Forex trading can be very lucrative and rewarding – however, it’s not without risk. Just like any other profession, you need to master the basics and fundamentals before you can excel. Whilst there is no one-size-fits-all approach, there are certain habits and principles to keep in mind, to maximise your chances of trading success.
Here are 10 habits successful forex brokers abide by:
- Research and observe – Watch the markets before jumping right in to buy or sell – remember, trends are your friends. Researching what each market offers and observing the highs and lows, will help you get an idea of what the patterns are for the areas you are interested in.
- Track your activity – Keep a daily record of your trading activity, observations and learnings. This is a great way to analyse what works and what doesn’t. A little effort each day will help you reap benefits in the long term and pave way for trading success.
- Take personal responsibility – Even though you may get advice on trading from a reputable Forex Trading consultant, you need to take personal responsibility for your own trading decisions. Make sure all your trading strategies are backed by sound logic, as opposed to emotions and speculations.
- Learn from mistakes – Learn by doing. Don’t let your bad experience stop you from going forward, but allow them to teach you how to make better decisions in the future.
- Take advantage of forex trading demo accounts – Demo accounts are a great way for you to test the waters in a risk free environment, especially if you’re new to trading or trialling different trading platforms. However, don’t stick to demo accounts for too long as they don’t teach you real money management skills.
- Look at proven methods – Don’t believe everything you read. Look for real proof of methods which are touted as working well. The main concepts which work best as proven methods include going with the current trends, cut your losses, if it’s profiting let it go, and take care of risks by managing them. Keep in mind that methods may differ from one time to another, but generally the proven methods work best.
- Look at the long term – Forex trading is a long term game, so don’t expect immediate results. Instant gratification is very rare in trading markets, so always keep the big picture in mind and avoid rushing through your decisions looking to get rich within a fortnight.
- Don’t let your emotions rule your trading decisions – Avoid making emotionally charged decisions, as this can often lead to trading mistakes and disasters. Always analyse your strategies objectively and make sure they are backed by sound logic.
- Keep in mind the risk/reward -There is always a risk to get a reward. The ratio of risk to reward will not always be the same, and may at times be deceiving. Sometimes it may look like you are failing with the risk you look, only for it turn into a reward after all. What you want to do is come out so that your draw-downs are about half of your returns or less. Pay attention, and don’t expect everything to produce returns all the time.
- Have a set of personal rules and follow them – Making a trading plan and sticking to it, is imperative. Identify your goals and needs from the start, so you can devise strategies accordingly. Don’t go in with more investment than you plan on, and stick with your length of time to see if something will be successful before ditching it.