Forex trading is the world’s most actively traded market. Believe it or not, the daily value of Forex trading dwarfs the total value of all daily trading activity on global courses. A figure of $4 trillion – $5 trillion in daily trades has been bandied about, and that’s a conservative estimate. When you trade foreign currencies, it’s easy to get caught up in all the hype. First of all, it is essential to have a basic understanding of currency markets and macroeconomic variables that drive market sentiment. It is highly unlikely that a novice trader with little or no skill will be able to generate substantial returns straight off the bat. Your experience as a Forex trader is fashioned off the amount of time, knowledge, and understanding you have of the currency markets. Naturally, the end goal is profitability. But to get there, you will have to invest in yourself first.
What are the top 7 tips to become a successful Forex trader?
- Persevere at your craft – regardless of the number of setbacks you may encounter along the way. This is as true for Forex trading as it is for all other projects that you undertake. Your ability to stay engaged in the markets, in good times and bad will determine your success at the end of the day. Remember, you don’t learn as much from success as you do from failure. Prepare yourself for the long haul, and all the challenges that come with it.
- Document your successes and your failures – with Forex trading, you’re dealing with tremendous volatility and uncertainty every single minute of every day. There is no more volatile market to trade than FX. When you succeed at a trade, document what you traded, when you traded, how you traded, and the prevailing macroeconomic variables. Likewise, with your failures. As a novice trader, you will quickly learn what works and what doesn’t.
- Always choose the right FX broker to get started – a good workman never blames his tools, but an unregulated, unsophisticated and poor FX trading platform will impact every aspect of your FX trading activity. Choose the most highly ranking Forex brokers every time. They can execute multiple trades at the click of a button, their spreads, fees, commissions, and margins are favourable to the trader and they will honour your payouts. The trading software is especially important when it comes to FX trading. Popular trading platforms include MetaTrader 4 and MetaTrader 5. Be sure that they are mobile friendly and updated with the latest figures. It is highly recommended that you browse the services offered by InvestinGoal.com before you get started.
- Stick with the currency pairs that you understand – that’s the way to get started every time. If you are in the US, trade the USD, if you’re in the UK, trade the GBP, if you’re in Europe, start with the EUR. This is geared towards helping you make the right trades with currencies that you understand. There are major pairs, minor pairs and exotic currency pairs that you can trade. As your understanding of the Forex markets improves, so you can take on a wider range of currency pairs. Be patient, and you will certainly reap the rewards.
- Define your goals – be realistic about what you want from FX trading. If you’re thinking that you can generate huge returns from the get go, think again. You should limit your expectations to conservative figures in the beginning. As you learn the game, so you can improve your percentages. What portion of your day and night can you dedicate to trading activity? Think about this, because it will determine how successful you are as a day trader. Leverage and margin have the capacity to assist you, but also to turn things against you.
- Define your strategic objective – think about what you want from your FX trading regimen? What are you prepared to do to achieve your goals? Don’t aim too high, but certainly don’t aim too low. If you have a profitable figure in mind, that’s your benchmark and don’t undersell yourself or oversell yourself. This thought process is key to succeeding in the FX trading arena.
- Think logicallyand frugally when you begin – that’s sensible advice to any neophyte Forex trader. Never invest more than 2% of your bankroll on any individual trade and always use protection measures like stop loss, take profit, and the like. When trades appear to be going our way, we tend to get greedy instead of locking in profits and cashing out. Long-run profitability is entirely possible if you reject impulsive behaviour and follow strategic reasoning.