Many people think of forex trading as a fast way to make some easy money. It is true that there are methods to earn quick profits from the frequent currency rate fluctuations in the forex market. However, becoming a profitable forex trader is not possible unless you work on gaining knowledge and developing your skills. The complex technicalities of currency trading may make it look like a rigorous process at first. However, once you understand the true essence of forex trading, you will realise that it is more flexible and dynamic than any other profession. You can freely make your own decisions and get countless options to consider.
Trading is often seen as a science as it involves a lot of calculations. Nevertheless, it is also an art as you can create your own personalised strategies to find the best trading opportunities. Today, I will share 4 tips to follow for mastering the art of forex trading.
- Take Your Time To Comprehend The Trading Concepts
Some beginners don’t spend enough time learning the basic concepts of trading. They skip the important lessons and rush into live trading as they lack the patience to study the market fundamentals in detail. They think that they can understand things better through trial and error but this would only result in losses as you will end up making costly mistakes. Hence, you should invest sufficient time and effort to educate yourself about the intricacies of forex trading.
Comprehending the concepts of trading can be a tough task for an average beginner as there are a lot of technical terms that you have to learn. For example, the basis of all trading activities in the forex market is pips, which is the unit for measuring the smallest price movement in a currency pair. This way, traders can use a standard unit to keep track of the changes in exchange rates. The amount of profit you can make from trade depends on the number of pips by which the price moves in your favour.
Being a new trader, you might feel clueless about the application of pips in a trading process and calculation of pip value can also be a tedious task. But you can use a pip calculator to simplify things. Another tool that you can use for trading with ease is a forex profit calculator that quickly lets you know about your potential earnings of a trade based on the prices and lot size that you enter. By using such tools, you can not only understand the concepts better but also get accurate values for planning your trades.
- Build Trading Discipline
The last tip I want you to follow is building trading discipline. Discipline has become a rare-to-find trait in today’s generation as most of us are impulsive and sticking with a plan does not come naturally. It is true that there are no rigid rules in trading but you must have some personal rules for managing the risk and becoming consistent. Those who easily give in to their urges will end up breaking the rules by making emotional decisions which is something that you need to avoid.
Thus, studying trading psychology is essential to deal with intense feelings in the middle of a trade. Since you cannot get rid of these feelings, practising emotional control is crucial for trading success. But this does not mean that you have to suppress your emotions and trade like a robot. You can stay calm by reminding yourself to focus more on logic and process the emotions in a rational manner.
For example, if you experience anxiety as a trader, it is a sign that you don’t have enough confidence in your strategy or trading skills. You will have to practise more to overcome this fear and move forward with a cautious approach.
- Pick The Perfect Currency pair
If you try to trade with multiple currency pairs at a time, you might not be able to do well with any of those trades. In fact, you won’t be able to focus on more than 1 pair at a time in the initial phase of your trading career as you are new to the volatile forex market. Hence, you should just pay attention to one pair at a time and pick the perfect currency pair based on your trading style and risk tolerance. Don’t forget to consider the trading session as it also affects the price movements in a currency.
For instance, those who want to indulge in day trading should stick to major pairs to find enough trading opportunities. Those who have a low-risk appetite should avoid trading with exotic pairs in any situation. The volatility and liquidity of currency pairs will be different in different trading sessions and you should trade with a pair that provides good trading opportunities during your trading hours. All novice traders are advised to start by trading a major pair to minimise the risk.
EUR/USD is the most popular pair with the highest trading volume and it can be an ideal trading instrument for a beginner. The currency pair you choose must complement your trading strategy. Now, the changes in the exchange rate of currencies may make the calculations complicated for a newbie. However, you can rely on automated trading calculators to calculate important values that are relevant for making trading decisions. They apply real-time conversion rates and give precise and quick results.
- Don’t Be Hesitant To Seek Advice
No matter how much you learn or practice, there are times when you feel lost while looking at the charts. Since trading is a self-employed profession, situations like this can be stressful as you don’t have any superior to guide or help you out. You might have thought that you can handle everything alone but sometimes you must seek advice from other traders who are more experienced and knowledgeable. If you try to figure it out on your own, you might make huge mistakes.
Hence, you should find and connect with genuine traders who can clear your doubts. For this, you can join reliable platforms where there is a community of traders or even forex forums where relevant information is shared by traders and market analysts. But at the same time, you should stay away from social media influencers who try to lure you in by promising unrealistic gains. You cannot trust all the trading signals or forex mentors that you come across online.
Therefore, you have to do some research to find legitimate sources of information. If you don’t want to depend on random strangers, you can look for alternatives like automated trading systems or Expert Advisor robots that are programmed to carry out trading activities with a greater level of accuracy and speed. Such innovative solutions are useful to avoid manual errors and emotional bias in the trading process. Besides this, you can learn more by simply monitoring the performance of these EAs.
In the end, forex trading can be a rewarding venture for anyone who is ready to master the art by taking time to comprehend the trading concepts, build discipline and trade with a suitable currency pair without being hesitant to seek advice.