If you’ve ever traded in the FX markets, you probably know how hard it is to actually return a profit in a consistent basis. Yea you may win some along the way, but ending your week or month in green is usually something that you only see in the movies or marketing materials of Forex signals providers.
Below you’ll find a myriad of tips that will improve your Forex game if you take them into account the next time you go into battle with the markets.
Pay attention to what is meant which each tip and mindfully study them. This little excercise will advance you towards more profits and less losses.
TIP #1 Choose a Broker That Fits Your Trading Style.
Finding the right broker can make or break you. If you are a new trader still learning the ropes, a platform that is meant for the professionals might not work for you.
It may be too difficult to operate with and technical mistakes could seriously hurt your trading account.Also if your trading strategy is scalping (making money off of small moves in the prices), then your main criteria for picking a broker should be the tightness of spreads instead of the user interface of the trading platform.
A wise decision would be to test your chosen platform with a virtual account before you send and of your hard earned money with them.
I recommend you check out brokernotes site on how to actually find the best broker for you. I personally use Trading 212 for FX trades.
#STEP 1 – Choose Your Trading Instruments
#STEP 2 – Select Your Account Size and Trading Size
#STEP 3 – You’ll Receive Their Broker Recommendation
Of course I encourage you to do your own further research. Another very good resource for finding unbiased reviews of various brokers is ForexPeaceArmy.com
TIP #2 Pick a single strategy that makes sense to you and become the master of it.
One of the biggest mistakes that beginners make is trying to find the best strategy in the world, while constantly switching from one tactic to the next.
Mastery does not come from finding the holy grail of trading systems, it derives from putting in the work to achieve proficiency and thus developing an edge over other traders.
TIP #3 Keep a trading diary.
As a famous saying by George Santayana states: “Those who cannot remember the past are condemned to repeat it.“ You should keep track of your trades in order to learn from them.
Take note of the setups where you made money and of the ones where you lost. Try to eliminate the losers in order to become profitable through choosing only the right setups where your odds of success are the greatest.
Without keeping track of your trades you are bound to keep making the same mistakes without ever realising why you can’t make it over the threshold of profitability.
TIP #4 Learn money management to avoid going broke.
A good strategy is to have a set percentage of your funds that you risk per every trade.
For example if you risk 2% of your account on every trade, when your account size gets smaller after consecutive losing trades, the amount you risk also reduces.
This will help to preserve your capital for longer when you are losing and in the same time helps to grow your account faster when you are winning.
Every time you win, you would risk a bigger amount of money, given that your risk/reward ratio would remain the same, your profits will increase.
TIP #5 Pay Attention to Your Emotions.
Trading psychology is one of the key contributors to profitable traders’ successes.
Beginner traders seldom realize how much their emotions affect their decision making and that this itself can turn a trader with a winning strategy into a hopeless loser.
They way around it, is to become aware of your emotions in order to consciously making decisions without being affected by them.
A good resource that I recommend is Mark Douglas’ book “Trading in the Zone”.
TIP #6 Plan Your Trades in Advance.
In order to avoid irrational decisions in critical situations, you should pre-determine your stop-loss and profit target areas.
It is also recommended to use stop loss orders or write the prices down if you have had difficulties with sticking to them.
Majority of losing traders wipe out their accounts with letting their losing trades go through the pre-determined stop loss levels. This “strategy” is also called the widowmaker trade and that is for a good reason :).
TIP #7 Treat Trading Like a Business
People tend to treat trading as a hobby. They throw some money they have left over into a brokerage account, find a random strategy and start trading half-assed.
What you should do instead is to treat this like a business. You need to have a plan, a realistic goal in place and a roadmap on how to get there.
A good goal would be to become a consistently profitable trader. In order to achieve that you need to find a proven strategy, meticulously look for only the best set-ups in that strategy, archive and analyse the results and make adjustments.
To Sum Up
I hope you’ve picked something valuable up from this bunch and that it would help you to avoid stupid losses and increase your chances of success.
To your trading success,