When you are speaking about Forex trading, it’s always about the money. Who would want to lose money? That too, when the stuff you are trading itself is money. Without much ado, let us chase right to the point and try to learn about squeezing maximum profits out of our forex trading.
Here are 9 keys to open the locks to lucrative Forex trades:
1) Focus on Quality rather than Quantity
There are umpteen trading strategies that use a variety of different indicators and signals in the currency or forex trading market. But that does not mean that you pursue each one of them and end up looking like a dog snapping at the fleas that are chewing on 100 different parts of his body.
Recognize and realize that successful trading of forex is not about the quantity or number of strategies that you apply or indicators that you use. It’s always about the quality of mastery that you can command over each of them.
Maybe it’s just one single forex trading strategy, but master it to such an extent that you could wake up from coma one day and instantly get back to applying that particular trading strategy to your forex trading, without batting an eyelid.
And how do you know if you have reached that kind of fluid mastery? Well, if you ask me then I would ask you to do 2 things. First of all, try explaining the strategy to your five-year old kid. Second, repeat successful trades using that technique.
If you can efficaciously do both of these, then pat yourself on your back. You, my dear friend are hereby declared the MASTER of that particular forex trading strategy.
2) Don’t Make It a Matter of Chances
There are many Forex traders out there who seem to base each of their trades on gut feeling and are almost always on an emotional roller coaster after entering their trades in the market. This is purely irrational and highly dangerous. If you use your logic and reasoning and have a price action trading plan to target, then you are automatically increasing your chances of success.
Having a plan chalked out means you are capable of recognizing how the market works and you can immediately spot an opportunity when it forms. Once you see a set-up taking shape in the market trends, you do not waste even a millisecond and jump into it and grab the bull by is horns.
That is the right way to profitable forex trading and forex traders who do this have nothing to worry much or lose sleep over. Trust me, they can even set-up trades, place a stop and target and then go blissfully to engage in any activity that they enjoy the most.
3) Maintain a Record of Your Forex Trades
Records are boring and no one wants anything to do with boring. But if I say that maintaining a consistent record of your usual forex trades is not only necessary but one of the crucial keys to unlocking forex trade profits and treasures, then why in the world would you not do it? Give me one good reason please.
Yeah, you read that right. Maintaining a forex trading journal may not be a smooth and interesting thing to do, but it definitely is lucrative. That is how you can keep track of what works and what does not.
As I mentioned previously, you certainly do not want to reduce your forex trades to a game of chance. You must have a sure-shot and clear record of what you did last time to reap the profits. And you also need a record of the loss-producing dangerous moves that you took, so that you steer clear away from all of them, next time and every time you trade currencies.
4) Forex Markets Don’t Work for You
Hmm, that may sound a bit rude, but the sooner that you accept the fact, the better for you. The economic or the currency market is not obliged to favor you or any other Forex trader for that matter. But if you want to milk out all the benefits out of the markets, you have to design your work in such a way that it favors the market trends.
So to cut out all the unproductive hours that you plan to waste on getting trade secrets and opinions of some financial news analysts. Unless the live and current movements of price chart in front of your eyes is truly and clearly reflecting a positive set-up, do not trade.
5) Don’t Trade Your Peace
Even if you are promised billions of dollars in exchange for your mental peace, do not trade. Because after all you are winning some to lose all. To cut a long story short, never trade more than you can afford to lose. If you are comfortable losing a million, then go ahead and trade that million dollar.
But if you can’t afford to lose even one hundred bucks, then stop right there buddy. What matters most in becoming a successful Forex trader is the number that affects your peace of mind, not the numbers reflected in your bank account. You may have millions lying in your account as bank balance, but trade only as much as you can comfortably and peacefully lose (in case of an unfortunate trade)
6) Be Consistent
Consistency is key and I am sure you heard that a million times before. But have you ever tried to implement that idea as consistently as you have heard of it? Forex trades or any trades for that matter have their own ups and downs.
No business in the world can guarantee only profits and zero losses. But sticking to what you know is right is the key to reaping success. Don’t make a move here and a move there and then expect to gain profits in the currency trade.
You have to be consistent and stick to the right moves and you will certainly reap your rewards.
7) Don’t lose Confidence
Speaking of consistency, you also need to know how important it is to maintain your confidence. Many traders master a technique, implement it and even reap a profit or two from it. But then comes in their first loss, and they lose all confidence.
No matter how great your preparation, there are bound to be some highs and lows when you involve yourself in forex trading. Do not let a few lows shake up your confidence levels.
It is the panicking and freaking out that are contributing more towards Forex trading failures, rather than anything else. But it’s a rare few of the forex traders who realize this and even rarer are those who realize this in time.
Keep repeating to yourself that you are indeed on the right track and there is absolutely no need to get anxious or nervous. Just hang in there and motivate yourself to keep going and half the battle is won.
8) Reward Yourself at the Right Time
Though every Forex trader out there takes a plunge into forex trading with an intention of reaping rewards, there are high possibilities of losing track of this over time. It could be due to greed, due to frequent losses or maybe due to circumstances, but for some reason or the other, it is common among Forex traders to hesitate from removing the rewards from their initial capital.
They keep reinvesting and inflating the original amount that they were ready to invest when they were just beginning to trade money.
Not only does this inflate your risks, but it is also against rules of profitable forex trading and also going to prove detrimental in the long run.
Removing rewards or profits from your trading will not only help in insulating your initial capital, but also helps in motivating you to keep going. And I personally feel that this is even more advantageous than the monetary benefit, because no matter how many master strokes you have learnt or profits you have earned, everything can come to a standstill if you are not motivated enough to continue.
9) Avoid the Green Eyed Greed Monster
Greed is possibly the most dominant cause for failure of Forex traders. I have some effective tips for those who feel it difficult to keep away from the greed monster.
Target a goal before you enter the trade. It is always recommended to have your plan set in stone BEFORE you enter the trade because you really have no time once you are inside and LIVE. Once you are in, you are in a high voltage environment and in no position to think rationally or logically. No matter how strongly your “intuition” or “gut instinct” thinks that the markets are going to change, they are just side effects of the high energy situation. It is important to understand that the right time to take decisions about your exit strategy or exit point is NOT during your live trade. It is always BEFORE you even enter the trade. Your entire forex trading profit strategy is based on a certain price action chart and you plunge into live trade when you see the set-up forming.
Another trap that most traders fall into is trying to fiddle with stop loss levels during live trades. They have a particular stop loss decided before entry in to live trade, but once they start trading live, they want to move the stop loss further because they sense that things are not going according to what THEY expected. They clearly know that they are about to encounter a loss and this is the exact point where emotion tries to take over reason and discipline and rules. They now start hoping for a profitable change in the market and this hope is totally based on emotions and NOT any kind of logic. Never start fiddling with your stop loss levels AFTER entry in to live trade. I think that these traders fall into this trap because of the same old green eyed monster called greed.
Another tip to stay away from greed is to be satisfied with a fine 1:2 risk reward profit. If there is no understandable purpose to attempt at trailing your stop, then do not think twice to dive in for the profit! You must realize that the Forex market is on constant ebb and flow and the chances of it taking a move against you is more than its sway in your favor if it’s already rewarded you with a profit amount twice your risk. Don’t allow greed to tempt you into unnecessarily keeping trades open long after you could enjoy decent profits.
Don’t start moving your stop up just because the trade pops in your favor the first 10 minutes you enter. Give the trade some room to grow and breath. Trading is like a garden, you have to give it time to grow to taste its fruit.
It is more common for forex traders to jump the gun than what people usually think. Every trader does begin with great intentions and ideals, but at some point or the other during live trading, the green eyed monster called greed takes over. And that is when you know for sure that disaster is imminent.
I am mentioning this towards the end of the post because I feel it is the most important. You have learnt everything, and are doing everything right, but if you don’t know where to stop, you could land yourself in major trouble.