More and more individuals are taking a look and dabbling with forex trading these days. Often lured in by the promise of quick and easy returns with minimal work on their part. The reality is that most new traders eventually blow an account or two before realizing that forex trading is not a short cut to easy money. Having said that there are a few simple principles that can greatly improve your chances of success in becoming successful in the forex market and achieving your trading goals.
1. Believe in yourself.
As is the case with most things in life, you need to put the initial time and work into developing your craft. But just as important you need to have confidence in yourself to put your education and well thought out trading plan into action. 90% of Forex Trading comes down to psychology and not second guessing yourself part way through a trade. As long as you have taken the time to formulate a sound trading plan and execute that trading plan, for the most part the decision making is done by the time you enter a trade and you need to have confidence in yourself and your trading decision. Many a trader have closed out a trade with a small loss only to have the trade continue on in the predicted direction and reaching their original take profit level.
2. Be prepared to invest the time and have losing trades.
You will have losing trades in Forex period. Anyone who tells you otherwise is lying to you and likely trying to sell you something. This is why it is important to educate yourself, and perfect your trading plan on a demo account until you have built up the confidence to move to a live, real money account. This is what is so great about Forex, you can actually trade to your heart’s content without risking a penny of your own money. Almost every broker out there provides a demo account to practice on, so you really need to take advantage of this. Now there are some psychological differences between trading demo money and trading with real money which will not be encountered until you shift over to a real money account. Again it is important to ease your way into this. Once you have been making consistent and steady profits for at least a few months on a demo account, and feel you are ready to put real money on the line, why not open a micro account. Many brokers will allow you to open an account with as little as $250.00 and trade micro lots. This will expose you to the psychological factors associated with trading real money without risking the farm.
3. What type of trader are you?
There are about as many ways to trade forex as there are people trading the forex market. Some traders seem to need constant action, others are very patient and deliberate in their trading. Eventually you will need to develop a trading style that fits your personality. Again you will take this self discovery journey on a demo account, leaving your real money intact until you are truly ready for live trading.
4. Educate yourself on Forex
There is an old saying that “if it sounds too good to be true it probably is”. Many vendors selling forex software or products play on your emotions by making promises of forex riches with little or no work on your part. Forex is like anything else in life, you get out what you put in. Do yourself a favour if you plan to take forex trading seriously and take the time to educate yourself on forex trading strategies. There are a few really great mentors out there, that will provide you with a real education at a very reasonable cost. I will discuss this a bit more at the end of this article.
5. Avoid the next “shiny object” syndrome
Many new forex traders stumble across a particular trading strategy, try it out for a while, don’t have instant success, and move on to the next “holy grail”. People can go through this cycle for years, moving from one forex system to the next. Now assuming you have come across a legitimate forex system, strategy or plan, and not some push button garbage software, it is still going to take time. As previously mentioned forex trading is more about the trader then even the strategy itself. A very sound and potentially profitable trading strategy will still not provide profitable results for a trader if that trader has not taken the time to make it their own. This takes time, and one should demo trade, demo trade and demo trade some more.
Money management is another key element for success. Risking too much on a single trade, and proper stop loss placement are essential to long term profitability. So before you give up on your current trading strategy, and move on to the next “shiny” new system, ask yourself if you have really taken the time to make the system your own and work on yourself as a trader.
DNB Forex Price Action Membership:
If your looking for a great forex mentor, and a place to begin a sound forex education I would strongly suggest checking out the DNB Forex Price Action War Room. The DNB membership provides a very thorough and complete trading guide (Price Action Protocol), chart of the day analysis, weekly market analysis, an interactive and highly educational chat forum, and much more. I have previously posted a review of the DNB forex price action membership on my blog which you can check out by clicking here.
You can also check out the DNB Forex Price Action Course directly for yourself by clicking here.
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