The Top 5 Secrets for Successful Forex Trading
Being a part time forex trader can be a good way of supplementing your income. No matter how tight your schedule or situation is, you can still find time to trade. For you to be a successful forex trader, you must have some special skills and knowledge. These are the skills required to make you a confident and successful trader. Discussed below are 5 helpful tips that will enable you to become a successful forex trader.
1. Select the Right Currency Pairs to Trade
Forex Trading can be done at any time of the day. However, experts are of the opinion that the best times to trade are during peak hours due to the guaranteed liquidity. Liquidity in forex refers to the ability of a trader to spot buy or sell signals due to the market being active. If you are a beginner, experts advise that you should start by trading the US dollar against other currencies. With time, you will get to learn how other currencies operate. The most active currency pairs worth trying out include USD/EUR, USD/JPY, USD/CHF, USD/CAD & USD/AUD. If you are highly experienced, EUR/GPB, EUR/JPY & EUR/CHF also offer good liquidities. For beginners, however, its highly advisable that you start trading the EUR/USD pair as this is the most frequently traded currency pair. There is also plenty of information that might be helpful in making trading decisions.
2. Make Use of Automated Trading Systems
You could choose to make use of automated trading programs. There are plenty of automated trading programs that can be of help. Some of these programs can monitor currency movements in real time and place market orders automatically. However, you must impose sell, buy or stop orders. Some of the more sophisticated programs can automatically order a trade even without your input. For beginners, there are programs that will make fully automated trading decisions. The benefit of using automated trading programs is that the decisions to either buy or sell are unemotional. Look around and read online reviews regarding a specific program before you settle on one.
3. Be Disciplined
If you do not use automated trading systems, discipline is essential for your success. Scalpers are advised to be contented with smaller profits once they have materialized as opposed to waiting for wider spreads and larger profits. This is easier said than done. It requires very high levels of discipline. If for instance, you have made a 30% profit from a trade, you should be disciplined enough to take home the gains as opposed to anticipating a further increase to 50%. This is because market liquidity could wipe out your gains in a matter of minutes. To cushion yourself against sudden markets reversals, its important that you put in place stop and trailing market orders. You should set your stop loss at an amount that you are comfortable losing.
4. Keep a Forex Diary
Most traders are not successful because they keep repeating the same mistakes all the time. Having a diary will help you keep track of the good and the bad. Make your diary your best friend. Ensure that your diary is detailed enough so that with just a glance, you are able to get a clear picture of how a trade performed. Your diary must include the date you took a trade, what motivated you to take the position, what strategies you applied before making the decision to trade, the prevailing rate when you took the trade and why you exited the trade. A diary will enable you to learn successful trading patterns. Also open a demo account where you can practice getting used to placing trades. Get a good feel for what you are doing and become comfortable doing so. Plus 500 demo would be a good place to start.
5. Keep Track of the Forex Market
Use market analysis, technical analysis, fundamental analysis and forex charts to monitor the performance of the world major currencies. Make use of forex charts as they can improve your trading returns. A single, well-placed trade can enable you to recoup any previous losses. Forex charts will enable you to spot trends and patterns. Fundamental analysis is also important when trading because this provides the latest news on currencies and also offers an in-depth analysis on where forex markets are headed to. This information can be readily accessed from leading forex brokers via their websites. For you to be successful, always be on the alert for any major economic and financial news. For instance, get to understand the effect of Brexit on the Euro.