Introduction:
The forex market surely attracts a lot of interest due to its high liquidity and round-the-clock nature, which makes it perfect for those who are fond of flexibility. But becoming a successful forex trader and attaining financial freedom will take some time when you are stepping into the volatile market as a newbie. Forex brokers and trading platforms do make the trading process easier by offering some basic and advanced tools for trading that can help you make informed decisions. One of them is trading calculators, as every trading decision you make in the forex market needs to be implemented precisely.
Although the forex market gives an equal amount of opportunities to all, the learning process and experience will not be the same for everyone but you can surely improve your chances of success by following 5 simple steps that you will get to read about in this blog.
1. Devote Your Time and Effort to Learning
The first step towards success in any profession is learning, as being equipped with good knowledge and skills gives you a fair chance in any field. Forex trading is no exception as one needs to prepare well to navigate the fast-moving market independently. The forex broker and trading platforms only bridge the gap between the market and traders by supplying the relevant data. However, a trader’s success is totally dependent on their own choices and decisions.
To make wise choices and sound trading decisions, you must learn about the market and take your time to understand the different trading concepts. There are many ways to learn about trading, both online and offline. You can either find websites or platforms to get information on forex trading or pick a good book and invest some time in reading it. Regardless of the method you choose for studying, starting from the basics is essential to making your foundation strong.
However, just reading or watching videos about trading won’t be enough to prepare for actual trading. To do so, you will have to open a demo trading account where you can get some hands-on experience and learn to trade for free practically. You will get to observe the market in real-time and develop skills that are required to trade in the live market without risking your hard-earned money. This is something that every beginner needs to do before entering the forex world.
Demo trading may not teach you everything about the market or trading but it can give you a realistic trading experience and it is a perfect place to practice trading and try out different techniques. Basically, how well you can utilise a demo account decides the benefits you get from it. However, demo trading for at least 3 to 4 months increases your chances of success on a live account as you will become familiar with the trading environment and be more confident about your skills.
2. Wait for the Right Opportunity
One mistake that many new traders make while starting their trading journey is being too impatient and often desperate to enter the market. They just grab any opportunity that they come across without a clear plan or strategy, and they even underestimate the risk. Such an approach is pretty dangerous in the forex market, and as a beginner, you should not take it. Missing an opportunity is better than making a costly mistake due to impulsiveness and wasting it.
Hence, the 2nd step that you need to take after you gather enough knowledge and skills through learning is waiting for the right opportunity to arrive. You must have come up with a sound strategy and trading plan at this point, but sticking to the plan and staying disciplined are the real challenges. Because you will be experiencing a lot of intense emotions while trading with real money on a live account, and making rational decisions without being overpowered by these emotions is not an easy task.
However, you need to train your mind to stay calm in any situation and only take action once you spot the ideal opportunity that is fully in line with your plan. You need to be sure about the amount of risk you can afford to take as a trader in the initial phase, as you may not be successful in your first few attempts. Having a proper risk management plan saves the day for a first-time trader, and you should not shy away from taking a moderate amount of risk but always follow a cautious approach.
3. Never Stop Improving
At this point, you may no longer feel the need to keep learning as you have already found a strategy that works and is more aware of the market fluctuations that are favourable for your trading style. However, you need to remember the fact that there is always room for improvement and you will be able to perform better by pushing yourself outside of your comfort zone. You should never stop exploring and experimenting, as that is what allows you to keep growing and upgrading your skills.
You may have already learned a lot about the forex market and trading, but that does not mean that you can’t expand your knowledge. The Forex world is also changing, and you must keep updated about the new trading solutions. Although you might have some experience as a trader, you should take some time to refresh your knowledge once in a while, as that will prevent you from committing mistakes in the trading process.
You should also keep a track record of your trades by journaling about them daily. This can be used to evaluate your performance and identify the aspects you need to focus on to get better results. Besides journaling, you should also review your trading account performance occasionally and ensure that you are not deviating from your plan.
4. Use Limited Leverage
The availability of high leverage makes the forex market an attractive place for traders, but this does not mean that you can use a high amount of leverage without much thought. Because doing so will only put you in a dangerous position, as using excess leverage can lead to huge losses if your analysis turns out to be wrong. Losing one or two trades won’t be a problem if your risk per trade is limited. However, since leverage amplifies the trade size, taking high leverage can increase the risk per trade, resulting in a higher account drawdown.
Hence, you must be extremely careful while trading with leverage and prioritise risk management. You need to assess your risk tolerance and only use leverage based on that. You need to think of leverage as a loan given by your broker. It is better to start small and take things slow until you are confident about your plan and the profit potential of your strategy. But you don’t need to restrain yourself from availing leverage as it does help in growing your account if you can use and manage it properly.
5. Trade Responsibly
One thing that you need to remember as a trader is that you are the only one responsible for the outcomes or consequences of your decisions and actions. You cannot blame the market or the broker for your losses. You are trading to make profits, but you should also be prepared to encounter losses. Wins and losses are part of the trading process, and you cannot fully avoid the risk. To become truly successful as a trader, you need to follow a professional approach and take responsibility for the results you get in the end.
You will surely encounter some challenges as a beginner and later face different struggles throughout your trading journey. But you can surely overcome these hurdles by staying positive and learning new things. It is easy to feel defeated and demotivated when you are unable to reach your targets or encounter unexpected losses. However, being determined to keep going despite difficulties makes you successful.
Final Words
To sum it up, being successful as a trader is not just about the profits you make or the win rate of your strategy. Yes, we see these numbers and percentages as criteria for evaluating success, but it is all about your progress over time. The progress is not just about figures but also about your skills, experience and approach towards trading. The knowledge you gather in your trading journey also defines your success as you can see how far you have come, and the enthusiasm to keep learning is the key trait of a successful trader.
