7 Tips For Successful Forex Trading

7 Tips For Successful Forex Trading

Many investors mistaken investment as a ‘lottery’, where everyone wants
to become rich with minimum effort given in the shortest time. One should
always remember that just like any other money-making method, trading requires
effort and time. The difference between trading and working a desk job is that
your desk job’s income depends on the overall company’s performance, while your
trading’s income depends entirely on yourself.

A lot of skills & knowledge are required for one to be successful in
something, however, what many people know but forget are the fundamentals that
are crucial for one to be successful. In this article, we’ve summarized 7
utmost important basic tips to help you become successful in forex trading.
Please take note that following all the tips below will not guaranty you large
profits or no losses; Instead, it helps you throughout your investment by
making more sound decisions.

1. Plan

Aside from forex trading, everything you do requires a plan to ensure a higher
success rate in reaching your goals with fewer worries along the way. Plan your
trade & trade your plan! Here we suggest using the 5 wives theory. Who
(Which instruments are you trading?) ; What (What positions are you entering?)
; Where (Where is the entry-level, stop-loss & take-profit?) ; When (When
are you going to enter & exit the market?) ; Why (Why did you make the
decisions above?). Knowing why you make your plan makes it a better plan before
executing it.

2. Stop-Loss (SL) & Take-Profit (TP)

Optimize the function of SL & TP provided by forex brokers. As mentioned
above, a trading plan should include at least a SL, as you should know the
maximum amount of capital that you are willing to risk. Traders often forget
about the SL and the next thing they know is waking up to a disappearing trade.
The use of SL & TP allows you to trade without needing to check on your
trade every 5 minutes. It also helps you to boost your confidence towards your
own trading plan.

3. Trading Is Not A Hobby  

Making money isn’t easy, so trading shouldn’t be treated like a hobby where you
do for fun. To become successful in anything, one must be ready to invest their
time and effort, especially in trading. Forget about becoming rich in a short
period of time; everyone would stop working and start investing if it’s that
easy. Every type of investment requires ample time and focus to obtain a
thorough understanding. Treat trading like your work and only source of income
to stay more focused and make fewer mistakes.

4. Know Yourself

Humans constantly think about their flaws and how to change them in order to be
better, so does trading. Everyone can be successful in some things, but not
everyone becomes successful the same way. The same goes for trading, where
everyone trades differently based on their personalities and goals. Some people
trade short-term, aiming small profits for each trade while some trade
long-term, aiming large profits for each trade. There are many more types of
traders out there, make sure you learn your type with a demo account before
investing real money.

5. Learn To Accept Losses

Anyone can be wrong, but only a few can accept and learn their wrongs. Traders
often give up too early after making consecutive losses over a period of time
despite planning well ahead. However, one must remember that anything can
happen in the market and train themselves to accept losses. Losses incurred in
trading should be taken as a lesson and experience to help a trader make better
decisions and risk management in the future. Your goal is to make more gains
compared to losses throughout your investment journey.

6. Record Everything

Make sure you record down every trade you do, starting from the planning stage
until the end of the trade. For example, entry & exit price, lot size, SL
& TP, reasons for entering the trade, experience throughout the trade and
the outcome of the trade. By recording everything, you can monitor your trading
pattern and decisions, factors for trading and get the most out of every past
trade experience. 

7. Patience

’Patience is a virtue’; The last and most important tip in any investment is
having patience. Traders often face problems like entering or leaving the
market too early, ending up with lesser profits or losses. Being patience also
means being confident with your plan, without being emotionally affected after
seeing a sudden spike in the technical chart. One advice is to plan your trade
well, set a SL & TP and let your analysis do the work. Even if all fails
and you face losses, remember to have patience still as some people take years
of losing before able to find a winning strategy for their trading.