Anyone trading on the forex market will know that the difference between amateur traders and the professionals can be the difference between making and losing money. Many professional traders use similar strategies to ensure that they minimise the risks and optimise each trade to increase their profitability and these can be used by anyone who wants to improve their performance in the forex market.
Make your plan the centre of your strategy
One thing which every professional trader has in common is meticulous planning. All successful traders will have refined the strategy which works for them over the course of their trading history and this will often mean sticking to the things that have worked for them in the past. Many forex traders have favorite currency pairs which they have studied over time and learn to predict their movements more accurately than others. Some pairs will move a lot over the course of a day, whereas others will have slower fluctuations, so it is important to pick pairs which suit your trading style and risk parameters.
Consider your exit strategy
Whenever you take a position, you should always have one eye on your plans to cash out, whether you are expecting to do so within a few minutes or not for a number of days. You need to ensure that you define your limits for cutting losses and also choose when you will capitalise on any gains.
You will also need to be aware that having open positions may incur rollover charges depending on your account, so consider whether any potential profits will be worth it.
Keep track of the market
Whatever your trading strategy, keeping an eye on the markets and learning what kind of fluctuations are normal and which be anomalous is an important part of understanding how best to trade using that knowledge. Using forex charts and news to monitor the progress of the markets is important and an investment in software packages which will help you to do that can often be recouped fairly quickly. Because the markets move fast, breaking news will often have an impact on the currency values which means that keeping up with world news could help you to predict changes in the forex markets.
Keep track of your trades
Because the world of forex trading can move quickly and you sometimes have to make snap decisions, it is always best to keep a record of what you have done and why. You don’t want to look back at your actions and have no idea what drove them, so it is always best to keep a log of the date and time, entry and exit rates, strategy, overall profit or loss and any other important information you have about any given trade. Not only will this help you to keep track of what you are doing and why, but it will also help you to identify patterns and predict movements.
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