In this article, we will outline 10 tips for Forex trading success – if you understand them, you will see why you can make money trading currencies, while the vast majority of traders lose.
In terms of currency trading, most traders simply fail to understand what is needed to win and this lack of understanding sees them lose money. If you understand what you need to do to win – you can win and this is what this article is all about. Let's look at our 10 tips for trading success in more detail.
1. Don't Believe FX Trading is Easy
This might sound a paradox as I just said anyone can learn to win and yes they can but don't listen to people who say you don't need to do any work and can follow them – you will lose. The commercially sold trading systems, Forex robots and signal services sold online will lose you money. These systems come from people who have never traded and simply appeal to the greed of buyers. The person who thinks, he can spend a nominal sum of money and make an income for life, soon gets the reality check of losing his trading account.
Forex trading success does rely on you doing some studying of the markets and also learning that having a trading method which can make money is not enough – you need to adopt the right trading psychology to trade it for profit with discipline which is the real key to success. So learning a simple method is easy but then, comes the application of the method for profit which needs you to adopt the right attitude and we will will now look at both these key points in more detail.
2. Get Educated in Terms of The Basics
If you want to enjoy success you need to know the basics of your profession and the same applies to Forex trading. You need to know how and why prices move, what systems work and don't work, the importance of the right mindset and develop a trading plan for success. The good news is the basics will only take you a few weeks to learn. Your trading method can be very simple and if you understand, your psychology is the key to success, you will soon be building regular trading profits in under an hour a day.
3. Avoid the Majority Opinion
95% of traders lose and will always lose money trading currencies so you need to avoid what they do. Most traders follow others and believe in easy money (which we have mentioned earlier) so you need to trade on your own and generate your own trading signals, with a trading system you have confidence in. You also need to avoid the fatal mistake of day trading or scalping the markets which is simply a great way to wipe out your trading account. Scalpers and day traders, are trading within the random noise of a currency pair movement and will never make money - so you need to focus your efforts on trading longer term trends in the market.
4. Trade Longer Term
Trading longer term trends is the best way to make money trading currencies but what time frames should you consider? You can trade trends which last for many weeks or longer or you can trade the shorter term overbought or oversold levels in the market, where trades last for a few days to around a week. You can choose either method or even combine the two but the important point to keep in mind is you must use a simple trading strategy and you must understand the logic of how and why the strategy will win and we will now look at these two points in more detail.
5. Get a Simple Trading System
Simple Forex trading systems make money and always have but most traders fail to understand why and try and make their strategies to complex and lose – so why are simple strategies best?
6. Understand Your Trading Systems Logic
You must know why your system will win long term and this means being totally confident in the logic your trading strategy is based upon. Most traders fail because they don't do this but if you don't you will never trade your plan with confidence and confidence in your trading method is essential if you want to win at Forex trading.
7. Confidence is the Key to Success
If you don't have confidence in what your doing in terms of executing your trading signals, you will never win because you will lack the mental control to keep losses small and run profits. Confidence comes from education and an acceptance that mental control and trading with discipline are the keys to long term trading success.
8. Learn Mental Control
Forex trading success is all about having mental control and this is also referred to as trading discipline. Read any article from successful traders which asks them the secret of trading success and they will normally say its the discipline to follow a system and learn to keep your losses small and run your profits. This sounds easy but it isn't when your emotions are telling you the opposite of what you should do. You should cut losses but who likes to admit their wrong? Not many people and you need to run your profits but this can be hard when the market pulls back and reduces your profit.
Your mind will tell you to run losses and hope they turn around and cut profits before they get away and turn into losses. You can of course overcome these basic emotions by knowing you have to do the opposite to win. Your education and confidence in your system will allow you to do this and achieve success.
9. Accept Imperfection
Many people believe there are ways to beat the markets and find some hidden secret in price movement which can be exploited for profit but there is no secret in price order. Prices move to the odds – no technical indicator, chart formation or set up is guaranteed to work but if you understand this, you will stop seeking perfection, accept imperfection but realize by doing this you can win with, a simple Forex trading strategy you can apply with discipline.
10. Follow Your Plan
All successful businesses have plans to guide them to success and you need to have a Forex trading plan which is realistic and helps you make money longer term. Your plan should have realistic goals and also rules which you need to follow to make your Forex trading strategy successful. Always remember the old saying - “if you fail to plan, you plan to fail” and its true.
Make sure you have a trading plan, follow it, update it and learn from it, as you trade and you will have a roadmap to longer term trading success.
If you want to know how to trade currencies and win, the above 10 trading tips will show you the path you need to follow and will also help you see, why the vast majority of traders lose and how you can not only learn to trade currencies quickly but also, why you can achieve long term trading success.