5 Tips to Succeed at Trading Forex

by Andrew McGuinness     Jul 16, 2019

Not everyone can make thousands of dollars overnight trading forex; many traders struggle to simply turn a profit on their trading accounts. But the learning curve between an amateur forex trader and a professional forex trader who trades for a living is one that is too large for many people to cross. Many traders end up quitting after a series of failures and losses, never taking enough time to truly get a hang of the forex trading game. In Trading 101, there is nothing more important than experience and expertise. Here are 5 tips to succeed at trading Forex:

1) Pick and Stick to Your Trading Philosophy

The first mistake of all newcomers to forex trading is their prioritizing the goal to make a lot of money in a short amount of time. This leads to new investors making “All In” trades, with all-or-nothing investments in the “Holy Grail” that is bound to make them rich. However, this is just like flipping a coin: there is no sense or logic to it.

Trading professionally means trading with long-term growth in mind. And the best way to achieve long-term growth is to develop your own strategy and stick to it. Do you intend to be a day trader, a long-term investor, or something in between? Figure out what works for you, and stick to it.

2) Don’t Obsess Over the Charts

It can be easy to get addicted to the charts, especially when you first start trading forex. Even successful day traders know that obsessing over the charts can lead to costly errors, such as:

  • Entering bad trades
  • Taking trades off at bad times
  • Pulling back profits at bad times
  • Tightening stops at bad times

Obsessing over the charts leads to the same stress and anxiety that obsessing over anything can lead to. It is mentally unhealthy and psychologically exhausting, and can quickly turn forex trading into a nightmare. If you are the kind of person who needs to check every day, then limit it to once a day, after the market has closed. If you see a great trade, go for it; if not, walk away.

3) Don’t Think of it as Your Money Until It’s Yours

When an investment starts rising, the first thought that will come to mind is, “Oh my god, I’m rich!” You may start imagining the growth continuing and your investment increasing exponentially. You may then start thinking of all the things you can do with this future money, whether it involves going on vacation or paying off your debt.

But here’s the thing: when it comes to trading, there will always come dips and lows after spikes and highs. Getting too worked up over potential money can kill your motivation and enthusiasm, especially when you end up losing it all. Don’t fill yourself with regret. Every dollar you trade with is no longer yours, until you get it back. Which brings us to our next point:

4) If You Can’t Afford to Lose It, Don’t Trade with It

It’s simple advice, but how many of us tend to go “all in” when we see an investment that we are “sure” is going to explode? Most of the time, investments don’t explode, and losing your lifesavings is something you may never recover from.

Never put yourself in a situation where your entire life may change for the worse because of a spur of the moment decision. If losing the money that you put in could cost you your family, marriage, or home, then don’t even think about putting it in.

5) Stay Mentally Fit

Psychology has much more to do with successful trading than economics or financial know-how. You can spend countless hours perfecting your foolproof system, but if you don’t work on your mental strength, you will find yourself buckling under the pressure and stress of the trading life.

Work on your mindset, and stay strong in your head. Only then can you see your trades to the end.

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