Here we are going to show you, how to trade Forex like a pro and enter the 5% of successful traders. Becoming a profitable currenct trader is not as hard to do as many traders think. All you need to do is treat Forex as a business, not a hobby which most retail traders. Let's look at how to run a profitable Forex business from home in more detail.
Let's look at how to apply the principles of a successful business to currency trading and see, how you can trade forex like a professional and enjoy currency trading success.
Study the Market You Are Dealing In
This might seem obvious but most traders, simply don't study the currency markets and understand how and why, prices of currency pairs really move. There in a hurry to make money and want to get trading signals from a broker or a software package and think they can win. They are not interested in learning how to trade Forex like a pro – their greedy and believe in get rich quick schemes with no effort but the serious trader, makes an effort and is well rewarded for his studying the markets.
The real pro currency trader, will study exactly how and why currency markets move, different forms of analysis, all indicators chart patterns and different methods of trading the market. He will know all the basics of trading the Forex market before he starts to trade. The one key area which the real pro trader will study, after the mechanics of trading Forex is - to know the competition he faces from other traders, when trying to make money with his trading strategy.
Study Your Competition
If you are selling any product or service would you look at your competitions strengths and weaknesses? Of course you would and its the same in foreign exchange markets – you need to know what your up against so you can get an edge, over your competition and enjoy success.
In Forex markets, there is a set ratio of losers which is 90% which is about the same as in business, where around 80% of businesses fail, to survive in business more than 3 years. In FX trading, the ratio of losers remains the same because these traders continually make errors and the pro trader learns what these errors are. In trading the markets, the key error is the same as in any other business - a lack of plan which is based on the reality of dealing in the market you have chosen, not having an edge over the competition and failing, to keep an overhead low and maximizing profits.
Work Out Your Advantage Over the Competition
You need to devise a Trading Strategy which has an edge over the market and we have discussed this in other articles but in brief – you only need a simple trading system and to apply it with discipline to win. Many traders make things to complex in terms of their Forex trading plan and focus their energies in the wrong areas – the successful businessman concentrates in the areas that matter and wins. The biggest hurdle, facing most businesses is balancing income and overhead to generate profit.
The losing Forex trader could learn a lot from the successful businessman in terms of cash flow. Managing cash flow is vital to any business – you need to make a profit of course but you also need to make sure, you don't run out of cash along the way – sounds obvious? It is but most traders, who lose at currency trading have no idea how important it is and this is why, so many traders lose. Let's look at this key point in more detail.
Work Out Overhead, Income and Profit
Let your profits run and cut your losses in business terms is translated into – control your overhead and keep it down and maximize profits on your product or service to not only cover the overhead but make long term profits.
The successful business owner knows, that to run his business he must spend money – it's the cost of doing business. The successful business, has a cost/ overhead which cover everything from taxes, to machinery to wages. He will have a lot of costs but will have worked out, how to make a profit above the loss he takes in overhead. The key point to keep in mind is the successful business is not worried about losing because they have have an overhead to make profits which should be logical common sense but it isn't to most traders in the FX markets.
The major mistake most traders make is thinking they are going to win most of the time and this myth is fed by numerous websites, brokers and people selling trading systems online. You often hear you will win over 80 or 90% of the time on your trades – but you won't. You will probably only be able to win on around 30 – 50% of your trades but the percentage of losing trades, to winners doesn't matter – its the size of the winners when compared to losers which is important. You don't need to win the majority of your trading signals to make profits. The successful business man knows this but the losing Forex trader doesn't.
Any successful business, will keep the overhead low and try and cut it, as much as possible. Controlling costs is vital to any businesses success. Over in the world of Forex trading, most traders simply like to let their losses run and hope, they are covered by profits. Hope though is a trait of losers and is not a way, to achieve success in business or in trading currency markets.
Successful businessmen are focused, driven and very disciplined in terms of reaching their goals and they will have a set plan in place which they follow and update regularly.
Continue to Update Your Trading Plan
Your plan is based around your knowledge of the market and contain your trading strategy and rules. You need to follow the rules and also keep a trading journal of your trades, with notes on it in terms of, the reason for the trade, the profit objective, the actual profit and loss and also, was the trade executed correctly. By keeping a journal and following a trading plan, you will have a clear idea of your goals and how to reach them. A business plan is vital to any business and the same applies in FX trading.
If you want to trade Forex markets like a pro, you need to think and act like one and apply basic business success principles to trading currency pairs. Most traders will never win because they don't take trading seriously, don't make the required effort, fail to get the right mindset and fail to follow a long term trading plan, to help them become a successful currency trader.
Anyone can win with a currency trading business and in terms of the profit potential for your effort, there is no other business which can offer you greater rewards. What you have to decide to do is to treat Forex markets seriously and with respect and if you do learn to trade currencies like a pro, you will be well rewarded for the efforts you make in the most exciting business of all – trading global Forex markets for profit.