As a new trader it can be easy to become obsessed with chasing profits and this will almost definitely lead to problems. The anxiety which surrounds chasing profits can cloud your judgement and lead to mistakes which will cause losses.
Therefore, our first bit of advice in your journey to becoming a master Forex trader, is to dispense with any unrealistic objectives. The prospect of becoming rich in just a few sessions of trading Forex is extremely unlikely and, believing any differently, may cause you to operate with greater risk, jeopardising your capital.
Before making any substantial commitments, get a good understanding of the fundamental aspects of the market. Assess your capital at hand, read trader testimonials so you have realistic expectations of returns and research the markets and currency pairs you are interested in. If you don't feel comfortable, don't invest your money in Forex, even if it might be profitable. This applies to any market.
However, if you think that your investment approach would be suitable for the Forex market, go ahead!
But make sure you keep in mind the following:
Once you have chosen to become a trader, the next step is to devise a trading strategy. There is no right or wrong way to trade per se, what really matters is that you define the strategy you will use.
Sometimes you will see that a particular strategy works well for a currency pair in a given market, whilst another strategy is more suitable for the same pair in a different market.
In order to become a successful Forex trader, try to focus on creating your trading strategy in line with your individual risk profile. Research trading tool, study techniques and think how they can be implemented in your strategy. Study how the market behaves and learn how the trading industry works.
Once you have a set strategy, don't forget to do extensive tests by backtesting your favourite markets until you feel secure in your strategy.
Emotions can be the worst enemy for people who want to become Forex traders. To become a successful trader, you must understand the mechanics of the Forex market, trust your analysis and follow the rules of your trading strategy.
When trading, make sure you have a clear head and are making informed and rational decisions. Try to manage your stress levels. Of course, this is easier said than done, but it can be the difference between a successful trader and an unsuccessful one.
If you are down on capital, do not trade. The same goes for being excessively confident and excited after a winning streak - refrain from trading or make sure you are knowledgable about your mental state. Overconfidence can lead to great losses.
Trade Risk Free With an Admiral Markets Demo Account
One of the best ways to prepare yourself for the emotions of trading is by testing your skills on a free demo account.
Instead of heading straight to the live markets and putting your capital at risk, you can avoid the risk altogether and simply practice until you are ready to transition to live trading.
Staying up to date with market news is vital! Many market movements are driven by news, central bank announcements, political events or the expectation of any of these. This is what's called fundamental trading.
Even if you are a technical trader, meaning someone who makes trades based on chart analysis of a market instrument, you should still pay close attention to fundamental news, since such events are a key factor in market movements. For example, if you have a reliable trading strategy and several technical indicators that indicate a long trade, check the forex calendar to make sure there are no upcoming events which could negatively impact your trade. Even if your technical trading strategy works perfectly, fundamental news can change everything!
Reprinted from admiralmarket.com, the copyright all reserved by the original author.