The forex market is in a constant state of flux and although a certain amount of chance is involved, the right strategy can be the difference between success and failure, writes Jesse Bahl of BFSforex
To succeed in currency trading, it is indispensable for traders to know the currency market they are going to trade properly, including the features of the market and the elements that can move the market. Traders need to know all the economic data, political decisions and social moves that can have great influence on the price movements. They also need to know about interest rate changes and international trade.
The key to long-term forex trading success is to manage the trades properly. It is good for traders to simply plan as much of their trades as possible in advance. By doing so, you can basically pre-manage your trade before it goes live. Therefore, it is essential to do as much of your planning as plausible before you are in the market.
Before diving in, it is important for forex traders to perceive the possible risks in their entirety and make adequate plans to deal with them
Some traders are only attracted by the possibility of making good money and neglect the negative side of currency trading – such as the inherent risk involved in the trade. Before diving in, it is important for forex traders to perceive the possible risks in their entirety and make adequate plans to deal with them. A good forex trader must be able to manage money properly. Traders should have a clear idea of how to invest their money and how to use profits properly in order to reach richer profits.
Newcomers should follow the market trend and not bid against it. They should never overtrade and should know when to stop – and when to draw a limit. Choosing a reliable broker can help you to make a better trading plan, set goals and learn the market trends that matter. Most importantly, however, they can help you to devise the ideal strategy to suit your interests.
Forex trading strategies can fall in and out of favour due to changes in market conditions. Strategies that can help bring profits to the present trades do not necessarily mean that they would be helpful in future trades. Traders need to adjust their strategies in order to accommodate the current market condition.
There are many currency pairs traders are able to choose from, with different pairs having different money making potentials. Currency pairs such as EUR/USD and USD/JPY are the most traded – they have great liquidity and have relatively more potential for making profits from their spreads than the other pairs. Knowing the most active hours to trade certain currency pairs is also important. For example, when London and New York sessions overlap (between 8:00 am and 11:00 am EST), it is good to trade EUR/USD or GBP/USD because prices are able to move quickly, which brings more opportunities to make money.
One of the best ways to trade is to simply strip charts of all unnecessary and lagging indicators. Traders should learn to tread the natural price action that occurs on their charts. Accordingly, traders must obtain a certain level of trading skills and knowledge. By learning to trade with simple price action trading strategies, traders can forego the confusion of lagging indicators.
It is a good tip to record details of every trade and to summarise them at the end of every month; by taking notes, traders are able to learn from their mistakes and gain further experience in forex trading.
There are a number of core philosophies that you need to embrace for success in the forex market, and these can then form the basis of key strategies. The first of these requires discipline. Trading in discipline is the basis of forex trading success. Without discipline or logic, you may win some profits at the very beginning, but lose in the long run. How can an army beat another without well-planned discipline? It is impossible.
You must also learn to trade in patience. The phrase ‘patience is a virtue’ applies in forex as much as the real world. The thing that determines whether you will win in the market is the accuracy you make in every single trade, not the frequency you trade. If you are trading long-term and follow the trends, you can make triple-digit gains by trading just a few times per month. Do not try and force the market to offer you high odds trades – wait until it does naturally. If you are patient, you will be rewarded.
Confidence is also important. Once you understand the market trend and know the lingo you get better with time and thus gain confidence in your decision-making. It is indeed necessary to learn from other forex traders’ experiences, but counting on them too much is also not a good thing. No single trader is identical and will have different habits and ideas. Sometimes they may not trust in their own decisions and so depending on others can be detrimental in that respect.
Know your limit
Finally, you must trade with well-planned money management. If you want to know how to trade forex with minimal losses, planning your money management is essential. You should know exactly how many losses you can afford and how many risks you can bear. You have to make sure that if the worst was to happen, the money you lose temporarily will not have any influences on your normal life.
Knowing one’s limit and having good management of funds will help you make less
Being able to adapt and progress towards the fundamentals of global financial makes BFSforex steadfast against any challenges. BFSforex is a global finance company engaged in providing online trading in foreign currencies, bulk commodities, spot metal and binary options agreements. Following its recent expansion, the company has established offices in many countries around the world, covering Europe, Asia, the Middle East, Africa and Latin America. We recognise the solutions that could earn customers profits in the fairest and most transparent transactional environment on the foreign exchange market, thus providing clients with the option to withdraw swiftly without any hassle.
Nowadays, BFSforex provides all kinds of services for its clients and partners, helping them conduct business management and effective investment. All of our clients can enjoy the same high standard services, regardless of their experience and capital. The team at BFSforex are experts in the monetary and financial markets, which has seen us earn the European CEO award Best STP/ECN Foreign Exchange Provider – 2013.