Trading Forex is surrounded by a certain amount of mystique, because there is no single formula for trading successfully. Think of the markets as being like the ocean and the trader as a surfer. Surfing requires talent, balance, patience, proper equipment and being mindful of your surroundings. Behavior of a trader is no different than the behavior of a surfer. If you make good analysis with effective implementation, your success rate will improve dramatically and, like every skill set, good trading is a combination of hard work, talent and a psychological stability. Here are basic tips that will serve you well in the markets.
1. Define Your Goals.
Define your goals and then choose a style of trading that is compatible with those goals. Be sure your personality is a match for the style of trading you choose. Before you set out on any position it is imperative that you 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; after that 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.
2. Choose a methodology and then 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 fundamentals of the company or economy, and then use a chart to determine the best time to execute the trade, other one use technical as a result they will only use charts to time a trade. But you have to be aware of one thing that fundamentals drive the trend in the long term, whereas chart patterns may offer trading opportunities in the short term. Whichever methodology you choose, remember to be consistent. And be sure your methodology is adaptive. Your system should keep up with the changing dynamics of a market. Choose a longer time frame for direction analysis and a shorter for entry or exit. Therefore, if you are taking your basic trading direction from a weekly chart and using a H4 to time entry, be sure to synchronize the two. In other words, if the weekly chart is giving you a buy signal, wait until the four hour chart also confirms a buy signal. Keep your timing in sync. After that you have to calculate your expectancy measuring all your winner trades versus all your losers.
3.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. Have the same attitude toward trading. 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. If you trade for example, with risk of 2%-4% of your total funds. Another way, if you have 10000 $, never put your stop loss more than 200-400$ of your account value. If they are bigger, trade shorter time frame, or decrease the leverage.
4. Perform weekend analysis and keep printed record
Weekend use to prepare for upcoming events. When the markets are closed, study weekly charts to look for patterns or news that could affect your trade. Perhaps a pattern is making some figures which can make your trades reversal or some upcoming news are suggesting that market will explode. 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. If the market does not reach your point of entry, learn to sit on your hands. You might have to wait for the opportunity longer than you anticipated. If you miss a trade, remember that there will always be another. If you have patience and discipline you can become a good trader. Also keeping a printed record is one of the best learning tool a trader can have. Note every emotional reason when you took any action. If you can note your own emotions like panic, greedy or anxiety and the reason why did you have them, you can also have a mental control and discipline to execute your system instead of your habits.
These tips above can help you become a more refined trader. Through consistent and disciplined practice with a lot of patience you’ll discover your profitability.