(The following is a guest post)
Successful Forex trading starts with good market knowledge, a sound strategy and effective risk management. If you trade regularly on the Forex market, it is sensible to limit your losses and maximize your gains to ensure the survival of your trading account.
Whilst there is no set formula to achieving great success on the Forex market, there are some top tips and best practice guidelines for better FX trading:
1) Put in the Time – Any experienced Forex trader will tell you that if you want to become a successful trader, there is no quick-fix or crash course, you need to put in the time and effort to learn how it works. By learning to use trading platforms effectively, you can quickly develop a trading strategy that works for you.
2) Assess the Risk – For the most part, limiting your losses is as important as profiting from your trades when embarking on a successful Forex trading career. Once you have determined the trend and found a potentially profitable opportunity in which to trade, it is essential to begin assessing the risk level. Only trade assets which you can afford to lose.
3) Monitor & Analyze – In order to find profitable trading opportunities, Forex traders must become adept at knowing how to monitor and analyze the markets. Looking for the right entry signals is important in helping a trader to identify the direction of the trend. Momentum indicators, moving averages and other tools can be used in conjunction with one another to find the best times to enter and exit a trade.
4) Research the Market – Knowing your market, currency pairs, platforms and cyclical trends is essential to help you make profitable trading decisions and identify optimum times to enter and exit a trade. An education in Forex is beneficial but hands on experience in researching and recognising what the indicators are telling you is greatly important in order to get the most from your trading strategy.
5) Act Consistently – Trading with consistency is important as it helps traders to avoid trading with their emotions. Panicking can lead to taking unnecessary risks which ultimately ends in losses. By trading objectively and dispassionately, traders will already know what they should do when a profitable opportunity arises and how much risk to take. Avoiding emotional decision making ensures your trading decisions are solely influenced by a clear and consistent trading strategy. This will help you to learn what works and what doesn’t as you record your trading history.
6) Stay Informed – Keep yourself updated with the latest Forex news. Although it is not advisable to trade the news, a good understanding of market drivers, debt problems, policy decisions and economic strength are essential to identifying long term trends.
Join our newsletter
Subscribe to get the latest "Engineer Your Finances" content via email.