Plan How You Will Trade. Strategize, Analyze. Whether you’re new to Currency Trading or a seasoned trader, you can always improve your trading skills. Education is fundamental to successful trading. Successful professional traders do three things that amateurs often forget. They plan a trading strategy, they follow the markets, and they diarize, track, and analyze each of their trades.
Plan How You Will Trade
You may have heard the adage, “if you fail to plan, you plan to fail.” This is particularly true in Forex speculation. Successful traders start with a sound strategy and they stick to it at all times.
Choose the currency pairs that are right for you. Some currency pairs are volatile and move a lot intra-day. Some currency pairs are steady and make slow moves over longer time periods. Based on your risk parameters, decide which currency pairs are best suited to your trading strategy.
Decide how long you plan to stay in a position. Based on your currency pair selection, plan how long you want to hold your positions: minutes, hours, or days. Remember that depending on your account type, having open positions at 5:00pm Eastern Time may incur rollover charges.
Set your targets for the position. Before you take a position you should establish your exit strategy. If the position is a winner, at what rate will you cash out? If the position is a loser, at what rate will you cut your losses? Then, place your stops and limits accordingly.
Follow the Forex Market
Use Forex charts and market analysis to monitor market information and technical levels that affect your positions.
Charts are an indispensable tool to improve trading returns. You can easily recoup the money spent on a charting package from a single well-placed trade based on the analysis from professional charts. Please keep in mind that forex trading involves a high risk of loss, and no guarantee is made that the investment on the charting applications will be recouped.
Market Analysis AvaTrade provides breaking currency news and in-depth analysis where the currency market is, where it’s going, and why it’s going there. You can access detailed market commentary and trading strategies from experienced Forex traders.
Keep a Forex Diary
Most traders fail because they make the same mistakes over and over. A diary can help by keeping track of what works for you and what doesn’t. Used consistently, a well-kept diary is your best friend. When keeping your diary, make sure that it contains at least the following:
1. The date and time you took the position.
2. The rate at which you took the position.
3. The reason you took the position
4. Your strategy for the position.
5. The date and time you exited the position.
6. The rate at which you exited the position.
7. Your profit/loss on the position.
8. Why you exited the position. Did you follow you strategy?
Once you learn to recognize successful trading patterns, you will be able to spot them when they return.
Be aware that trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading.