- Forex trading is believed to be worth nearly $3 trillion a day. What was once the preserve of big banks, financial institutions and professional traders, is now one of the most popular and lucrative online activities. Deregulation combined with advancements in technology mean that anyone with $100 and a reliable internet connection can trade the forex markets. However, approximately only 5% of all forex traders make consistent profits. If you want to become a successful forex trader, follow these top 5 tips for success:
Learn the Chart Basics
When it comes to getting the best forex education possible, you have to learn at least the basics of technical analysis. Although all the charts may seem daunting at first, a little bit of study can go a long way. Also, once you understand the basics of moving averages, support and resistance lines and channels, the rest will follow soon enough. Nowadays, there are plenty of charting tools to ensure even the greenest of novices can understand what is happening and what should happen to an asset’s price.
Choose Your Assets
There are many assets to trade. In fact, probably too many assets. It is important that you focus your time and energy to study just a couple of assets. Each asset has its own nuances and the more you study about a particular asset, the more you will be able to predict its movements. A good asset to choose for beginners is either the EUR/USD or Gold. Both do not fluctuate wildly in price and both have a dearth of information available to learn. Gold is good because as a general rule, gold normally trades inversely to the US dollar. So, when the US dollar goes up, Gold, which is priced in USD, becomes more expensive, less appealing to invest in, and declines in price.
Successful Forex Traders Follow the News
Successful forex trading is not just about technical analysis and the study of charts. The best forex traders have a strong knowledge of fundamental analysis too. Reading the financial news every day will help you understand the bigger picture. There is so much information available that there is no excuse not to keep up-to-date of what is happening in the markets. A good example is with Oil. Iran is the world’s fourth largest oil producer, so when tensions are ramped up in the Middle East, especially between Iran and Saudi Arabia, then oil prices tend to rise.
Keep Your Emotions in Check
Success in forex trading means keeping your emotions in check. It is far too easy to become emotionally attached to a trade. It is vital that make investment decisions based on research and facts, rather than emotions. As soon as you start making forex trading decisions based on emotions, you risk making ill-informed decisions which will cost you money. If you are suffering a losing streak, it is not the time to go chasing losses. A losing streak is time for forex traders to lower investments amounts and rethink trading strategies. A winning streak is time not get carried away and deviate from the plan. You have to resist the temptation to stay focused on why you are winning and stay with the plan.
Forex Trading Should Be Fun
At the end of the day, forex trading should be fun. If you are not enjoying it or losing money you cannot afford to lose; stop. Successful forex traders know how to enjoy their trading and know when to stop. Only invest what you can afford to lose and make sure you allocate the time and energy needed.
Forex trading isn’t rocket science. However, the successful forex traders stay disciplined, they dedicate the time needed to follow the markets and study their chosen assets. There is plenty of forex education guides and tools freely available and no excuse not to use them.