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 trading 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. Every experience as a Forex trader is fashioned off the amount of time, knowledge, and understanding of the currency markets. Naturally, the end goal is profitability. But to get there, invest in yourself first.
What are the top 7 tips to become a successful Forex trader?
- Persevere at the craft – regardless of the number of setbacks encountered along the way. This is as true for Forex trading as it is for all other projects undertaken. The ability to stay engaged in the markets, in good times and bad will determine success at the end of the day. Remember, traders must learn as much from failure as from success. Prepare for the long haul, and all the challenges that come with it.
- Document successes and failures – Forex traders, deal with tremendous volatility and uncertainty every single minute of every day. There is no more volatile market to trade than FX. After succeeding at a trade, document what was traded, when it was traded, how it was traded, and the prevailing macroeconomic variables. Likewise, with all 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 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 to browse the services offered by InvestinGoal.com before starting.
- Stick with the currency pairs you understand – that’s the way to get started every time. When in the US, trade the USD, if you’re in the UK, trade the GBP/USD, if you’re in Europe, start with the EUR. This is geared towards helping make the right trades with well-understood currencies. There are major pairs, minor pairs and exotic currency pairs to trade. As understanding of the Forex markets improves, take on a wider range of currency pairs. Be patient and reap the rewards.
- Define the goals – be realistic about the outcome wanted from FX trading. Traders who think they can generate huge returns from the get go, must think again. Limit expectations to conservative figures in the beginning. After learning the game, improve the percentages. What portion of the day and night can be dedicated to trading activity? Think about this, because it will determine success as a day trader. Leverage and margin have the capacity to assist, but also to turn things against you.
- Define strategic objectives – think about what you want from FX trading regimen. What are you prepared to do to achieve the goals? Don’t aim too high, but certainly don’t aim too low. With a profitable figure in mind, that’s the benchmark. This thought process is key to succeeding in the FX trading arena.
- Think logically and frugally – that’s sensible advice to any neophyte Forex trader. Never invest more than 2% of the 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 by rejecting impulsive behaviour and follow strategic reasoning.