There is no single formula for success for trading in the financial markets. Think of the markets as being like the ocean and the trader as a surfer. Surfing requires talent, balance, patience, proper equipment and mindfulness of your surroundings.
The attitude to trading in the forex markets is no different. By blending good analysis with effective implementation, your success rate will improve dramatically and, like many skill sets, good trading comes from a combination of talent and hard work. Traders need to consistently hone their skills through hard work, persistence, good research and planning.
Here are 6 things successful forex traders do, which you can adopt to pave way for trading success.
Understand needs & goals
People choose to trade forex for different reasons. Some are new traders getting started in the markets whilst others are full time workers trading in the evening or part-time workers looking for ways to supplement their income. Identify your needs and decide whether being a trader is just a hobby or if you’re looking to turn it into a full time job. You can then devise the appropriate strategies to work towards that goal.
The timeframe indicates the type of trading that is appropriate for your temperament. Trading off a five-minute chart suggests that you are more comfortable taking a position without exposure to overnight risk. On the other hand, choosing weekly charts indicates a comfort with overnight risk and a willingness to see some days go contrary to your position.
Once you choose a timeframe, find a consistent methodology. For example, some traders like to buy support and sell resistance. Others prefer buying or selling breakouts. Some of them uses technical indicators & auto traders to get the trades to make profits.
Once you choose a system or methodology, test it to see if it works on a consistent basis and provides an edge. If your system is reliable more than 50% of the time, you should consider that an edge, even if it’s a small one.
You need to choose which instruments you are going to inverst or trade with. Most of the traders make mistakes by following more than 10+ instruments at the same time. for novice traders can follow one or two instruments to trade, test their strategies technically and fundamentally.
Start with a demo account
First you need to choose best brokerage account to trade with. In the markets there are several brokerage available with free demo accounts.
It’s wise to start with a demo account so that you can practise trading with virtual money, at no risk. By placing some practice trades in a disciplined manner you’ll start to get a good feel for what it is all about. However, don’t do it for too long as you will not learn any money management skills from a demo account. Once you’re ready to start a live account, trade only in small amounts.
Track your trading activity
Follow the markets with your existing trade ideas and keep track your trades and analyze it. For weekly, montly you can check what made you profit and what leads to losses. Make a trading journal to be consistent profit trader. You can learn from your losses. Losses aren’t ideal, but they can happen. Avoid blaming the market and admit your mistake. Instead of wallowing in your losses, remain calm and focus on reassessing your strategy. Ask yourself if you are trading the correct currency pair, chart time frame or time zone. Then address your risk management. Perhaps your goals aren’t realistic or your position size is too large.