This week we did a lot of research into what works best when it comes to Forex trading. We organized this advice into several essential tips you can browse below.
Here are Superforex’s seven tips to make you a better trader:
#1 Plan accordingly.
Like with anything else, you don’t want to show up unprepared. Planning starts with knowing yourself and the type of trades you’re interested in. Can you leave a position open overnight without having nightmares? Or do you prefer entering into small orders that follow the rapid changes in the market that occur during the day? Answering questions like these will tell you what kind of trade is the best for you, and then you can focus your research there! Check out our article on strategies if you need more help.
You don’t usually wear summer clothes in December, do you? Much like following the weather forecast, there are methods of learning how to read the market. We’ve already touched on those before. Some people follow fundamental analysis, which focuses on larger political implications in a given economy. For Forex trading, however, usually it’s more productive to employ technical analysis which deals with various types of charts. To be more successful, you need to learn which method works best with your trading style, perfect your knowledge in that area, and use it consistently.
#3 Time is your friend.
Think of how long it takes to prepare a tasty meal – selecting and finding the ingredients, cutting them, then the actual cooking – it is a time-consuming endeavor. And how long does it take to eat what you prepare? Not so much. The same is true for trading – you should think about what you are about to do and be adaptable. Don’t be afraid of seemingly conflicting information – if you look at charts that cover a longer period of time, you can learn more about the direction of a trend. However, looking at short-term charts can reveal more about the various positions you can take throughout the trend development.
#4 Keep statistics of your trades.
To understand how you’re doing, it’s good to keep track of your success. Measure your wins and losses to calculate your success rate. Divide the money you’ve won over wins, and the money you’ve lost over losses to get the average of each. Calculate your expectancy by the formula [1+ (avg Win/avg Loss)] x (success rate) – 1. If the number you get is, say, .38, that means with the current strategy you can expect 38% returns on each trade.
#5 Embrace the possibility of loss.
Loss is natural; it is likely you won’t always be successful, especially in the beginning while you’re still learning. If you’re just starting out and trading is not your full-time occupation, treat is as a hobby – don’t invest the money for rent and food, but only what you can spare in case you lose. This will help your mindset adjust to the ups and downs and you will come out of it stronger and more confident than ever.
#6 Stay positive!
While being aware of the possibility of a loss is a good way of grounding yourself, it’s important to remain positive. Focus on your wins, no matter how small. Rome wasn’t built in a day after all. Winning a little bit today can help you win a little bit more tomorrow, and a little more the day after that. Be patient and you will see positive change over time!
#7 Choose paper.
There is nothing wrong with being traditional. It is proven that writing things down on paper is a good way to understand them. Try to write about all the deals you make, both winning and losing ones, your methods, how much preparation went into each, and especially the rationale behind them. You can even write about trades you didn’t make and why. This piece of writing can turn into your ultimate weapon as it becomes a study book on trading, a reference point to go back to in your times of trouble. It’s like getting advice from yourself!
We know that these tips might not have the same levels of success for everyone, but since they have worked for countless traders, there’s no reason they won’t work for you. Give them a try and let us know how it goes. You can comment below any other tricks you’re willing to share.