FX Trading Tips to Stand Out from the Crowd
96% of Forex traders don’t succeed in the long run.
Meaning only 4% of all FX traders globally make it on the foreign exchange. This turns Forex trading into one of the most challenging professions to take upon. However, many of those unsuccessful traders don’t follow any rules or guidelines.
To counter such a behavior, we’ve compiled five tips for profitable trading. Not all of them may suit your trading style, but they can surely help you up your Forex game.
So, let’s dive in!
Educate Yourself before Entering the FX
Like any business field, Forex also has its fundamentals and terminology. Knowing how the market works is your first step to beating the odds.
Starting from the pips and lots, going through order types, leverage, and spread, all the way to Japanese candlesticks and Fibonacci Retracement. Understanding the essentials will keep you prepared for the challenges on the FX.
To be aware of the FX environment is a powerful ally when you engage the trades. “Doing your homework” will prove useful, especially if you want to progress at a higher rate. Nonetheless, don’t rush into massive trades.
Take your time to learn everything you need and only then, try to storm the markets.
Find a Trading Buddy
Every new endeavor is easier with a party.
Walking in on your first day at school, going away for college, presenting an idea to your superiors or starting a business. Having someone beside you is helpful, and Forex doesn’t make an exception to that.
That’s why we started this blog as the three Musketeers of Investing. Any one of us could have done it on their own. But we prefer to stick together, as it accomplishes three vital terms:
- We can count on honest council for all of our investments.
- We also enforce self-management this way – we are aware that each of us follows the trades and strategies of the other two.
We’re not just friends; we are competitive friends. Which makes it breezier to push our strategies to their optimal state. Even if we have a common goal, it’s always sweet to be the most profitable, even among fellow traders.
Use the Best Available Tools
The cool thing about trading Forex nowadays is the access to so many valuable trading tools. Even if you are an old-school “analog” trader, you can still benefit from the most essential tools out there.
Having at least a couple of tools on your side eases the trading process. It saves you time and effort as well.
Here are the most accessible trading tools we use:
- Economic Calendar – simply put, the calendar follows economic events across the world. You can input forecasts, cross-reference events, pinpoint crucial political news, and much more.
- Currency Correlation Tool – this tool shows the statistical measure of how two different currencies “react” to each other. Unless you are sticking to one, and only one, currency pair, it’s important you know how correlation works for different currencies. Be it major or exotic ones.
- Financial News Network – a newswire, targeting the most important financial events around the globe. A bit like the economic calendar but rather focused on interest rates and government regulations regarding currencies.
- A Trading Journal – this one doesn’t need an internet connection to operate properly. You can even do it on paper!
A trading journal lets you follow your progress, study your mistakes, calculate profits, and improve your trading strategy in the long-term.
Get Familiar with Hedging
Hedging in Forex plays as simple insurance against heavy losses.
When you hedge on the FX, you place an order to buy a certain currency, while you open another trade, selling the said currency. This way, you can trade in two opposite directions at the same time.
Just make sure to do proper calculations beforehand. Afterward, there are two common ways the hedging can turn out:
- Your first trade delivers favorably, so you set a stop order on the second one. You can also outright close the second one.
- Your first trade goes against your prediction. You close it before losses go overwhelming and make it up with your second trade.
Learn from Experienced Traders
Even if they’ve gathered immense knowledge, nobody enters the FX as a demigod.
FX education is crucial, but practical experience is as essential as knowing the fundamentals.
It’s a good thing that you can follow experienced traders and learn from them as well.
Many platforms offer statistical data on successful traders. You can engage that data, study it, and try to implement tactics you find promising.
If you have a trading buddy as we do, it’s okay to share experience and polish your methodology even more. Maybe one of us will skyrocket before the other two – this doesn’t mean he’ll keep his secret and continue to stomp us in terms of profits.
Another bonus point towards having a trading party – when one comes up ahead of the others, they can share their knowledge. Then, the rest of the gang can “catch up” to them, maintaining a level of equality. Once this new equality is set, someone else can break through and build up upon it.
Do it enough times, and both you and your trading buddies will form a stellar trading strategy.
This last tip is more of a psychological one.
Every aspiring trader should understand that different strategies suit different trading styles.
Something can work for Derry but not for Rocky. I can think of a strategy for my own trading preferences, and both of them can see it as unreliable.
The key to mastering your trading goes through conquering your own mind. If you can point out your positive and negative sides within trading, you’re one step ahead of so many failed traders.
The Alliance Conclusion
Being an excellent Forex trader requires preparation, determination, and logic. It also relies on analysis, self-awareness, and support. Be it from a trading buddy or trading tools, it’s nice to have a helping hand.
Forming the proper strategy, picking the most promising trades, and keeping a journal about it all. Those aren’t all the keys to Forex success, but they sure are a solid core for your career.
We hope our trading tips do you good. See you on the exchanges!