Forex Trading is a challenge of delight if you have a solid understanding and a right mind. Making impulsive trades without a well thought-out plan often ends with traders’ tears. Here are the must-haves of trading, for you to become a successful trader.
Strategy
Trading without a strategy reflects poorly on your results. Success or failure, it all depends on the decision you make. Trading plans act as a map that gives an outline on what and when to trade. Follow your strategy with absolute precision to make more profitable trades.
Stop-loss
Stop-loss is a triggering action to protect your capital when the market turns against you. It is nerve-racking to be watchful of your trades at the time of abrupt surges and declines, as we are not hardwired to act faster than the fluctuations of the market.
Stop-loss is a position you mark to sell/buy automatically when the price hits to reduce the incurring loss.
Money Management
You reach nowhere without proper money management. It is a primary component to increment your profits in trading.
The risk involved in forex trading cannot be taken out of the equation, but it can be minimized. Investing bulk amount causes great losses, if you are unsure of the trade and strategy. Test it out by staying low.
Use your profit effectively to grow your account over time. Remember, float with the trend to retain your capital.
Position Sizing
Proper position sizing is the key element to overcome risk. Position sizing is setting the correct amount of units to buy or sell a currency pair.
Here is a controversial statement that gives you a better understanding about position sizing: “Risk too little and your account won't grow; risk too much and your account can be depleted in a hurry”.
Risk management
You’ll never know the future. Your survival in forex trading relatively depends on the risk management. It is a collation of ideas and strategies that lessen the risk.
Long-term profitable trading in the global market is an unattainable task without risk management. Accept that you can not be right all the time as your analysis is based on probabilities and previous scenarios. It can evolve at any time.
Bonus: Keep your emotions at bay
Greed is a dangerous emotion that every trader should defeat. If you want to be a successful forex trader, then you have to overcome greed.
Fear is ubiquitous. It can derationalize your thoughts and drag you away from making the right decision.
Greed and fear are universal! Greed pushes your act and fear pulls your act. To make a rigid decision as a forex trader keep out the emotions, especially greed and fear.
The size of gains and losses are unequal in trading. Traders must realize that not every deal is going to be fruitful. So, it is advisable to adopt better strategies to diminish risk, and progress in trading.
