Nine Currency Trading Tips
Practice and discipline are what the best traders do to sharpen their skills. Performing self-analysis to know what pushes their trades and learn to set aside their fear and greed is another thing. The following are the skills that any forex trader should practice.
· Define Goals and Trading Style
It is important to have an idea of the destination and how to get there before setting out to travel. Therefore, it is important to have a clear goal, and then make sure that the trading method can achieve these goals. Every trading style has a different risk profile which requires a specific attitude and approach to have a successful trade.
For example, if you cannot go to sleep after going in an open position in the market, you can consider having a day trading. On the opposite, if you think that the funds will gain profit over a period of some months, then you are more of a position trader. Ensure that the trading style suits your personality. Stress and certain loss can be a product of personality mismatch.
· Choose the Best Broker and Trading Platform for Your Needs
Spending time researching the differences between currency trading brokers and choosing a reputable one is essential. You must know the broker’s policies and their status in making a market.
Also, ensure that the broker’s trading platform suits the analysis you want to perform. Make sure to get the best broker with the best platform.
· Have Consistent Methodology
Have some idea on how you will execute your currency trades before entering the market as a trader. Know the necessary information that is needed to have an appropriate decision about entering and exiting the market. Underlying fundamentals of the economy, as well as charts, are used by some people to determine the best time to execute the trade.
Be consistent and ensure that the methodology is adaptive whichever you choose. It must go with the flow of the changes of the market.
· Know the Entry and Exit Points
There are times when charts in different timeframes show conflict information.
Make sure that when using the weekly chart as a basic trading direction and the daily chart as a signal to entry, it must be synchronized. If the weekly chart shows a buy signal, then wait for the time that the daily chart also signals to buy. Synchronized your timing.
· Compute your Expectancy
The expectancy formula is used to know the reliability of your system. By viewing your past trades with gains and losses, determine how profitable your winning trades are against the losses of your losing trades.
· Concentrate and Accept Small Losses
Always remember that your money is at risk after you have funded your account. This money in your fund must not be needed in your regular living expenses. Just think that this trading money is like vacation money that was spent after your vacation. With this, you are psychologically prepared to accept small losses. This is the key to handling your risk. You will be more successful if you concentrate on trading and accept small losses rather than always computing your equity.
· Have a Positive Feedback Loops
A well-executed trade according to the trader’s plan will result in the positive feedback loop. A positive feedback pattern is formed when the trade plan is executed well. Success bears success and confidence especially when the trade is profitable. Even if it resulted in a small loss but executed according to the trading plan, then it will build also to the positive feedback loop.
· Do a Weekend Analysis
Study weekly charts to look for a pattern or news that influence your trade during weekends or when the markets are closed. Maybe the pattern is making a double top and the experts and news are suggesting a reversal in the market. This is an instinct where the pattern could cause the experts and reinforce it. You need to be fair and make your best plans. Learn to be patient and wait for your setups.
· Keep a Printed Record
A printed record is a great learning tool. Print out a chart and list all the reasons for the trade, and the fundamentals that influence your decisions. Mark your entry and exit points. Write relevant comments including the emotional reasons for taking actions. Having this, you can develop mental control and discipline in currency trading in accordance with your methods and not based on your habits or emotions.