The best traders sharpen their skills through practice and discipline. They perform self-analysis to see what drives their trades and learn how to keep fear and greed out of the equation. In order to trade Forex successfully, you need to gain a far better understanding of Forex and the basic tricks and strategies that can help make you a successful forex trader. In this article, we’ll look at some tricks a novice trader can use to perfect his or her craft in forex trading.
Define your goals and choose a compatible trading style
Before you set out on any journey, you should have some idea of where your destination is and how you will get there. Consequently, it is imperative that you have clear goals in mind as to what you would like to achieve; you then have to be sure that your trading method is capable of achieving these goals.
Each type of trading style requires a different approach and each style has a different risk profile, which requires a different attitude and approach to trade successfully.
Choose a broker who offers an appropriate trading platform
It is important to choose a broker who offers a trading platform that will allow you to do the analysis you require. Choosing a reputable broker is crucial and spending time researching the differences between brokers will be very helpful. You must know each broker’s policies and how he or she goes about making a market.
In choosing a broker, it is important to know your broker’s policies. Make sure that your broker’s trading platform is suitable for the analysis you want to do. A good broker with a poor platform, or a good platform with a poor broker, can be a problem so make sure you get the best of both.
Choose a methodology and be consistent in its application
Before you enter any market as a trader, you need to have some idea of how you will make decisions to execute your trades. You must know what information you will need in order to make the appropriate decision about whether to enter or exit a trade.
Some people choose to look at the underlying fundamentals of the company or economy and then use a chart to determine the best time to execute the trade. Remember that fundamentals drive the trend in the long term, whereas chart patterns may offer trading opportunities in the short term.
Choose your entry and exit timeframe carefully
Many traders get confused because of conflicting information that occurs when looking at charts in different time frames. What shows up as a buying opportunity on a weekly chart could, in fact, show up as a sell signal on an intraday chart. Therefore, if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to bring the two into line.
Calculate your expectancy
Expectancy is the formula you use to find out how reliable your system is. You should go back in time and measure all your trades that were winners versus losers. Then determine how profitable your winning trades were versus how much your losing trades lost.
Focus on your trades and learn to love small losses
Once you have funded your account, the most important thing to remember is that your money is at risk. Therefore, your money should not be needed for living or to pay bills etc. Consider your trading money as if it were vacation money because once the vacation is over, your money is spent. Have the same attitude toward trading as this will psychologically prepare you to accept small losses, which is key to managing your risk. By focusing on your trades and accepting small losses rather than constantly counting your equity, you will be much more successful.
Build positive feedback loops
A positive feedback loop occurs as a result of a well-executed trade in accordance with your plan. When you plan a trade and then execute it well, you form a positive feedback pattern. Success breeds success, which in turn breeds confidence – especially if the trade is profitable. Even if you take a small loss, but do so in accordance with a planned trade, then you will be building a positive feedback loop.
Perform weekend analysis
On the weekend, when the markets are closed, study weekly charts to look for patterns or news that could affect your trade. Perhaps a pattern is making a
double top and the pundits and the news are suggesting a market reversal. This is a kind of reflexivity where the pattern could be prompting the pundits while the pundits are strengthening the pattern. Or the pundits may be telling you that the market is about to go off.
These are the kinds of actions to look for to help you formulate your upcoming trading week. In the cool light of objectivity, you will make your best plans. Wait for your setups and learn to be patient.
Keep a printed record
Keeping a printed record is a great learning tool. Print out a chart and list all the reasons for the trade, including the fundamentals that sway your decisions. Mark the chart with your entry and your exit points. Make any relevant comments on the chart. File this record so you can refer to it over and over again.
The tricks above will lead you to a structured approach to trading and in return should help you become a more refined trader. Trading is an art and the only way to become increasingly proficient is through consistent and disciplined practice.
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