Becoming a consistently profitable trader is the main goal of everyone’s Forex trading journey. Every newbie who just starts his story of currency trading aims for achieving success, inspired by brilliant stories of the world’s famous billionaires like George Soros. Unfortunately, there is no special formula of Forex trading success.
However, learning and practicing can bring nice results and you actually CAN become a successful Forex trader.
The secret of profitable trading lies in combining high-quality analysis with its precise implementation. But these are not the only things required for successful Forex trading. Here is the list of what you’ll need for achieving your goals.
Forex trading involves not only a technical part but a psychological one as well. Set your personal goals along with your temperament. If will influence your Forex trading strategy and style greatly.
So, after you, a future professional Forex trader, have decided that it will be a business for you that needs time investments and learning, let get further. Begin assessing the main components of live trading:
It defines the trading type, suitable for your temperament. You have to decide whether you want to sit in front of the screen the whole day or leave deals opened for days or even weeks. So, trading terms are fully dependent on your trading goals. But don’t be in a hurry to scalp several times per day. Remember that establishing your own trading system methodology needs time. Successful trading, as well as consistent profit, needs time too. And small trades always mean small profit, so you’ll need to open deals more frequently.
There are lots of different trading strategies out there. Some people use support and resistance levels as their main tool. Some work with the Moving Average. Some choose Price action trading strategies. You have to learn what systems and methodologies full-time traders use and choose the most suitable one. After you’ve done it, check how it works and if it can provide you with a necessary edge. Do the paper trading. If you notice that there are more profits than losses every time you see a signal for entering the market, the strategy of your choice is performing well! Stay with it and continue trading on a live account.
It’s your main instrument and the platform you will be working on. You may choose certain pairs to work with and test your strategy with them, with writing the results down in a trading journal. For example, Fibonacci is more applicable to the USD/JPY currency pair. Try working with multiple time frames too. By the way, soon I’ll write an article on trading multiple time frames, so keep an eye on the new publications on ForexNote!
It means working out the right mindset while becoming a good Forex trader. Take into account the feelings that appear during the whole process. As a trader, you need to be concentrated and serious. A wrong attitude to the Forex trading can lead to losses. Treat it like a science, like a business, but not gambling or an easy way of making money. Traders lose money and they earn here as well. What outcome you’ll have, depends on your attitude.
You should always follow the rules of your trading system. If you have identified the key levels, wait until the price reaches them. If the market doesn’t move the way you’ve forecasted, don’t hesitate to switch to the next opportunity. The Forex market always give another chance, and you always can make money here, just ‘wait for the next bus’, as they say.
Forex traders with good trading skills usually sit on their hands until the plan triggers an entry point. So, you may be disciplined enough to wait the moment when you should act. Of course, it’s very itchy to start trading, but better adhere to your system and it will lead you to profit. And I’m talking not about just entry points, this rule is fair for stop losses too.
It can also be called some sort of ‘emotional detachment’. It depends on the reliability of your Forex trading plan. Professional traders don’t become overwhelmed with emotions, as their trading systems show reliable entry and exit points. So, if you’re sure that your signals won’t miss the goal, you won’t be nervous. Though, Forex trading can be frustrating even for experts sometimes. For instance, it can happen during news and ‘black swans’.
Trading foreign exchange with realistic expectations is important, as your risk level depends on it. You may understand that a successful trader is not the one who has invested $250 and wants to make $50000 in a month. Such account will be likely blown. Success on the Forex market looks like consistent profits, even small ones. This is a question of the risk&reward ratio.
Every trader who has a Forex trading journal can look at it right now and make sure that there are never 100% winning trades. It’s impossible even during the trading demo! Even a profitable trading account will have a certain profit/loss ratio, for example, 70/30%. The art of making your profit larger than the loss is in the implementation of the trading plan into reality.
Many traders know that success lies in the risk control. It’s often necessary to take losses quickly without hesitation. Better cut out and get another try, than sit and watch your money disappearing. This requires discipline and practice.
As a conclusion, I can say that there are no right or wrong ways of trading on Forex. So, you can begin to master trading now. Choose a broker and a trading platform, find the resources for the Forex education (by the way, I’ve already collected them in one of my previous articles), open a demo account. And practice trading Forex successfully!