How to Become a Successful Forex Trader
In today's multifaceted society, many people are seeking alternative ways to make money. Thanks to the active and dynamic world of online forex trading, it has never been easier to become a forex trader from home.
Forex trading has changed significantly over the past decade. This is largely down to technological advancements that have given retail traders access to forex trading platforms through an online forex broker. Thanks to ultra-fast streaming technology, real-time pricing, innovative computer systems and more, forex trading is available with ease – to anyone – at the click of a button.
Even though online trading is easy to access, there is definitely no 'quick fix' when it comes to successful forex trading and it is essential that you understand the ins and outs of the market in order to become an expert trader. There are also a number of skills you need in order to successfully trade in this potentially
profitable market and make a regular income from your trades. Without these skills, you will end up failing to achieve desirable results, and ultimately losing money.
This article isn't simply about how to become a forex trader, but how to become a good forex trader. Here, we outline the intricacies of forex trading and teach you how to become a successful forex trader, whether you are just getting started or already possess trading experience:
How to become a professional forex trader
One of the first steps you need to take in order to become a professional forex trader is to improve your forex education. Learn to trade forex by joining forex trading webinars and seminars, where you will elevate your knowledge and become well-acquainted with the latest cutting-edge information, strategies and trends. Improving your knowledge and education is also of paramount importance as it teaches you about the risks involved in trading, including the potential for losses.
In addition to attending webinars or seminars, you should read as much as possible about the foreign exchange market in order to improve your understanding of it – including the risks involved. At Admiral Markets, we maintain a vast database of trading information including articles, tutorials, FAQs and much more, all of which is designed to help you to stay afloat of current market conditions as you evolve your skills in financial trading and remain aware of the potential for losses. Continually educating yourself about forex will help you to enter the trading platform with a heightened level of confidence and even greater opportunities to win.
2. Demo trade
As tempting as it is to jump right in with live trading, this can be a recipe for failure. Most experts agree that the best way to familiarise yourself with the market is to demo trade first. It's recommended to execute between 10 and 20 trades before trading real money on a live trading account, as this will give you plenty of time to develop and test out your trading strategy in real time and to practice following a trading plan. It's also ideal for educational purposes, giving brand new traders a risk-free insight into the market.
Demo trading also gives you the opportunity to navigate the platform with confidence and familiarise yourself with all the tools and features, so that when the time comes to trade live, you feel comfortable and able to locate any necessary functions with ease. That being said, it is vital to switch to a live trading account as soon as you feel confident enough to do so, as this is the only way you will become a currency trader. Once you have a good understanding of the market and know the risks involved with trading, you should be ready to trade live. This should take no less than one month but no more than three.
3. Develop an Effective Trading Strategy
In order to establish yourself as an accomplished trader you need to develop a trading strategy, which should be simple, easy to follow and unique to your own trading personality. It should be well-thought-out and in-depth, taking into consideration every possible outcome.
There are countless trading strategies to choose from, with some of the most well-known including scalping, swing trading, day trading and position trading, all of which work well for beginners and advanced traders alike. It's vital that you feel comfortable with your chosen strategy, so practice different techniques on a demo account to determine what feels right for you.
Next, you need to analyse your chosen currency pair, and there are many different ways to do so. Whether you wish to perform fundamental analysis or technical market analysis (or a combination of the two), be sure to develop a plan that is fool proof and effective.
With fundamental analysis, you will need to interpret macro and micro economic indicators related to your chosen currency pairs, and will need to keep track of the latest news releases by following an economic calendar very closely.
With technical analysis, you will need to possess a solid understanding of some high-quality technical indicators in order to forecast future exchange rates. Some examples include Fibonacci levels, moving averages and Bollinger bands, and you should possess an understanding of at least three or four indicators in order to effectively analyse the market through technical analysis.
Your forex trading strategy is your armour against all market conditions. Without it you will end up taking a gamble and basing your trading decisions on luck, greed, fear, faith, or any combination of these emotions.
4. Set stop loss orders for every trade
One of the most important ways to become a professional forex trader is to consistently implement risk limits. This predetermines how much money you are willing to risk – and lose – before you close a trade. Before any trade is placed it should always have a pre-defined entry, stop and profit target. These can only be placed with thorough market knowledge, understanding of the currency pair and a clear insight into future market activity.
Some key points to remember are:
5.Eliminate emotional trading
Another crucial element to your success is having the ability to control your emotions. Emotions such as fear, greed, hope and faith are some of the most common contributors to one's forex trading failures. Once you begin trading on any one of these emotions your failure is imminent, as your perception of the market will be shrouded by your emotions.
For this reason it is essential to learn how to become a trader who trades with little or no emotion. The best way to achieve this is to follow your tried and tested trading strategy very carefully. Accept that losses are an inevitable part of forex trading and never take them personally. As with all endeavours in life we all learn from our mistakes, so accept trading mistakes as a learning curve and move on from them.
Also, never try to outsmart the market, which ebbs and flows on an almost never-ending basis. Take control of the market by trading a well-researched strategy that enables you to trade what you see, not what you think. In doing so, you will be effectively managing risk while enhancing your chances of becoming an expert trader who aims for regular profits from your trades.
Forex trading has the potential to become a truly profitable activity when carried out correctly, and a career from online trading is attainable to those with the right approach, provided you trade with caution and care while understanding the risks involved. By following the above points, you have the potential to achieve forex trading success and become an accomplished forex trader who can trade from anywhere in the world.