When it comes to Forex trading, planning, execution and above all, discipline, are the three fundamental properties which must be mastered in order to enjoy success.
In 2018, Forex trading will continue to be practiced by a high number of traders looking to capitalize on the comprehensive trading volume and geopolitical factors which influence international currency. With questions over the high volatility of cryptocurrencies such as Bitcoin, many traders simply prefer Forex as a long-term strategy, which has been influenced by increased-scepticism of its value from trusted financial minds such as UBS Chairman Axel Weber.
So what increases your chance of making money in Forex trading? These tips will help you achieve your goals and develop your skills as a trader:
Compose the principles of your plan
Benjamin Franklin once remarked “By failing to prepare, you are preparing to fail,” and your approach to Forex trading should always be based on a solid plan. Your aims will need to be based upon fundamental points such as your general trading strategy, entry and exit points and when to stop your losses.
Sticking to the principles of this plan will be crucial to your success as a Forex trader, although you will find that modification will be something to embrace as you grow more experienced.
Don’t dive in too deep or too fast
Taking your time will slowly acclimate you to the process of Forex trading, and ensure that you gradually build up the patience required to be a successful trader. The temptation to dive head first into proceedings may or may not be initially fortuitous, but as a long-term strategy, will likely lose you your capital.
Be mindful that anything worth knowing in life generally takes a lot of time and effort to understand, so don’t expect immediate results or proven, tangible success overnight.
Always stay composed
Forex trading takes skill, but personal attributes such as composure and persistence are the bedrock of any successful trader’s arsenal. Being overwrought or too susceptible to compulsive behavior is likely to see you deviate from your plan and losing money. Decisions made on emotion rather than judiciousness rarely yield good results, and trading is no different.
Composure will allow you to see things from an objective perspective, which maximizes the ability to make good decisions. Discipline and adherence to your strategy and overall plan will ensure that you know when and when not to trade.
Learn from mistakes
Analyse your previous moves and your history of trading in order to understand what you may have done better. Assess and try to correlate your decisions with market behaviors, and what information led to your choices. Know that profits and losses are both a means to improve your knowledge going forward and read as much as you can on the success others may have had against your shortcomings.
This information will likely reveal points which you might have overlooked as a novice or intermediate trader, which are now valuable and even necessary tools going forward.
Study the market and factors which could potentially influence movement
The hallmark of successful trading is a comprehensive understanding of the market and the ability to recognize trends and potential driving factors which may add value to a currency. 2016’s unexpected Brexit vote, where the United Kingdom voted to exit the European Union, saw GBP drop to a 31-year low on currency markets. Although GBP had initially gained before reports that the “Leave” camp, the pound slipped from $1.50 to $1.33 just hours following the conclusion of voting.
Naturally, assets like gold (which raised to a high of 7%) would naturally be invested in as a result, given the unexpected news. Although this is a very basic example, novices who study the market and the factors which will likely influence movement are more likely to yield successful results as traders.
Forex trading requires patience, planning and a genuine hunger to learn. By adhering to a strategy and dedicating ample time to the execution of your plan, you give yourself a better chance of making money.