How Forex Traders Become Rich (And How You Can Too)
The Winning Traits of a Forex Trader
Cut Your Losses Early
Don’t Fix What’s Not Broken
Know The Right Time To Trade
Know The Best Times To Use Trading Breakouts Versus Range Trading
Rather than letting mere instinct to be your guide, there’s a surer way of determining which of these two essential trading strategies is best to use.
Range trading is best to use during active hours as your strategies are given sufficient time to work.
Trading breakouts are best to use during volatile hours as they can take advantage of the extreme changes that currency pairs will undergo.
Make Use Of An Effective Leverage
How much leverage you allow yourself to use will always have a considerable impact on your trading strategies and its eventual outcomes. There are many different formulas you can use to compute how much leverage you can afford to use, but at the end of the day the factors listed below will prove most important. Keep it conservative. Always apply a stop-loss point to your strategy.
Risk tolerance levels do not have to be proportionate with leverage. There are always exceptions to the rule, and those are simply an inevitable part of the game. Even if things do not go your way, the above traits will serve to minimize your losses and increase your winnings.
We use the complete system above to reduce our losses and give us confirmation for our manual trades. This is why we trade at a 94% success rate and have earned a lot.
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Knowledge & Experience
Those who attempt to day trade without first learning the fundamentals of the market frequently lose money. A day trader should be able to perform technical analysis and understand charts. Charts, on the other hand, can be deceitful if you don't have a thorough understanding of the market you're in and the assets that exist within it.
Winning and losing trades is part of learning. It takes time to remove emotion from trades. Accept losses before facing defeat. Day traders rely largely on market volatility to make money. If a stock moves a lot during the day, it may be appealing to a day trader. This could occur as a result of a variety of factors, such as an earnings report, investor attitude, or even basic news events.
Focus On Managing Your Emotions Instead Of Ignoring Them
Emotions are not your enemy. This is extremely important to understand. Ignoring them will not help you at all. If anything, they will simply make you more prone to bad trading decisions. What’s more critical is being the master of your emotions with the right mindset rather than the other way around.
Avoid Over-analyzing Forex Trading
Some traders are so opposed to the involvement of emotions in their trading strategies that they go to the extremes and over analyze their next steps. Again, doing this will only backfire on you. When you over-analyze and even over-complicate your trading strategies and market trends, you will simply end up confusing yourself. Remember that every complicated equation can be broken down to various simpler equations. In fact, it’s one of the golden rules when writing algebraic equations: the simpler, the better! It’s the same with Forex trading. If a system proves too complicated for you, then forget about it! If it works for another trader, good for them! But don’t let that sway you into knocking your head against the wall. There are many other systems you can try – and some of them will surely prove much more suitable to your personality and preferences.
If you succeed in emotional management, then you will be able to use your emotions to help you stay objective. With emotional management, you’ll know which emotions to believe in more. If you are presented with a very high-risk investment that you do not understand but your friend recommends, what should you do? Greed will tempt you to bet on it, but your instinct for danger will warn you against doing something foolhardy. With successful emotional management, you will be able to take the more objective middle ground instead and that’s to carefully research your options before making any decision.
Constant Training And Practice Leads To Permanent Habits And Mindsets
Consistency and constancy are essential in making price action trading a permanent part of your mindset. It’s not enough to know how price action trading works. It’s not even enough to be aware that emotions can have a positive and negative impact on your life. You should also make a conscious effort to apply your knowledge to your trading decisions. It’s all right to forget these principles once in a while, but don’t let that hinder you from trying again. Having the right mindset will not make your strategies fail-proof, but it can significantly reduce your risks of incurring heavy trading losses. With the right mindset, you become more aware of the pros and cons of your decision and that’s more than what you can say about other traders.
Understand The Power Of Patience
Create a Trading Plan and Stick to It
The best traders in the market always plan ahead and are prepared at all times having compiled an elaborate trading plan after which they always act according to their plans. Creating a plan does not necessarily mean that they trade all the time; novice traders usually accumulate losses because they think that they should be on the market trading all the time. Preparation is an important aspect to any successful trade but at times it’s better to sit tight and wait for the trade to play out; just because the Forex market is open 24/7 does not mean that you should be trading all the time.
Wait for Your Trade Setup to Play Out Good
traders never anticipate how their trades will play out, those who do lose a lot of money in this manner. Exercise patience when your trade plays out and bear in mind that a good trader can be compared to a lion, an amazing predator due to his great stalking skills, and a patient one at that, always waiting for the perfect opportunity to go for the kill and what’s more when he goes for it he rarely misses. Jesse Livermore once said that big money is made by sitting and waiting, and never by thinking, he adds that it’s important to wait for all the factors to tilt in your favor prior to making the trade.
Trust Your Instincts
Accurate gut feelings are indisputable with one of the greatest Forex traders, George Soros revealing that he depended heavily on his instincts when he traded. Soros said that he relied on his animal instincts and that when he suffered from back pain he used the onset of the pain as a sign that something was wrong with his portfolio. This will prompt him to check whether something was amiss when he might have done the contrary, if he had ignored his instincts he might have incurred huge losses.