With $5.1 trillion in average daily turnover, foreign exchange trading is certainly the largest market in the world. In order to survive in such a volatile environment, you need to keep up with the trends, build a solid Forex trading strategy and, most importantly, keep learning and improving your trading skills. Here are three basic techniques every successful trader would recommend you.
1. Build a Solid Strategy
Since the Forex market is extremely complex, you cannot afford to enter it unprepared. When starting off, you first need to know what your goals are and determine what kind of trader you are. Of course, your next move should be doing a thorough market research. Only this way will you be able to survive in such a hectic ecosystem and avoid some of the most common beginner’s mistakes. Luckily, there is a plethora of literature on Forex on the internet, providing you with invaluable expert insights. Once you figure out some basic principles of the currency trading, you can move on to creating a solid Forex plan, which includes numerous aspects, such as choosing the right broker, defining time frames, selecting the leverage ratio, tracking the trends on the market and developing an exit strategy.
2. Set Up an Automated Trading System
In the era of hyper connectivitiy, every Forex trader needs to invest in real-time data analysis and facilitated information transmission. By implementing automated trading platforms, you will manage to make unemotional decisions, save a considerable amount of time and, most importantly, synchronize and manage your multiple accounts effectively. Today, automating a trading system is not the privilege of large companies with enormous budgets anymore. The number of sophisticated and yet affordable trading tools is constantly rising, making them available to the individual traders, as well.
Now, since automated trading systems vary in simplicity, speed and performance, you need to choose the one that meets your needs the best. For example, for rookie traders, “set and forget” programs would be ideal since they help you learn the basics of currency trading and allow software to make automated decisions.
Additionally, when digitizing your Forex trading campaign, you should also consider social trading, which is a relatively new concept. Similarly to the social networks we use every day, social trading platforms enable us to communicate with other retail traders and use their combined ideas to make profit.
3. Controlyour Emotions
Your emotional states play an integral role when it comes to your performance as a Forex trader. Of course, getting emotional is something you cannot avoid, especially when the things don’t go as planned. And, this is perfectly fine. However, you should never let your emotions overwhelm you and affect your currency trading efforts. Remember, you need to always make objective, unemotional and, most importantly, consistent decisions.
For example, as a part-time trader with no or little experience, you should avoid high-risk options such as massive leverages and stick to the proven trading techniques. This way, you will be able to reduce your stress levels and make rational decisions. Of course, as you gain more experience in this field, you will be able to change your approach gradually and move it to the next level.
4. Choose the Most Liquid Currency Pairs
When you start off in the world of Forex trading, you first need to choose the right currency pairs to trade. As you lack experience in this field, you might want to focus on a single pair you are familiar with. For example, trading your country’s currency against a liquid foreign currency is always a good idea. If that’s not an option, you should stick to the most tradable pairs. For example, the industry experts advise pairing the U.S. currency with some other liquid currencies, such as EUR, GPB, CAD and AUD.
One last piece of advice- don’t give up easily. You need to understand that Forex isn’t about getting rich overnight. In order to succeed in this field, you need to constantly learn, keep pace with the latest trends and analyze your failures in order to prevent them from happening again. Hopefully, with these tips, you will manage to keep the ball rolling.