This is a rewarding business which is open online 24/5 and is an outstanding method for making high returns and quick cash. Traders can reap the fruits of good trade by timing their trade wisely. Just as in other businesses, a new Forex trader too has to follow certain do’s and don’ts to become successful in this business.
1. Don’t get emotionally attached
Usually Traders prefer to trade in a few currency pair as every pair has a unique working style like reacting to news and which technical indicator suits it. It’s really nice to know completely about the instrument you work with. But it can lead to emotional attachment which is not a good thing for a trader. Due to emotional attachment you may lose focus and start see trading signals and interpret the news the way you want it instead of the reality. You should know that currency pair behavior will not react to your emotions but will react to the market sentiments, so be focused, concentrate on the currency pair you trade to be successful.
2. Control over emotions
Physiological factors like fear and greed can affect a trader which can make him to lose even in a winning situation. You have made a analysis of the highest point a currency pair will reach then your trade reaches that point you know there will be reversal after reaching that point but due to greed of earning more you avoid closing the trade which cause you a unwanted loss on reversal of trend. Your analysis report clearly states that the currency pair will reach a certain point but due to fear you close very soon making a small earning where you could have made hefty earnings. Even losing trade can make you low and you can fear on the next trade. Have control over emotions and always be confident while trading.
3. Avoid take a losing position
Your analysis report states a particular position but you have read news exact opposite to it and there are some facts that support the news. Due to pride that your guessing can’t go wrong you enter in to the trade and lose. Please don’t overlook any news following your insist, take wise decisions by considering every aspect and factor involved.
4. Have a Plan beforehand
You absolutely need to have a solid plan that details every aspect of your trading before you venture into the trading. Remember that without a plan, you are not trading, you are gambling. Don’t be a gambler. Do your homework and research and make a plan A and Plan B for trading. Which currency pair to trade, where to set stop loss, take profit and follow it. However, during a real trade things are not that simple: they are dynamic and change a lot. You may make some changes, but do not change your plan fully without having any serious analysis beforehand.
5. Take a break
Sometimes you take a position make a loss and again immediately you try something else and you’re still on the wrong side. Change again, and the result is the same. You are losing some more. You may think that the whole world try to hurt you. It’s not the real things, you are just too stressed and need a break. Take a break and then continue if it is still the wrong way then take a break for a while then go for it.
6. Invest only after knowing it.
Don’t trade in a currency pair of which you don’t have knowledge. Don’t go for the CAD ( Canadian Dollars) if you don’t know who Justin Trudeau is. Or don’t invest in BGN (Bulgarian Leva) if you don’t know that it is pegged to the euro. You risk keeping an eye on Bulgarian Central Bank’s web page and look for relevant info that will never come.
At a technical level, you should already know that each pair acts on its own way, as if it had its own life. So, don’t invest in a pair you haven’t researched first. Otherwise, you risk being ripped off without knowing the reason for that.
7. Don’t break the rules
The last and the most important advice: don’t break the rules. Whether you care for the above or you have a different set of rules, do not ever break them. More and more trading are let by the computers and You need humans, great traders, to set up customized indicators and rules for the computers to trade. But after having placed a set of rules, you know that a computer will never break them. And this is why, in most of the times, the computers make a better track record than you.
8. Follow a strict routine
The importance of a daily trading routine is something we have never talked about before, and for good reason. Trading can become a lonely endeavor, and some may struggle with a completely new situation where they have no boss to tell them what to do at all time.
Having a routine in place will help you overcome these challenges and put you on track for a successful career as an independent trader.