If you ask any trader, one of the major perks of FX trading is the financial gain. However, for the seasoned and successful traders, money is just one of the many benefits of trading. In fact, money is arguably the least value reward you`ll ever achieve from consistent success in trading.
The most valuable rewards of trading are the less tangible ones, which include self-discovery, true personal freedom, self-improvement and the real meaning behind virtues like patience and discipline. These are things that will stick with you forever and will have a positive impact on your life.
However, despite all the above benefits, a large percentage, nearly 90% of all forex traders fail. This can be quite alarming, especially to individuals who want to join the market.
In this article, however, we shed more light on what separates the successful traders from the rest and teach you some of the effective tips that you should know to become a successful trader.
Define your Goals
The first step towards successful trading is defining your goals or rather defining what you want from your trading. Develop a working plan that includes a timeframe for your trading career. Before setting out any position, it`s crucial that you have the basic understanding of where your destination is and how you`ll get there.
Also, it`s vital that you ask yourself some questions such as what will constitute failure? What will you define as success? How much time are you willing to spend trading? And do you aim for financial independence or aim is to generate extra income?
Answering this and other questions will allow you to have a clear vision necessary for a persistent and patient approach to trading.
Choose your Broker Wisely
There`re plenty of options when it comes to choosing forex brokers today. However, you should be wary of the forex scams that are growing by the day. For instance, many brokers are unregulated and unlicensed but still in operation. The unreliable and scrupulous brokers invalidate all the gains you acquired. There`re also several blacklisted brokers who steal your money through manipulated software, which can generate losing trades.
When choosing an FX dealer, you should first ensure that they are registered with the relevant bodies. In the US for example, all certified brokers are registered with the US Securities and Exchange Commission. Aside from the registration, you can check online reviews from existing investors, and go through their various terms and condition like minimum deposit, commissions, payout percentage or hidden fees.
Choose a trading Account that Meets Your Needs and Expectations
In the FX market, it can be quite overwhelming to pick the right account package. When choosing an accounting package, it`s vital that you choose an account option that is most suited to your expectations and knowledge level.
The variety of the trading accounts can be quite confusing at first, but the general rule is that lower leverage is better. Therefore, if you have a rudimentary understanding of leverage and trading in general, you can go for a standard account.
Choose a methodology that works for you and then be consistent in its application
Before entering the FX market, you should be aware of how you`ll execute your trade. You must know what information you`ll need to make an appropriate decision on whether to enter or exit a trade. Regardless of which technique you use to trade, remember to stick to your plan and be consistent. Also, be sure that your methodology is adaptive, and should keep up with the changing dynamics of the market.
Focus on a single pair First
The world of currency is deep and complicated. You can never be an expert of every currency, due to the chaotic nature of the markets, and the diverse characters and purposes of the market participants.
Therefore, it`s always a great idea to restrict your trading activity to a currency pair which you understand. You can even begin trading with the currency of your nation. If not so, then you need to stick to the most liquid and widely traded pairs.
From there, you can expand to other currency pairs, but only if you`re comfortable and have the experience
Begin Trading With Small Sums
If you plan to execute a successful trade, it`s vital that you start with small amounts, and low leverage, while increasing your account through organic gains. There`s no justification that larger account generates larger profit margins. Therefore, you should aim at increasing the size of your trading account through your trading choices. If not, there`s no point of pumping more money into your account.
Following Successful Trader
Success in forex trading is not a matter of chance. A trader needs to work hard with perseverance and patience for achieving success in trading. Most often a newbie trader can’t understand where and how to start learning. In this case, a successful trader can help a newbie trader in the right path, because he has mastered the art of trading with so many trial and errors. If a newbie trader can get the assistance of a successful trader, it would be a blessing for him. He can go to the path of success in a shortcut way. A newbie trader can take the trading signals from a professional trader. A newbie trader can also use trade copier system to copy trades from professional trader account to his own account. In this way, he can learn and earn in forex market
Automate your Trading
FX trading automation is more than just convenience of trading. Automation also allows you to minimize the role of emotions. However, automation does mean investing in forex robots or buying expensive technical strategies. No, all you need to do is to ensure that your response to similar situations and trading scenarios are similar in nature, meaning that you should let your reactions to market events follow a studied and tested pattern.
Restrain your emotions
Do not let greed, excitement, euphoria, panic or fear take the better of you. Even though it`s challenging to fight against physiology, you should aim at restricting and minimizing their effects on your trading life.
And this is why you should always start trading with small amounts; so that you reduce you reduce your risk, reduce the impact of your emotions and remain calm enough to realize your long-term goals.
The best way to keep away from emotional trading is to use a logical approach.
Only Do What You Understand
As simple as this rule seems, failing to abide by this rule has been the doom of many traders. In general, if you`re unsure of what you`re doing and cannot defend your opinion or decision, do not trade.
When trading, do not trade on the basis of hearsay or rumors. Additionally, do not enter into a trade unless you’re confident and understand the benefits and the adverse consequences that may result from opening such a position.
Keep it Simple
Despite the convoluted paths of the FX trading, the market is not rocket science, and you don`t need to be a mathematical genius or economics professor to acquire wealth in trading. Instead, the key to FX success lies in the clarity of vision, and well-defined and carefully observed trading strategies and goals.
In simple terms, FX trading does not require over explaining, over analyzing and rationalizing your failures.
Having a perfect understanding of each of the above trading rules, and how they work together, is vital, especially for traders who want to establish a successful trading business. However, remember that trading is hard work, and it`s only those who have the patience, and are disciplined enough to follow the above rules can increase their odds of success in a very competitive arena.