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20 things you need to know to be a successful trader

Discussion in 'Forex Discussions' started by painofhell, Dec 20, 2015.

  1. painofhell

    painofhell Content Contributor

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    Forex has caused large losses to many inexperienced and undisciplined traders over the years. You need not be one of the losers. Here are twenty forex trading tips that you can use to avoid disasters and maximize your potential in the currency exchange market.

    1. Know yourself. Define your risk tolerance carefully. Understand your needs.
    To profit in trading, you must make recognize the markets. To recognize the markets, you must first know and recognize yourself. The first step of gaining self-awareness is ensuring that your risk tolerance and capital allocation to forex and trading are not excessive or lacking. This means that you must carefully study and analyze your own financial goals in engaging forex trading.

    2. Plan your goals. Stick to your plan.
    Once you know what you want from trading, you must systematically define a timeframe and a working plan for your trading career. What constitutes failure, what would be defined as success? What is the timeframe for the trial and error process that will inevitably be an important part of your learning? How much time can you devote to trading? Do you aim at financial independence, or merely aim to generate extra income? These and similar questions must be answered before you can gain the clear vision necessary for a persistent and patient approach to trading. Also, having clear goals will make it easier to abandon the endeavor entirely in case that the risks/return analysis precludes a profitable outcome.

    3. Choose your broker carefully.
    While this point is often neglected by beginners, it is impossible to overemphasize the importance of the choice of broker. That a fake or unreliable broker invalidates all the gains acquired through hard work and study is obvious. But it is equally important that your expertise level, and trading goals match the details of the offer made by the broker.

    4. Pick your account type, and leverage ratio in accordance with your needs and expectations.
    In continuation of the above item, it is necessary that we choose the account package that is most suited to our expectations and knowledge level. The various types of accounts offered by brokers can be confusing at first, but the general rule is that lower leverage is better.

    5. Begin with small sums, increase the size of your account through organic gains, not by greater deposits.
    One of the best tips for trading forex is to begin with small sums, and low leverage, while adding up to your account as it generates profits. There is no justification to the idea that a larger account will allow greater profits. If you can increase the size of your account through your trading choices, perfect. If not, there’s no point in keeping pumping money to an account that is burning cash like an furnace burns paper.

    6. Focus on a single currency pair, expand as you better your skills.
    The world of currency trading is deep and complicated, due to the chaotic nature of the markets, and the diverse characters and purposes of market participants. It is hard to master all the different kinds of financial activity that goes on in this world, so it is a great idea to restrict our trading activity to a currency pair which we understand, and with which we are familiar.

    7. Do what you understand.
    Simple as it is, failure to abide by this principle has been the doom of countless traders. In general, if you’re unsure that you know what you’re doing, and that you can defend your opinion with strength and vigor against critics that you value and trust, do not trade. Do not trade on the basis of hearsay or rumors. And do not act unless you’re confident that you understand both the positive consequences, and the adverse results that may result from opening a position.

    8. Do not add to a losing position.
    While this is just common sense, ignorance of the principle, or carelessness in its employment has caused disasters to many traders in the course of history. Nobody knows where a currency pair will be heading during the next few hours, days, or even weeks. There are lots of educated guesses, but no knowledge of where the price will be a short while later. Thus, the only certain value about trading is now. Nothing much can be said about the future.

    9. Restrain your emotions.
    Greed, excitement, euphoria, panic or fear should have no place in traders’ calculations. Yet traders are human beings, so it is obvious that we have to find a way of living with these emotions, while at the same time controlling them and minimizing their effect on our lives. That is why traders are always advised to begin with small amounts.

    10. Take notes. Study your success and failure.
    An analytical approach to trading does not begin at the fundamental and technical analysis of price trends, or the formulation of trading strategies. It begins at the first step taken into the career, with the first dollar placed in an open position, and the first mistakes in calculation and trading methods. The successful trader will keep a diary, a journal of his trading activity where he carefully scrutinizes his mistakes and successes to find out what works and what does not.

    11. Automate your trading as much as possible.
    We already noted the importance of emotional control in ensuring a successful and profitable career. In order to minimize the role of emotions, one of the best of courses of action would be the automatization of trading choices and trader behavior. This is not about using forex robots, or buying expensive technical strategies. All that you need to do is to make sure that your responses to similar situations and trading scenarios are themselves similar in nature. In other words, don’t improvise.

    12. Do not rely on forex robots, wonder methods, and other snake oil products.
    Surprisingly, these unproven and untested products are extremely popular these days, generating great profits for their sellers, but little in the way of gains for their excited and hopeful buyers. The logical defense against such magical items is in fact easy.

    13. Keep it simple. Both your trade plans and analysis should be easily understood and explained.
    Forex trading is not rocket science. There is no expectation that you be a mathematical genius, or an economics professor to acquire wealth in currency trading. Instead, clarity of vision, and well-defined, carefully observed goals and practices offer the surest path to a respectable career in forex. To achieve this, you must resist the temptation to overexplain, overanalyze, and most importantly, to rationalize your failures.

    14. Don’t go against the markets, unless you have enough patience and financial resilience to stick to a long term plan.
    In general, a beginner is never advised to trade against trends, or to pick tops and bottoms by betting against the main forces of market momentum. Join the trends so that your mind can relax. Fight the trends, and constant stress and fear will wreck your career.

    15. Understand that forex is about probabilities.
    Forex is all about risk analysis and probability. There is no single method or style that will generate profits all the time. The key to success is positioning ourselves in such a way that the losses are harmless, while the profits are multiplied.

    16. Be humble and patient. Do not fight the markets.
    Recognize your failures, and try to accommodate them if they can’t be eliminated completely. Above all, resist the illusion that you somehow possess the alchemist’s stone of trading. Such an attitude will surely be ruinous on your career eventually.

    17. Share your experiences. Follow your own judgment.
    While it is a great idea to discuss your opinion on the markets with others, you should be the one making the decisions. Consider the opinions of others, but make your own choices. It is your money after all.

    18. Study money management.
    Once we make profits, it is time to protect them. Money management is about the minimization of losses, and maximization of profits. To ensure that you don’t gamble away your hard-earned profits, to “cut your losses short, and let profits ride”, you should keep the bible of money management as the centerpiece of your trading library at all times.

    19. Study the markets, fundamentals, and technical factors leading the price action.
    That we have placed this so low in the list should not surprise the experienced trader. Faulty analysis is rarely the cause of a wiped-out account. A career that fails to begin is never killed by the consequences of erronerous application or understanding of fundamental or technical studies. Other issues that are related to money management, and emotional control are far more important than analysis for the beginner, but as those issues are overcome, and steady gains are realized, the edge gained by successful analysis of the markets will be invaluable.

    20. Don’t give up.
    Finally, provided that you risk only what you can afford to lose, persistence, and a determination to succeed are great advantages. It is highly unlikely that you will become a trading genius overnight, so it is only sensible to await the ripening of your skills, and the development of your talents before giving up. As long as the learning process is painless, as long as the amounts that you risk do not derail your plans about the future and your life in general, the pains of the learning process will be harmless.
     
  2. AwaberA

    AwaberA New Member

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    I think, you’d better use both practice and theory. You can trade with demo-account and read books about forex at the same time. Also you can speak with experienced traders and watch webinars. It’s good when you can get base knowledge on your broker site. For example, Fresh provides Forex encyclopedia, terms and definitions and a lot of useful books. As for me, it was very helpful at the beginning.
     
  3. Sharon Higgins

    Sharon Higgins New Member

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    Although I agree with majority of the mention points, but I feel they are not I correct orders as far priority goes. If we need to be successful then we must set priorities and make sure in no way we ever break them. I have already completed certain points mention here and one of them is to find right broker, I have the greatest one in OctaFX, it is a worldwide recognized company with servicing clients in over 100 countries, it really helps to work with such trustworthy broker and I can even start without investing with them, it is all due to their 8 dollars no deposit bonus which is forever available to use and helps me succeed all very easily.
     
  4. AwaberA

    AwaberA New Member

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    The main thing in Forex trading is to find normal broker. I have tried many brokers and stopped at FreshForex. I like fast order execution there. There are a lot of contracts and no requotes. And finally, they withdraw profit in 10 minutes.
     
  5. sininfinity

    sininfinity Active Member

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    Agree with all the above mentioned points. But what I liked most is this



    if one gives up then he is done for. If one keeps trying success will eventually come to that trader.
     
  6. Fxtrader88

    Fxtrader88 New Member

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    Now Freshforex has fast withdrawal to Visa/Mastercard as well. It doesn't matter what type of payment you use for topping up the account.
     
  7. AwaberA

    AwaberA New Member

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    Fxtrader88, it's a great news! I like that FreshForex is constantly developing their servise making our trading easier. Did you hear about the new "Hot Summer" promo?
     
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