Learn the secrets to acquiring good income from the forex market09 February, 2018 by Fred Vold in Forex Lifestyle
Whether you are a casual investor or a hard core full-time forex trader, there are a few secrets you absolutely need to know in order to be successful in the markets. Success, whether in investing or in life in general doesn’t happen by itself. For it to happen, you need to proactively take steps to facilitate it. In this article, we have listed 8 secrets that we believe you absolutely need to know in order to achieve success as an independent forex trader:
- Follow a strict trading routine. This is the first and probably the most important item on this list. If you want to earn a living as a professional forex trader, you need to start acting like one. A strict daily and weekly routine is often what differentiates amateurs from the professionals in the forex market, so make sure you have a routine and stick with it. Your trading routine should consist of items such as weekly market scanning and analysis, checking the economic calendar, checking financial news, setting price alerts, etc.
- Maintain a detailed trading journal. Your trading journal is in fact one of your most important resources as a trader. Your trading journal will help you go over your past trades, learn from your mistakes, and optimize your entire trading process. Make sure you record down all relevant information regarding your trades in the journal, including a snapshot of the chart, your strategy, thought process, and overall feeling about the trade. This can become immensely helpful later when you review your trades in order to optimize your trading process.
- Stop strategy hopping. Most beginning traders make the mistake of constantly looking for new strategies because they believe something must be wrong with their current strategy. I’m going to reveal a secret to you: Chances are there is nothing wrong with your strategy. Instead, take a closer look at how you implement the strategy. Are you following all your rules regarding position sizing and risk management correctly? Are you trading in the right market, with conditions suited to your strategy? If not, start with that before scrapping your existing forex strategies.
- Pay attention to the news. Many traders, especially retail traders, wrongly believe that news is just a distraction from their trading. These traders trade based on price action and technical analysis, and therefore will not let news affect their judgment. However, what you may not know is that most professional traders actually do pay attention to the news. The professionals are experts at combining technical analysis with fundamental analysis and real-world news events, and this is what gives them an edge in the markets over the retail guys.
- Follow a trading plan. To follow a plan, you need to first have a plan. If you trade without having a well-defined plan, you are per definition gambling, and your money would probably be better spent at a casino. Your plan should be written down on a piece of paper and not just exist in your head. The reason for that is so that you can use it as a checklist every time you are about to make a trade to ensure all conditions for taking the trade are met. This greatly reduces the chances of you making silly trading mistakes because you got bored in front of your screens or acted on impulse.
- Keep a positive mindset. If you are in the market for the long-run, keeping a healthy mindset about trading is crucial. We all know that trading can be a lonely endeavor and an emotional rollercoaster. In order to stay in the game, you need to find a way to keep your motivation up during difficult times and losing streaks. One common technique for doing this is to make sure to reward yourself every time you have made some good money in the markets.
- Keep your trading costs low. Keep in mind that costs add up. You don’t need four monitors on your computer to start trading. In fact, your laptop will do the job just fine if you can stay organized and trade on the slightly higher timeframes. Once you have learned the basics, feel free to buy an extra screen or two and invest in custom indictors or trading signals via your trading platform if you feel the need for that.
- Know when to trade. Most forex trading strategies are profitable only under certain market conditions. The same goes for many of the technical indicators that are popular among forex traders. For example, the MACD indicator works very well in a trending market, but provides unreliable signals during a ranging market. Therefore, know how to recognize the markets you want to trade. Experienced traders can see this from a quick glimpse on the chart, and they easily distinguish between a “beautiful chart” and an “ugly chart”. Learn what market conditions your trading strategy works in, and chances are you are well on your way to becoming a successful independent forex trader.
If you can follow these 8 pieces of wisdom every day in your trading career, chances are your profits will follow sooner than you expected. Nobody is born with this knowledge, and it will therefore be a great advantage for you if you can learn these things from other people who have made the mistakes before you.
Don’t try to reinvent trading. Instead, follow what other successful traders have done in the past and let them guide you on your own journey to success.