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| 12 Tips to Become a Succssful Forex Trader |
1. Find a good broker!
Once you decide to invest money in Forex, the first important thing you need to do is to find a good broker. There are many fake brokers on the market, and many people ended their trading careers before they even started. So before you invest real money, choose a Forex broker.
Use Forex forums, check websites that show broker ratings, read comments and experiences of other traders, call brokers by phone or, if possible, go to their offices and talk to them in person. Invest a little time and effort before making this decision so that you do not have unnecessary headaches later.
2. Don't invest more than you can afford to lose!
Forex is a risky business! By trading on the Forex market, you can lose all the money you have deposited in your Forex account! So never invest all the money you own! Never borrow money from family or friends to start this business!
Never take a bank loan to invest it in Forex! Invest an amount of money in the Forex market that you are sure, that even if you lose it, it will not change anything in your life.
3. Make a Trading Plan and Be Consistent in its Application!
What the business statute is for one company that should be the trading plan for you. The trading plan should contain information such as Time for trading, the amount of money you are going to invest, the maximum amount you are willing to lose.
The risk per trade, which financial instruments you are going to trade, what strategies you are going to use (scalping, intraday, swing) as well as all other decisions that have an impact on your trading.
4. Always use Stop loss and take profit!
This is one of the most important items of Forex trading and by choosing the right place to stop loss and take a profit you can improve your trading results several times. Set stop loss and take profit.
These must not be arbitrarily selected levels, and by no means, it must not be the specific number of pips that you will use for each trade. These levels should be given the same attention as finding the ideal place to enter the trade.
5. Don't move the stop loss!
It must have happened to you that after you set a stop loss, the price hits that level, and immediately after that, it goes in the direction you wanted. Instead of a profit, you made a loss due to only one or 2 pips.
This really can be very annoying for traders and that is why the next time they find themselves in that situation they move the stop loss by a few pips, so if the price continues to approach they move the stop loss a little more, and so on.
In the end, the loss can be 2 or 3 times bigger than you planned. Don't do this, situations like this are happening to experienced traders also, it just happens from time to time and you have to accept that.
6. Do not risk more than 1% per trade!
In the first year of real money trading, traders are not recommended to trade with a risk that exceeds 1% of the total balance per trade.
This is very important for psychological reasons because if you risk a lot in the first days of trading and lose a big part of your initial investment it is very likely that you will be disappointed and give up this job. Once you are confident in your strategy or system of trading then you can increase your risk to 2% per trade.
7. Avoid trading around big economic announcements!
Announcements from the economic calendar can have a big impact on the movement of prices in the financial markets. Wait for the market to calm down after the announcement of an important economic indicator and then continue with trading.
If you opened a trade before publishing some news from the economic calendar, it does not mean that you should close the trade, in that situation always set a stop loss so that you do not lose a lot of money if that news causes big market movements.
8. Avoid Overtrading!
There is no trader who has not encountered this problem. Beginner traders, for example, after a successful morning trade, decide to continue in order to make even more profit, so they trade in the second part of the day. Then they usually lose what they earned in the morning.
The second situation is when, after an unsuccessful morning, they want to regain what they lost and then make even bigger losses. You have to accept good or bad days on the stock market, it is an integral part of trading. Don't spend the whole day on the Forex market, determine one part of the day that suits you best and stick to it as your regular working hours.
9. Lower your expectations!
Beginners often think that they will be able to invest $100 in forex and become millionaires in a year. This is how fake brokers are often advertised in order to attract people and take their money.
Forex is not a 100-meter race but rather a marathon. Forex is not an exact science, everyone can learn how to trade Forex, but like any serious business, it requires practice and time, so those who want to be successful in this business should, first of all, arm themselves with patience. In the first year of trading, every positive result is a great achievement.
10. Don’t use too many indicators in trading!
Beginners love to use indicators, often many of them at the same time. This is not good because the indicators generally give similar signals and it is enough for you to use only 1 or max 2 of them.
More indicators will only make it easier to convince you to enter a buy or sell position which is not good. Indicators are generally late for the price, their movements are directly related to the price movements and your focus should be on the analysis of the price movement and not on the indicator's movement.
11. Don't trade all Financial Instruments!
Today, traders have a lot of financial instruments on offer. In addition to currency pairs, there are also cryptocurrencies, indices, stocks, oil, gold, and so on. It is wise for beginners to make one pool of financial instruments to trade, no more than 10.
If you trade just with currency pairs then choose only basic currency pairs because the spread on them is lower and therefore your trading costs will be lower.
12. Use higher time frames for trading!
Comparing trading on small time frames such as the M1 and M5 with higher time frames is like comparing a Ferrari with a family car. It is more interesting, but if you are a beginner, it would be better to learn to drive a family car first.
The internet is flooded with trading strategies that yield 50, 100, or 200 pips a day, many of them offering their robots that have a success rate of over 90% or offering their always-winning systems. All in all, there are many fake experts who want to attract people by telling them how they have discovered the holy grail of Forex trading.
Believe me that something like this does not exist, do not waste your time and money on things like this. Work hard and smart, always find time to learn something new, trade every day, and follow what is happening on the market and the results will come.
