Despite what the ‘gurus’ will tell you, learning how to trade forex for consistent profits isn’t difficult. However, like with any endeavour, top performers do things differently to everyone else. After spending time with elite forex traders, I can reveal their habits and strategies. You will still need to put in a lot of hard work. However, you will have a ‘road map’ to one of the top 5% of all forex traders.
Trading strategy
In forex trading, average performers are broke. A majority of traders never make even a dollar in profit. This isn’t because they are less intelligent. They simply fall into the same traps most people do. One of the skills you will need to develop is deciding which training materials to use. There is a lot of money to be made by teaching people how to trade. You will come across courses promising to make you a forex millionaire. 99% of the time it is marketing hype. There are costs to jumping from one course to the other, not to talk about the possibility of implementing wrong information. As a rule of thumb, look for ‘gurus’ who place more emphasis on strategy and hard work than living the ‘life of a millionaire’. More often than not, those who sell the dream of success can’t help you. Their courses are weak. All you paid for was false hope.
All of the major forex brokers have mobile apps. However, I am yet to meet a top forex trader who trades from their phone. You simply don’t have enough information on one screen to make a decision. The importance of your trading setupis less talked about; however, it can have a big difference. Like with any occupation, you need the right tools for the job. Firstly, you need a decent computer to trade from. Stuttering and/or a slow internet connection can affect your trading. Secondly, a dual screen setup enables you to see more information at a glance. You can pick up a good desktop tower and dual monitor for about $200 on eBay. Secondly, you want a quiet area to trade in. If you have noisy children or needy relatives, you will need to reach an understanding.
There is a difference between trading with your heart vs trading with a strategy. A majority of traders let emotions affect performance. This is because the fear of losing their investment causes them to take unnecessarily big risks. There is also a sense of impatience because they want to get the Lamborghini and mansion quickly. More often than not, they lose all their investment. Top forex traders take calculated risks. They treat it as a marathon, not a race. As a result, they invest with the knowledge that they can lose it all. And if they get into a bad run of form, it won’t affect their lifestyle.
Risk management
As a general rule, don’t take out a loan or use a credit card to trade with. You can invest a small amount of money and build it slowly until you have big capital. This is a smart strategy even if you have a lot of money to invest. It is better to lose small as you learn and implement. This is a process which takes time.
The forex markets are fluid and complex. One breaking news story can shift the markets very quickly. Elite traders don’t know every single currency pair, and how all the global markets are connected. It would be silly to even attempt this. Most of them actually trade one or 2 currency pairs. I know one who only trades EUR/USD and GBP/EUR and makes 5 figures in profit each month. Notably, by only trading 2 currency pairs, they are focused, and can, therefore, carry out a comprehensive analysis. Moreover, if there is little opportunity in one market, they can easily switch to the other.
Forex trading isn’t a form of gambling. The moment you feel yourself trying to dig out of a bad position by taking more risks, you are gambling. Trading and gambling release the same endorphins and adrenaline into the brain. As a result, you can feel euphoric even though you are losing. This is why some traders make a lot of money and then invest it all back and end up losing it all. On a subconscious level, they are addicted to the thrill of trading rather than the monetary reward. If you are in a bad patch of results, stop and re-strategise. If the chart is volatile, be patient and wait for better opportunities. You might also need to carry out deeper analysis and take more factors into account. This way of problem-solving helps to turn a consistent profit.
The importance of community
Forex is a lot easier when you are part of a community. This enables you to bounce ideas off each other and discover who the best brokers are. Some traders like to ‘keep it in the family’ and train other relatives. Trading forex at a high level requires a tremendous amount of commitment and mental fortitude. Every now and then you need friends in your corner cheering you on. There are numerous Facebook groups and Reddit communities based on forex. A lot of top Forex traders hang out on Quora and answer questions in detail. You can also get free training from reputable sites.
Final thoughts
In conclusion, I hope this article makes a difference in your growth as a forex trader. To get what few people have, you must be willing to do what few people are willing to do. Therefore, guessing your trades might win you some money, but it isn’t a consistent strategy. Trading on a phone is incredibly convenient; however, you don’t have enough data to reach an intelligent decision. In brief, here is what works:
1) Trade using a reliable computer and dual monitor in a quiet part of your home.
2) Invest small while building up your strategy and confidence.
3) Don’t get into debt to trade.
4) Join a community.
5) Remain focused and committed.
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