The success rate and profitability of forex trading is subject to the combination of the following seven factors - precise technical analysis, skillful metatrader operation, simple trend following, effective demo account management, emotion-independent psychology and appropriate strategy selection.
Basic conditions to manage
You are decided to start to trade forex in order to earn money. First of all you have to learn how to work with your trading platform and how to technically operate your account. Then you need to know the basics of the technical analysis without which you are lost.
Each broker has its own trading platform while most of them provide the basic Metatrader 4 with a detailed instruction manual. The trading platform is in fact the means via which you are able to connect to your trading account and to the forex market. We will not explain the Metatrader 4 operation here. Any broke will provide it.
Technical analysis is number one
Forex market behaves very technically for most of the time, except the news release time (about 30 minutes before the news and 1 hour after the news release). The basic principles of forex market move includes supports and resistances, that is prices where the market was sometimes in the past, these highest and lowest prices on the market usually work very well meaning that the market will have a tendency to test these lines and will either bounce back from these prices or will try to break them. These levels are watched very carefully by all the traders so be careful here.
Trend as the market mover
Another strong aspect of market is the trend. You can have either an uptrend (growing market) or downtrend (falling market). If there is a strong uptrend, it is not advisable to sell this market unless you target just a few pips. Most traders try to follow the trend that is why the trend works very well. Moreover, it is usually possible to draw trendlines reflecting the market movement in one direction. This is also a good indicator of a healthy trend.
Forex demo account needed
After this you are advised to open a demo account on which you can try all you have learnt about forex trading. You will get real market prices in real time without the threat of losing money. Everything here looks like on a real account.
Psychology of trader
As soon as you manage all the technical and trading aspects of your trading platform and demo trading account, as soon as you discover how the market moves and what strategy might be suitable for you (we will discuss several possible trading strategies in one of our next articles), open a small real account. Here you will learn how your psychology works with real money.
You have to know that you will not be a millionaire in one, even not in three years. Forex trading is about patience and lots of discipline. Any trading strategy is only successful when kept long-term. You have to keep the rules you stated in the beginning and be very consistent to reach your goal. Forex is always about the journey, not the destination.
While trading, you keep learning all the time. So keep an open mind as a trader. Do not be nervous, do not let your psychology break your trading strategy. Watch the market changes and modify your strategy accordingly.
The basic point of forex trading is simplicity. Trading does not have to be difficult, it must be as simple as possible, however, many traders are trying to make the trading harder than it really is.
Bear in mind that you trade alone, you are the one who defines the trading strategy, you are the one who makes decisions, never break your initial strategy, be consistent, strict and follow the rules. Real traders are self-motivated and self-disciplined. If you are not like them, do not trade forex. Discipline and patience are the basic stones of any forex trading strategy
Losing trades as a necessity in Forex trading
Don’t be afraid of failure. All traders have losing trades. All traders go through sometimes long periods of losing money. Just keep on and be patient. The market will give you the fruits when it moves into your direction. Just keep your money management tight and follow your strategy
Good luck !