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The most confusing thing about being a beginner is knowing whether you are on the right path. Fortunately there are a lot of other people who have walked this path. This post will be your roadmap to being a successful Forex Trader.
The three pillars of Forex Trading.
It has been discovered that the most successful traders have mastered three qualities. We call these qualities “The three pillars of Forex Trading”. They are Risk Management, Strategy, and Psychology. This means that as a beginner you should be working on these three qualities more than anything else. So the first thing you should realize is that Forex Trading is a skill. And skills can be learned if you are willing to put in the relevant effort.
Risk Management
The most devastating thing for us traders would be to lose all the profits we’ve accumulated in one go. How do you ensure that you don’t lose all of your trading capital at once? The answer to this question is Risk Management. Risk management ensures that you only expose a small portion of your trading capital to the market. This means that every trade you take will have the same risk as a percentage of your trading capital. Forex Made Simple risk management recommends that you risk 1% to 2% of your trading capital in a single trade. The following video teaches you how to apply risk management.
Forex Trading Strategy
Have you ever wondered how forex are able to know whether they should BUY or SELL? The secret is in having what is called a Forex Strategy. The forex market keeps on repeating patterns. And studying these patterns leads to having some sort of a conclusion, “if this happens, then it’s more likely that the market price will increase”. But as a beginner you don’t need to worry a lot about this. There’s tons of profitable strategies and you don’t have to reinvent the wheel.
A strategy allows you to make trading decisions. Without a trading strategy, you are more likely to trade using your emotions. And that ends in horror stories. Therefore, you need to learn at least one strategy and get started with practicing it. Some of my favorite strategies are, the break and retest strategy, impulse-correction-impulse, trendline strategy and more. You can learn these from the Forex Made Simple YouTube Channel.
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Trading Psychology
Trading psychology has to do with happens in your mind when trading. You need to keep a positive mindset when ever you are trading. However, it is not that easy to not be affected by the eratic nature of the forex market. This is a very broad topic. Hence I recommend that you read the book, Trading in the zone, by Mark Douglas.
