Forex represents the biggest tradable market dwarfing entire stock exchanges. To give you some perspective, the global GDP in 2019 was estimated to be about $142 trillion, while the forex market in the same period was estimated to be about $2.4 quadrillion. That is 17 times the global GDP. Today an estimated 10 million individuals trade in the forex market, and this number keeps growing by the day. Unfortunately, only 15% of those traders are profitable since forex trading is quite complex. Unlike the common narrative, you are likely to come across on YouTube from individuals trying to sell you signals or a course you will not become a millionaire in no time by picking up forex trading. You will have to dedicate time to study the craft, hone your skills, and practice a high level of discipline if you want to join the profitable group. Below, let us explore 4 actionable tips that will help increase your success in forex trading.
Get In The Habit Of Backtesting
When getting started with forex, many individuals underestimate the amount of work required to succeed. This means they get in with the mindset that there is a magic formula that, once figured out, will guarantee success at all times. However, this is not true. This is where backtesting comes in. It is like training for an athlete. The more you practice, the better you become. In this aspect, trading is like a sport; the more practice you put in, the better you will perform under pressure. Also, you will be more confident since you are sure a given strategy works. Platforms such as PrimeXBT will allow you to backtest your strategies effectively, thus boosting your confidence before taking actual trades.
Become A Better Loser
Humans are not good losers since who likes to lose anyway? However, when it comes to trading, even pros with years of trading under their belt never win every trade they take. This means as a less experienced trader, you will suffer many losses of your own, but this shouldn’t discourage you. It is only by losing that you learn how to win. Professional traders understand how to handle losses. They stick by strategies they have tested and have seen bear higher success rates. They understand one good trade can wipe out a bunch of losses.
Create A Trading System
A trading system entails a step-by-step list to achieve the desired result. Once you have established this blueprint (strategy), you can repeat it to achieve the same result again and again. Some of the things to consider here include when to enter, when to exit, where to put your stop loss to break even, what your daily loss limit, what markets you intend to trade, what time are you going to trade, what time are you going to stop trading, etc.
Avoid Failing In Love
As a trader, you will realize it is easy to fall in love with your trade, bias, and even the market you are trading. However, this makes you sloppy. For example, you might have a strong conviction that the market is going up and take a position. If the market goes against you, you can decide to move your stop loss because you believe the market will go up, and before you know it, you get stopped out. Always remember the market is in control, and you are better off taking a small hit than getting your account wiped out.
As for bias, you might notice the market is bearish or bullish on a given day and take positions accordingly. However, if the market breaks structure and begins to trend up or down, be able to change your bias; otherwise, you will end up with losses.
Finally, don’t fall in love with your market. Let’s say you are used to trading EUR/USD, and on a given day, it’s slow; nothing much is going on. Feel free to move to another market with some action since the rules apply to all markets. This ensures you will not miss out on profitable trades in other markets.