help you in your down-time, but when it is time to take care of business, your body needs the right fuel to function. Eat well, stay hydrated throughout the day, and never skip a meal: that is the message from the most successful forex traders. Experts advise eating at least five portions of fresh fruit and vegetables each day. Limiting sugar and salt in your diet will keep your blood pressure in check and improve concentration and decision-making when you need it most.

Discipline and patience

Discipline and patience are invaluable skills to master. Although automated, high-frequency trading dominates the modern forex market, it is valuable to remember that the vast majority (85.7%) of forex positions still remain open for more than one hour. Experts tell beginners to plan speculations in advance, and test them rigorously before making a financial commitment. Identify a potential investment, devise a strategy, and test that strategy by predicting outcomes. Only once your instincts are correct on a regular basis should you think about executing a trade.

Practice before you preach

Virtually all web-based trading platforms provide a demonstration account for free. Use it. The facility will help you to familiarise yourself with the user interface, as well as market movements and pattern recognition.

Start small

Realising exponential growth may be the dream of every forex trader, but that means beginning with modest aims and scaling your activities over time. Invest only small amounts at first, apply only low leverage, and remain disciplined: unlock guaranteed profits when there is an opportunity. Gradual growth and stability are the foundation of every long career in forex.

Keep emotions in check

Keep a cool head. It is easier said than done – especially when the markets are not falling favourably for you. But hot-headed trading leads to mistakes and poor decision-making. Intelligent trading, on the other hand, means learning to reduce the impact of losses and knowing when to step away from a trade. Whenever tension takes hold – whatever its cause – recognise it and have the discipline to pause your activities until your mind is ready to continue.

Focus on a single currency pair

Beginners can become overawed by the wealth of options available on even the most basic forex trading platform. The advice from the experts is to focus on a single currency pair, and become an expert in that field. Understand trends and price movements and – once you are confident in your strategies – only then should you think about branching out and start to look for opportunities in other currency markets.

The price of a cool head cannot be overstated when it comes to forex trading. New traders risk being overwhelmed by the scale of the market and the breadth of trades on offer. It is easy to see how even a seemingly minor detail – such as a slow internet connection or a poor diet – can impact your outcomes. A new trader should aim to stack the odds in their favour at every opportunity: from exercise and sleeping habits, to knowing when to take a break from trading. With the sound advice of our ten trading commandments, even a complete forex novice can take their first steps into currency trading with confidence.

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