How to Excel at Forex Trading

Forex trading is one of the most exciting trading opportunities on the market; yet, despite its accessible nature, many practitioners are actually losing money. Having a clear trading strategy, as well as an awareness of the typical pitfalls can ensure the most profitable use of your time and resources. The list below outlines some of the best ways of maximizing the profitability of every forex trade.

Have a Clear Trading Strategy

One of the most common ways of losing money when trading comes from not considering an appropriate exit strategy. The excitement for the predicted profits of a trade all too frequently means that many traders fail to put a stop in place.

A stop-loss order refers to the price a stock hits in order for a trader to sell, and is a way to protect capital. No matter how confident one is of the trade they are making, it is important to have a stop loss in place in case the predicted success does not come to fruition.

Outlining a detailed trading plan will work to protect every asset. A trading plan will answer the following questions:

  • How much money can be lost?
  • When and how can the trade be left if predictions aren’t correct?
  • How and when a trade can be left if the predictions are right?
  • How much will be made if the predictions are correct?
  • How will the predictions be identified in the market?

Both coming up with, and then sticking to a clear trading strategy can be a time-consuming task, especially when it comes to monitoring the market. A system such as expert forex signals can help you save time and remove the potential for human error, as they provide traders with all the necessary information needed to ensure swift and successful responses.

Start Small and Increase Through Gains

For those starting out in forex trading, starting with small sums and low leverage is highly recommended. Choosing to add to an account from the profits it generates is a much better way of ensuring security, and, since there is little evidence to suggest that a larger account will generate greater profits, it is a perfectly viable money-making practice. By choosing to only add to an account from profits is the best way to ensure that losses are kept within a manageable boundary.

Emotions such as excitement, fear or panic are completely natural, but it is important, when it comes to trading, that one learns to control them. Starting small and reducing risk is also necessary when it comes to establishing a logical, non-emotional mindset, which is necessary for any successful trading endeavour.

Begin by Focusing Just a Few Currencies

While it isn’t hard to understand the logistics of currency trading, the specific markets can be complex and seemly chaotic at times. To ensure a full and clear understanding, sticking to a particular currency pair is a helpful approach. This could be a trader’s native currency, or a liquid, widely traded pair. Having this focus is advised for both beginner and advanced traders, as it will ensure that a full working knowledge of the specific market is easily obtainable.

Consistency is the Key to Successful Forex Trading

The Forex market is in a constant state of flux. Its liquidity is the very thing that helps Forex traders turn profits when they get it right. It may be difficult to consider that in such a volatile market, consistency is the key to successful trading. How can you remain consistent when the market appears to do the unexpected on a daily basis? The fact is that all the indicators in the world will not tell you what the market will do. As a result, new traders should be wary of becoming frustrated with what they believe the market should do.

The first lesson any Forex trader should learn is that this unpredictable market is impossible to forecast for the majority of the time. Any consistencies, trends or indicators you spot are simply patterns that increase the probability of you trading successfully on the Forex market and do not guarantee the direction the market will take. Consequently, you should expect consistency from your trading strategy not from the market itself.

The key is to focus on consistency not profits and to go into the Forex trading market with realistic expectations. Patience is another necessity when learning how to trade Forex. Opportunities arise every day but that does not mean you should act on every single one. Focus on your trade plan and the opportunities you feel are most favourable and manageable for the time and experience you have.

Your trading plan should be consistent. If you trade to your plan consistently, you are more likely to learn how to progress as well as avoid your emotions influencing your decision. A string of losing trades may have nothing to do with the profitability or effectiveness of your trading strategy.

You should stick with your trading strategy through good and bad times. Each trade is independent from the last. Just because you have had a string of winning trades does not mean your next trade will follow suit. Control the risk and only trade when signals align. A consistent approach to price is important too. Indicators can tell you about what has happened before and together may allude to future movements, but the price must be your sole focus.

Become consistent in all aspects of your trading plan, only trading when probabilities are clearly on your side. Whether through thorough testing, record keeping or monitoring, your trade decisions should always be made to your satisfaction whether they end in profit or loss.