Hello and welcome to another edition of the bulls vs the bears. Today we are going to ask a simple question. “How Do I Hone My Craft As A Forex Trader?” Yea I know it’s a loaded question that could take all day to answer. Not to worry! We’re going not going to take all day answering this question. Do you know why so many people fail to prosper as forex traders. Very simple. They just do not have the patience and discipline to succeed as forex traders.
Even worse, they don’t have the mental fortitude to prosper as a forex trader. They keep on blowing their trading accounts to smithereens on a regular basis . Then they come up with all kinds of excuses ranging from being born in the wrong family to the global credit crunch of 2009. I wont surprised if they add metal handicaps as well. So if you want to be the best forex trader that you can be, here is what you need to do.
Don’t Be In A Hurry To Get Out Of Trades
Yes,Don’t Be in A Hurry To Get Out Of Trades. Even better make sure the trader are high probability trades. They should be the type of trades that can run for weeks and months and get you substantial profits. Just set and forget them and smell the roses while the market executes on your behalf. By the time you check your balance you’ll find a nice healthy balance staring you in the face.
Also make full use of the time frames in the forex markets. Don’t be anxious to hit the exit button too soon. Let the trades ride for as long as possible so as to give you a chance to ride the big waves and net some huge profits in the process. That’s how the top traders become prosperous.
Be Smart Placing Your Stop Losses and Don’t Be Greedy
If you want to be the best forex trader you want to be, then be smart placing your stop losses and don’t get greedy. Being smart with your stop losses could be the difference between prosperity and poverty. Ever heard pf the line “Greed is Good” in the popular movie “Wall Street”? Well greed can also detonate your trading account if you decide to gamble with your money.
I strongly suggest you use a wide stop as part of your trading strategy. Why? Because the last thing you want is to place a tight stop and then your trading suffers a nuclear-sized hit in the process, throwing your whole strategy out of joint. Your best option is to place your wide stop outside of price ranges and beyond key levels. This way you save your trading position from taking a major hit.
Keep Your Price Action Charts Clean
The main feature of price action trading is clean price action charts. With that in mind you need to keep your price action charts clean and devoid of all those indicators. Why? because you want a clear and accurate view of the forex market. Even more important, focus on end of day data. The best way to do this is to zone in on higher time frame charts.
That’s where most of the action takes place and you will have your best chances of success trading this time period. If you’re thinking of scalping, you will be digging your own grave. Not only will these short term frames cause you to lose all your money, but they will also cause you enough stress to last you a life time. And they will also lower your chances of regular long term trading success.
Develop Clear Trading Strategies
If you want to prosper as a forex trader then you need clearly defined trading strategies. It’s like going to war, if you have a plan to win the war you will lose terribly. You need a set of trading setups and then you wait patiently for your trading edge to line up for your trading signal to form.
You most certainly need a trading plan consisting of the most effective trade setups that you hope to find on the price charts. So for instance if you are a pin bar enthusiast, you’d be on the look out for the pin bar and its different variations among other price action signals. It’s an absolute must that you have a checklist of some sorts before doing your analysis and then putting in your trade.
Understand How Risk/Reward Works
Ask the most successful forex traders and they will tell you this:”Understand How Risk/Reward Works.” And they are absolutely right. Because you need to understand the calculations behind risk reward and how to make it work by placing your stops and profit targets at the right places. For risk/reward to work for you, do absolutely nothing. Yes!ABSOLUTELY NOTHING! Because hitting the exit button when trouble looms will cause you to leave potential profits on the table. So to help contain your emotions and fears just apply the set and forget strategy and head for the beach. By the time you get back from smelling the roses, you should see profits in your forex trading account.
Look Out For Factors of Confluence
One of the biggest indicators you should look out for on the charts are factors of confluence. Now in case some of you have forgotten factors of confluence are coming together or intersection of two or more key levels. The intersection of these levels creates a hot point or point of confluence in the forex market. Part of looking for factors of confluence is knowing what constitutes confluence. Examples of factors confluence you should be looking out for are : uptrend/downtrend, Exponential Moving Averages(Look up Moving Averages 1 and II), and static support and resistance levels. You need to find as much evidence as possible on the charts to support your trade.
For more information on factors of confluence look up Something Called Confluence.
Your Thoughts and Your Actions Must Be On The Same Page On The Forex Market
Make sure your thoughts and your actions are on the same page on the forex market. If these two things are not in sync, your chances of prospering on the forex market are very minimal. There is something crucial you need to understand. You cannot afford to trade like a gambler nor should you allow previous bad trades to affect you too much. Just be cool calm and collected, even if those voices in your head try to force you to jump into the market.
You need to get your thoughts and actions on the same page such that you develop a sixth sense about the intentions of the forex market. Once you are able to get your thoughts and actions to work in tandem, your ability to navigate the forex markets will be less problematic.
Treat Forex Trading Like A Business
You need to treat forex trading like a business. If you think about it, forex trading is a business. Just like any other business it has costs/expenses(losses). It also involves the use of external equipment such as internet connectivity, computers, e.t.c. And you make revenues(winning trades). You make profit when your revenues outstrip your losses. So now that you have that in mind, here is what you need to do. Try not to risk too much on your trades or else you will cause your trading account to hemorrhage. Even more important you need to know what you are doing. You cannot be winging it like a Las Vegas gambler.
That’s a wrap for “How Do I Hone My Craft As a Forex Trader?” You need to work on yourself before you can perfect trading on the forex markets. When you accomplish this feat then you your trading will improve. Some of you are probably like “How Do I Work On Myself?” First learn as much as you can about forex trading. Keep an open mind and do not make failure part of your vocabulary. And remember, there is no “Silver Bullet” strategy to trading success. Just work on yourself, stick to your trading plan, and keep your eye on the prize. Til next time take care.
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