Forex trading will be one of the most lucrative ways to make money online. While thousands of people are making millions in profit be engaging in Forex trading, some have incurred hefty losses and left it all together.
Strategy is at the heart of this venture and coupled with studying the charts, as well as market reactions to current trends in global economy are crucial in knowing the best time to trade and rake in the big bucks.
Successful FX traders watch how other traders use strategy, and keep in mind that there is always something new to discover and learn.
We have studied some of the most successful Forex traders in the world and compiled five actionable tips to help you become a successful Forex trader.
Be Courageous
Some of the most successful traders in the world are courageous enough to take risks, and this separates them from the crowd. Forex trading is all about speculation and you must trust your intuition as well as personally studying the charts religiously.
You might be going against the opinions of other traders but studies show that 20% of the Forex traders make 80% of the profits. As far as courage goes, only invest money you can afford to lose and avoid gambling tendencies at all costs. This might sound cliché, but before you learn how to read the charts like a professional and make profits, you might get some depressing losses.
Risk Management
As much as risk requires courage, you ought to know when to stop. We have seen first-time risk-takers win big, only to lose it all because they did not have a strategy to know where to draw the line. Experts recommend that you should eliminate emotions when trading in order to make logical decisions.
As a rule, successful Forex traders suggest that you should only leverage a maximum risk of 2% of the invested funds. However, if your trade stops are far from 2%, then only trade in shorter periods or decrease the leverage percentage significantly.
Invest in an Automated Forex Trading Software
Successful Forex traders seek an extra opinion when unsure of the market behavior, and they are active on multiple trading platforms as well as relying on brokers with superior trading experience. There are two sides to automated trading, you can either allow the computer to perform the trading for you or allow a professional to execute the trades for you.
Studies show that your chances of turning a profit improve by up to 70% compared to the traditional method of point-and-click trading. The biggest advantage of using automated Forex trading software is in eliminating human emotions, which override logical thinking when making the trades.
After a period of using an automated FX trading software, it is necessary to audit it and calculate your expectancy. It is a formula used to determine the reliability of your strategy and software. You will need to analyze your winnings against the losses to determine the profitability of your trading strategy.
Make Independent Judgement on the Market
To be successful in Forex trading, you need to perceive the current trends in the market as well as the factors that will influence it in the future. You must know how to read and understand the charts to decipher the forces moving the market. Use the internet to research on the economy movers and shakers of each currency because they have a huge influence on the Forex trading markets.
Most markets close on weekends, and it is the best time to perform an analysis of how your trades have performed in the week. Study the weekly charts to identify the underlying patterns that could affect trading in the coming week. This action will allow you to make an independent and informed judgment on the markets since some pundits conspire to give incorrect market analysis to cash in on liquidity when the trading starts in the coming week.
Cultivate Strategy Discipline
Traders are losing money every day because they deviate from their strategy based on the predictions of other traders. Successful traders have a high level of discipline and stay true to their trading strategy. Trading discipline allows you to recognize when you have made a mistake and make the necessary changes to your strategy. When you stick to your strategy, you will form what FX trade experts call a positive feedback loop. Even if you make small losses, but execute your strategy to the letter, trading discipline will enable you to minimize your potential losses.
Closing Remarks
These are the some of the tips successful Forex traders are using and that show much promise. However, whenever you can, get a second or third opinion on interpreting the markets charts, but ensure that you make a trade in line with your strategy. Follow this post for an update on the tips that will turn you into a successful Forex trader.
Disclaimer: This article was written by a freelancer.
