There are numerous viewpoints and core beliefs that the cream of the crop FX traders all seem to subscribe to. There really are numerous paths to FX trading success, but in this article we’ll serve up some of the core values that you really should wedge firmly into your FX trading mindset. Follow these gems of advice and there’s a very good chance you’ll be among the 10% or so of traders out there who consistently and emphatically beat the markets.
5 Things Successful FX Traders Understand
1. Day Trading Might Sound Great – But Swing Trading Can Be Where The Big Gains Lie. There are advantages to both swing and day trading. FX day traders typically close out their positions at the end of a session, thereby limiting their risk to market events that happen while they are away from their screens. However, the real yawning and rip roaring trend movements often happen during the course of several days – this is where being on the right side of a trend can make you thousands of pips per trade. Consequently, it’s important to understand that the more longer term your horizons – the more your potential profits as long as you get your FX trading analysis right.
2. Smart Money & Risk Management Is The Single Most Important Factor For Long Term FX Trading Gains. It’s really that simple. Understanding how much money from your account you can risk at any one time, and on any one trade is a very important thing for the FX trader to understand. Over time, traders naturally become more adept at managing their money intelligently – including knowing what percentage of their equity to parlay on a trade by trade basis. The fact is some trading opportunities are just more attractive than others – so it makes sense to adjust position sizes accordingly (while still staying within some predetermined percentage parameter)
3. Price Is KING In The FX World. The price is where the market is at NOW. Therefore the price is the single most important indicator as to where you should be at any one time. When price is going up and up, but your position was to go short – you messed up. It can be very dangerous to keep ignoring price action that keeps moving away from your position, and this is where a good stop loss technique comes into its own.
4. Have A Plan Then Trade That Plan. Ask most FX “traders” who keep losing whether they have a trading plan and the answer will almost certainly be an emphatic “NO!” – the fact is, trying to trade FX without a comprehensive plan is pretty much akin to taking your equity to Vegas and gambling it away. The FX market is not a game or a gamble – and without a comprehensive plan, that’s exactly what you’re treating it as.
5. Patience Is Crucial To Your FX Trading Success. A good trading plan will require you to demonstrate an element of patience. The market wont always offer up a trade. There will be times when you’re just on the side lines idly twiddling your thumbs. That’s OK. That’s all part and parcel of the FX trading game. By waiting for the right trading set-ups, you’re certain to trade only when there is a high probability of success. And that’s what FX trading is ultimately all about.
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