March 15, 2014 in Forex Strategies
Forex trading is not just about knowing the rules and terminologies of the trade. It is also about the different strategies that traders need to adopt for gaining success in it. The personality of the traders is an important aspect in this regard. Start with examining the strength and weaknesses of your character trait, for instance, how you will feel if you get an opportunity or what will be your feeling, if you suffer a loss. Make sure that you can adapt well to the varied trading conditions in multiple time frames. It is important for the trading style to match with your personality, or you will soon lose the passion for it.
Plan your trade
You need to plan the trade well in advance; this helps in knowing the trading limits and also the goal. This will also help to take prompt action, if the market behaves the way you have predicted it to do. Never get emotionally attached to the trade. Always remember that every day is not the winning day for traders, and you also need to accept the loses open-heartedly. Based on your strategy, you should have the knowledge of the time that is best for buying and selling the currency. In Forex trading, it is important to be patient and wait for the entry point. Always set realistic goals, so that you can fetch consistent returns every year.
Assess the trading methodology
After you have set the financial goals, now it is the time to determine, how to achieve it. You need to assess the trading methodology that you follow to fulfill the goal. You can do this by analyzing the last twenty trades and calculate the profit that you have earned. This can give a clear picture of the effectiveness of the methodology that you have adapted. Ensure that you have ample resources to fund your trading. The capital used in this form of trading is also known as risk capital. Make sure that you can afford to lose some amount of it without affecting your lifestyle.
Test the currency pair
Test the currency pair that you are planning to trade with, in different time frames. You can start with weekly ones and move on to the hourly or daily charts. Try to determine the trend of the market in various time frames, as this can help you to know, how to trade the currency in those time frames. Once you are determined that you will trade with specific currency pair, then do a background research about them. Go through the recent updates and reviews and tally with the data reflected through the price chart. There is no one-size-fit-all trading system available. Trading is more about the individual trader and their mindset and practices.
Track your trading
You need to pick the methodology that will suit your need and test it in different time frames. This can help you to assess the success rate of the methodology that you follow. With appropriate risk management, you can fetch high profits. Measuring the risk and reward ratio and setting the limit is also important. Try to avoid the mistakes that can lead to severe loses. You can keep a track of the date, time and the strategy that you adapted when you entered the market and the same when you exited it. Also keep a note of the rate at which you entered and exited the market. You can also note the profit or loss percentage, as this helps to identify the trend well in the future. Do not forget to use the best binary options broker, it ensures that you will get a good payout. If the interface is user-friendly, it will also help in smooth trading.