‘I’m the master at USD forex analysis’ – says the trader that just lost their entire bankroll.
Many traders think they know what they’re doing, but when it comes to making real success from currency trading, they often fail. Most of the time, when they think they’re winning, they’re actually losing long term.
It can be very difficult to learn to trade Forex so that’s what this article is going to focus on.
It will be showing how to go about trading and show you what you need to become a successful currency trader.
Know what you want to get out of Forex trading
Before you do anything, you must know why you’re trading in the first place? Are you looking for a quick buck or looking for long term success? If you’re in it as a ‘get rich quick’ scheme, it’s recommended that you should stop looking at Forex trading ASAP.
For the rest of you, the next phase is setting goals.
To help you decide, set a SMART goal. SMART stands for specific, measurable, attainable, relevant and timely. So, for example, a SMART goal would be to achieve a 2% ROI each month for the next year.
Quick note: your goals should be set by year rather than by month.
Once you know your goals, you need to know how you are going to achieve them. Depending on how much time you are willing to invest, this will vary.
Once you have a clear vision here, let’s move on to the next step. As you now know what you want to achieve and what you are willing to put on the table, it is time to make an action plan. This action plan should include the currency pairs you are planning to trade and the amount of trades you are going to commit to.
This is of course difficult without having a proper strategy in place, so first prepare a template of your action plan, and then move to the next step.
These are the basics you have to know before you should even think of making your first trade. They will act as the foundation of everything you hope to achieve from Forex trading.
This is the most important thing you have to do to become a successful currency trader. The more time and effort you put into the educational side, the better your success.
The Forex markets are always changing so you must be able to adapt to the frequent changes. There is no guarantee that you will be successful in Forex trading, there is only having a high chance of success.
If you can understand this, you have learnt the first thing about Forex trading.
There are plenty of learning materials on the internet that provide all the information you need. Take your time and move at a reasonable pace so you can actually take in what you study.
But the learning stage isn’t rooted to pre-trading. Once you being to trade, you will learn more from successful trades or mistakes you made. This makes it important to evaluate how you have been performing to understand why you won or lost on a trade.
With these two topics covered, here are some tips to become a successful Forex trader.
Don’t become lazy
This is a vital step in becoming a Forex trader. Successful people never put off until tomorrow something they can do today. This is even more important when trading Forex. With the way the global political landscape is at the moment, anything can happen at any time.
This is why you have to develop a habit of avoiding procrastination. The best way to do that is just keep at it. Even something so simple as trading with a demo account can help you to battle procrastination.
Practice makes perfect. It’s an overused phrase but when it comes to Forex, it couldn’t be more true.
With a demo account, you can practice to your heart’s content. This is very helpful when you want to get the feel of the trading platform and get acquainted with its features. It’s worth noting that some platforms will have tools available that others don’t.
Keep researching different theories and strategies, implementing them in the demo accounts before executing in live trades. It’s better to lose demo money rather than your own while in the learning stage.
Have a separate investment fund
You should keep all trading funds away from other earnings and expenses. This will become your bankroll and all deposits/withdrawals will be made into this fund until you’re in a position that you can take some out to spend as you wish.
This means that you need to be on a strict bankroll management strategy. You don’t have to invest a large amount to earn profit – you can maximize your investment, however small it is. B
y starting out small, you minimize the risk of heavy losses when large volumes of cash are involved. This is an essential part in understanding how Forex works and how to trade Forex online successfully.
Keep emotions away from trading
If you find yourself becoming concerned about the market and effects on your trading, don’t follow your emotions. Giving into feelings of panic, greed or excitement is a sure way to ruin your trading career. Instead, maintain a logical and practical approach to your trading.
All traders should have a predetermined trading strategy to follow, so make sure you follow it. Don’t suddenly change your mind halfway through a trade based on emotion – you’re more likely to make irresponsible decisions which can cost you greatly. On the same train of thought, don’t chase losses based on your emotions as this can do a lot more harm than good.
If you make a loss on a trade, don’t get too caught up in the moment. It’s not uncommon so leave emotions behind.
Keep a record of your trades
This is the final thing you need to do to become a successful Forex trader. We learn from our wins and losses so keeping a record of all trades is essential to your learning and understanding of the markets.