How To Be A Profitable Forex Trader

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How To Be A Profitable Forex Trader

How To Be A Profitable Forex Trader

This guide will teach you how to start being a profitable forex trader. You can be a profitable trader even if you have just a few thousand dollars to invest. However, you need to know the basics first. You do not have to be a genius or have perfect timing, but you must have enough knowledge and be willing to learn from the mistakes of others.

 

How to Succeed at Investing

Unless you are insider trading (which is illegal), no one can ever know with 100% certainty that their trade is going to make money nor how much profit they will earn. All successful traders and investors have one thing in common. There is a secret to their success. It’s so mundane, so simple but so overlooked.

The one thing every profitable Forex trader has in common with each other is their ability to control their emotions. Keeping your cool will allow you to trust your decisions and stick to a risk management plan. Some traders have spent many years developing a trading strategy, but you don’t have to.

 

Top 4 Things Successful Forex Traders Do

Approaching Forex Trading

Before you trade, recognize the value of proper preparation. It's important to align your personal goals and temperament with relatable instruments and markets. For example, if you understand retail markets, then it makes sense to trade retail stocks rather than oil futures, about which you may know nothing.

Time Frame

The time frame indicates the type of trading that is appropriate for your temperament. Trading off a five-minute chart suggests that you are more comfortable taking a position without exposure to overnight risk. On the other hand, choosing weekly charts indicates comfort with overnight risk and a willingness to see some days go contrary to your position.

 

Methodology

Once you choose a time frame, find a consistent methodology. For example, some traders like to buy support and sell resistance. Others prefer buying or selling breakouts. Some like to trade using indicators, such as MACD (moving average convergence divergence) and crossovers.
Once you choose a system or methodology, test it to see if it works on a consistent basis and provides an edge. If your system is reliable more than 50% of the time, you should consider that an edge, even if it's a small one. Test a few strategies, and when you find one that delivers a consistently positive outcome, stay with it and test it with a variety of instruments and various time frames.

 

Market (Instrument)

You will find that certain instruments trade much more orderly than others. Erratic trading instruments make it difficult to produce a winning system. Therefore, it is necessary to test your system on multiple instruments to determine that your system's "personality" matches with the instrument being traded. For example, if you were trading the USD/JPY currency pair in the Forex market, you may find that Fibonacci support and resistance levels are more reliable.


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