Secret Recipe for A Successful Forex Trader
Want to become a successful Forex trader? Want to Flourish and thrive in flying colors? If yes, then you are in the right place 😉
How to be a successful Forex trader
There are five ingredients that can make you a perfect trader and helps you to survive in the long run.
2. Time management
3. Self assessment
4. Discussion and learning
5. Managing risk and capital
Control your emotions and be patient:
They say that there is no place for emotions in trading.. Which is true. However, being human avoiding all these emotions which are such an important part of our daily lives is almost impossible. So what we would suggest is, try to build such a trading personality that can hold back your emotions and minimize its effect to such an extent that they cannot affect your trading strategies. We know that’s difficult, especially when you are new to it. Getting panicked when you see your trades are going in loss is quite predictable. Getting greedy when you are getting profits on two or three trades consecutively is natural. So the best way to do so is to develop a proper trading plan beforehand and stick to it, this includes the regular position size you trade. Keep in mind that losses are part of the game. This way you will be ready for any consequence and your heart will not be beating like you’re having a heart attack every time your trades going in loss.
Another important element to successful trading is being patient. Although it’s easier said than done. Having a lot of trades open will likely get you overburdened and stressed out managing all those trades. Plus, just getting into a trade to make a few pips, is very risky especially if you do it without a proper trade plan and strategy. It’s just asking for trouble.
Let’s say you haven’t seen a decent trade setup in the market for a few days, you’ve been browsing around for a trade and you see a certain pair with signs of bullish momentum in it and think, “I’ll make a few pips and get out”, that’s called chasing price. You get long the pair starts moving in your direction a bit before falling, and heads straight for your stop loss. If that trade is profitable and it works, great, you’re fueled up to do this again till it blows up in your face, again and again. If not? You will be disappointed you didn’t just wait for one of your trades to set up instead of taking a loss. So always stick to your plans, so what if you don’t have a trade open? Sitting on cash itself is a position in my opinion and it’s better than taking a loss. So you’ll miss one trade? There are loads to come. 🙂
Being a Forex trader isn’t easy. Deploying your assets in the best possible way keeps you at ease. May it be money, time or anything of value, everything needs proper management. Time is an important resource, so use it wisely. How to manage our trading hours? That depends on your trading style. If you’re a scalper, you’ll be glued to the screen either looking for a good entry or watching your trade because with scalping you have to be quick and on the watch. A day trader or swing trader manage their trades by checking in every few hours and so on.
If you are a part time trader and are holding another job as well then it is almost impossible for you to sit before the screen all day long and getting every opportunity that’s come your way. You can set your time around the market charts, some traders even watch every hour or four hours to check in on candle formations and how their trade is doing. During this time try to avoid any distractions that can waste your precious time. Use that time to have sound analysis of the market and then setting up your orders as per your plan. Don’t worry if you missed out on a trade just because you were not there, it happens ,you will get another one, sitting in front of the screen won’t change the direction the Forex market is moving in or move it your way anyway.
If you are a full time trader and trading is the only source of your income then you should keep yourself distracted otherwise you will be caught in the euphoria of over-trading which can be dangerous for your account. So keep yourself busy, you can use that time to study news, charts, do analysis and further use all these in developing new trade ideas and testing strategies. You can have breaks in between, have some coffee, go out for a while and spend some quality time with your friends and family. Every now and then take some time off. All such things will help your mind lighten up and you will feel fresh and more energized.
We all make mistakes. Don’t we? We are human. But successful are only those who learn from them. Every new trader makes silly mistakes. Getting strong hold of technical analysis and fundamentals is not easy. It an expertise that comes with hard work, effort and time. That is the reason demo accounts are for, though they may not have the same pressures of a live account, you can use a demo Forex account to practice and polish your skills so that you may not lose your real money. It’s a good idea to keep a trading log where you can note down all your strategies, your mistakes, because it will help you in self assessment.
Discuss and never give up on learning:
Visit forums and blogs and try to participate in such interactive sessions. Discuss your trade ideas with them and try to absorb information which you get from there. Discussion is another great way of learning. Maybe you were missing out on something in your idea and a friend pointed that out for you. Sharing your views with others helps in looking at a trade with a different perspective which could provide you with useful insight. Remember, keeping an open mind and looking at possible outcomes will only make you aware to what could happen to your trade, it will help you be a successful Forex trader. Discussion and having other another trader agreeing to your trade idea or being in the same trade usually psychologically gives you more confidence in that trade.
Managing your risk and capital:
As we have discussed earlier in our posts, you may have understood that how important it is to manage your risk and capital. Obviously if you fail to manage them, you stand nowhere. A well developed strategy which includes entry points, placing your stop losses and take profits, should be in place, all your entry and exit points are a crucial requirement before entering any into trade. We will not be going into much detail here but we will highly recommend you to read the following posts we’ve already made to enhance your understanding of the concept.
These along with a lot of patience are traits of a successful Forex trader.