10 Steps to Forex Trading Success

by FX EA Review
10 Vital Steps to Forex Success

Intro

We know that many traders around the world end up losing money more than they earn and the number of successful traders is not many. The question is, why do most traders lose money, and why is the percentage of successful and profitable trades so low? This is because after trading begins, all traders make some common mistakes and fail to take the right steps. You need to keep in mind that the forex market is volatile and trading is complicated.
So, you must learn about it in detail before you start.

Here are some steps which can help you to be successful:

1. Stops

A stop order is an order for buying or selling a security when its price moves beyond a certain point and ensures a higher probability to achieve a predetermined entry or exit price. It limits the loss of the investor and locks in a profit. Once the price crosses the entry or exit point, the stop order becomes a market order. As a trader, it is a must that you respect your stops. You need to take a break and concentrate on where and why you went wrong.

2. Consistency

If you want to improve in trading, then it is important to analyze the market quantitatively and qualitatively first. Only then, you will be able to determine what specifically requires improvement. The only way to know if your trading strategy is effective is making sure to do the same thing under the same circumstances over and over again with few deviations. With consistent data, you can have a framework of variables you know to work within. Doing it can be tiring, but you have to outline your strategy in the beginning so you can stick to it later. Take time to research data well and trust in it.

3. Start small

It is indeed tempting to take advantage of the most liquid market in the world through big positions. However, you should not forget about the risks associated with it. If you only focus on big wins from the very start, then it can be possible that you forget the importance of following the pattern. Keep in mind that taking smaller positions can offer you greater control over the long run. It also saves you from the risks of losing a huge amount. As you become familiar with the forex market and get better at trading, your knowledge, experience, and knowledge will grow and you can then increase your portion size gradually.

4. Lifestyle

Forex trading requires a lot of commitment and dedication. So, if a new trader wants to consider trading for a living, he/she needs to put effort and invest in quality education first. For a career, trading is very different than other 9 to 5 jobs out there. The working hours are not defined. It depends on what markets you choose for trading in. So, your lifestyle matters for your forex trading success. While planning your strategy, make sure it fits around your lifestyle. If you have time to look at five charts and you try to look at fifty, it will be an utter waste of time and effort. So, it is better to go with smarter time management and concentrate on a few with good opportunities.

5. Noise Reduction

Market data is all of the price data that distorts the picture of the underlying trend. It includes mostly intraday volatility and small corrections. Noise reduction is one of the most important factors in forex trading. With too much noise, you will be easily bogged down in huge volumes of microdata while you need to put your energy on the overarching picture. By reducing noise, traders can avoid false signals and view the overall trend clearer. You can reduce noise by isolating trend direction, and creating a usable strategy by combining chart types highlighting trends.

6. Realistic Goals

Setting realistic goals is one of the best trading secrets. If you go with unrealistic profit targets from the very beginning, it will lead to reckless decision making quickly. So, start by learning and grow without expectations. You should not expect to make a living right away, instead, try part-time trading. To be a trader, you also need to be an observer to see how the market works. Keep in mind that you cannot earn profits without being an expert in different strategies. As the market conditions change, you need to change your plans as well. So, do not put your money at risk in the temptation of earning huge profits and take it slow.

7. Cutting Losses

Bruce Kovner once highlighted, “If you personalize losses, you can’t trade.” When there are threats to big losses, you need to go on autopilot and get out. So, make sure to prepare mentally and visualize the emergency exit. The smart option is cutting your losses short and letting your winners run. However, many investors make the mistake of doing the exact opposite. They sell stocks after a small gain and hold a stock with a small loss, which results in even more loss. By realizing a capital loss before it gets out of your hand, you can minimize losses and be a successful trader.

8. Learn From The Best

As mentioned earlier, you need to be very observant to be a successful trader. Before you get into trading, spend your time on learning different strategies of trading better. The market is all about predicting the outcome and minimizing your losses if your intuition goes wrong. This is why you should learn from the best that can help you. Trading requires consistency and discipline. So, you can pick up books on developing discipline. “The Disciplined Trader” by Mark Douglas is one of the best books you can choose in this matter.

9. Trust Yourself

After you educate yourself well and practice trading in demo accounts, you need to trust your intuition. Forums and chat rooms are indeed useful, but you should not let yourself be overly influenced. You need to understand that not all market conditions are the same, so, online advice can only help to a certain extent. Moreover, as mentioned earlier, your lifestyle matters in trading. So, you have to come up with your own strategies that fit your trading styles. It is not a good thing to doubt your strategy when your capital is on the line, but that is exactly what will happen if you spend too much time on chat rooms and forums. So, trust your instinct and go for it.

10. Overall Picture

If you want to take trading seriously, then you must bring consistency and discipline in your life, and you will need a lot of willpower. Trading can be very stressful in the beginning but there is no place for emotions in this field. Fixing your bad habits and practice developing willpower in all aspects of life can be useful. It can help you to stay neutral while trading.
By following these steps, you can increase your rate of successful trades.

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