Successful forex traders make modest gains
Most of the world’s top traders do not make immediate, large profits. Instead, they spend their time analysing the markets, placing trades and making small, consistent gains. Over time, these small gains accumulate to generate sizeable profits. Traders of this nature have an excellent long-term trading experience as they lose less with the right strategy.
Choosing the right forex broker is vital
The foreign exchange market presents endless opportunities to make a return on investment; however it’s critical that you sign up with a reputable forex broker that is fully licensed and regulated. Do your research to ensure you find a broker that is professional and well established with a wide range of services, exceptional customer support and competitive spreads.
Controlling your Emotions is Critical to your Success
Forex trading is by nature an emotional activity since your own money is being traded on a volatile and oftentimes highly unpredictable market. However, traders who approach the markets with an emotional mind-set are far more likely to experience forex trading failures as they will end up making spontaneous, rash decisions that are unplanned and unprofitable.
To prevent this from happening, you should create a detailed trading strategy that has been tirelessly tested on a demo trading account. When you learn to control your emotions and trade objectively, you automatically increase your chances of making a consistent return on investment.
There is no such thing as insider trading
Despite what many people might believe, there is no such thing as insider trading on the forex market. Therefore, if you decide to trade forex, this means that there will be abundant liquidity, 24 hours a day, and that all forex traders can base their trading decisions on current market conditions and the latest forex news.
Simplicity is the key to your forex success
Finally, the simplest approach to the foreign exchange market equates to the greatest gains. Rather than crafting a complex, sophisticated trading strategy, it is better to create a simple, tried and tested strategy that is based on in-depth market analysis. This strategy can then be applied across all markets and timeframes.
ll Brokers Are Not Equal
Your broker is the vehicle that will drive you either into profitability or losses. So you have to make the choice of which broker to pick very carefully.
Unfortunately, even though you may find many brokers using similar trading platforms and offering many similar products and services, every broker is different.
They are different in how they operate, how they treat their customers, and how much they charge in terms of spreads.
Additionally, some brokers are more connected to the big market makers and these are the ones who can guide you to the best and highest profit levels.
The Best Strategies Are Simple Strategies
You may want to know it all in forex trading including all the forex signals, all those currency pairs, and all those complex risk management ideas.
But if you cannot comfortably explain your currency trading strategy to an average junior high student, then that is a bad trading strategy.
If s/he cannot understand your strategy then you are over complicating it and that will be an almost impossible strategy to stick to.
The best trading strategies are simple, easy to understand, and easy to stick to.
Overtrading Is a Recipe for Failure
One common blunder made by a majority of new traders is over trading. Most of them feel that every single minute that they spend away from the forex market represents lost opportunities.
Other traders tend to enter into multiple positions thinking that this increases their profitability chances. Many other traders suffer losses on one trade and in an attempt to recoup losses enter into more trades without giving it much thought.
In some quarters, this is known as revenge trade. Another form of overtrading is where a trader holds a losing position too long in the hope that the tide will change in their favored direction. This only increases their losses.
95% Of Forex Traders Lose Their Investments In The First 6 Months
For many people, the forex market seems like a pot of gold just lying there at the end of the rainbow waiting to be picked.
The abounding stories of untold wealth, financial freedom, and a total lifestyle change coming from successful traders who started with nothing inspire these dreams.
However, for most people, these will only remain unfulfilled fantasies. The shocking forex market truth is that only about 5% of forex traders earn profits from their currency trading.
And of these, less than half can afford to live fully on their forex trading profits. The fact is that over 95% of traders lose their whole forex investment in the first six months.
This is mainly due to failure by newbies to first learn the market and adopt a winning strategy before investing their money.
The Highest Profits Are In the Majors
Profiting in the forex market is all about trading on the price movements of currencies within a currency pair.
More than 85% of the global forex market’s price movement happens on only 7 currency pairs.
These are the USDJPY, GBPUSD, EURUSD, AUDUSD, NZDUSD, USDCAD, and USDCHF.
Small Transaction Cost
There are no commissions charged in Forex, only a small transaction fee called a spread. This is not possible in any other market, as brokers charge a commission on each trade in all other markets. The spread in a Forex trade is typically less than 0.01% of your account size.