There are many different ways of trading in financial markets. However, it is challenging to achieve absolute success all the time using just one of those trading methods. Besides having a trading strategy, you also need patience, the balance of being aware of the economic environment, and talent in trading.
To be a successful forex trader, you need several skills sets, talent, hard work, and lots of patients. This article gives you a few tips that could assist you to be better.
Understand a Niche and Stick to it.
In a forex trade, preparation is extremely valuable. You need to align your temperament and personal goals with relatable markets and instruments. For example, if you understand retail markets, than oil futures, retail trade stocks rather than the former. Before you begin to trade, have a solid understanding of the forex market and learn ways of navigating it.
Choose a time frame that is appropriate for your temperament. If you decide to trade off a five-minute chart, you should be comfortable enough to take a trading position without exposing yourself to overnight risk. On the other hand, if you choose weekly charts, you should be comfortable and willing to see some trades going contrary to your position.
It would be best to decide whether you are more comfortable trading all day long every day or rather prefer to research over the weekend and take a position for the week ahead based on your weekend analysis.
Remember, you need patients if you want o make big profits in the forex trade. Short-term scalping can only give you small gains or losses that will prompt you to trade more frequently.
Once you choose a suitable time frame, select a consistent methodology with the time frame and your temperament. You can choose to use indicators such as crossovers and moving average convergence divergence or buy or sell breakouts. You could also decide to purchase support and sell resistance.
Before you settle on a particular methodology, test it over a while to see if it provides an edge or whether it works consistently. Settle on a method that is reliable by over 50%. That kind of methodology gives you an advantage, however small it is. Test a few more strategies and come up with one that works well under various time frames.
Use suitable instruments for your trade. Some systems are more reliable than others for producing a winning strategy. You might have trouble creating a winning system using unpredictable trading instruments.
Have a Positive Forex Trading Attitude
Your behavior significantly shapes your chances of winning in forex trade, and hence your mindset should reflect your ability to:
Be patient enough to wait for the trade to reach the levels that your selected system shows before you exit or enter the trade. If the system you are using indicates an entry at a certain level which the market never attains, wait for another opportunity before you trade.
You will need discipline to nature the patience to wait until your system triggers an action point. You need the discipline to believe in your system indicators without second-guessing them. You will also need the discipline to make a move when your system indicates that you should.
Often, traders use their emotions to trade; however, for you to be a successful trader, you need emotional detachment. Being objective prevents you from being influenced by unreliable opinions.
Be Able to Control the Risks
Successful traders are those that can control risks and take trade in the correct direction. If it is not working, you need to evaluate your trading system, make adjustments where necessary, and try again. Trying various attempts enables you to tune the system in the correct direction, and this requires much discipline and patience.
To be a successful forex trader, you need to sharpen your artistic skills as much as your scientific skills. Although you may be talented, if you do not know how to control your temperament when trading, you will never be able to keep Warren Buffet’s two rules in forex trade: Never losing money and Remembering rule number 1.