Top 7 Tips For Successful Forex Trading: The Profit Hacks
Before starting something new, it’s good to go back to basics. Read on to fully understand how you can use these 7 tips to trade smarter.
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7 Tips For Successful Forex Trading
The phrase ‘time is money’ has never rung truer than when applied to the exciting world of trading. In the age of millennials, where working smarter not harder is the metric of every successful career, efficiency is key when your livelihood is taking leaps of faith in the financial markets. To be able to generate profit consistently whilst also minimizing time and energy is something that every investor must strive for.
So, how can a trader, regardless of experience and background, be successful with the least amount of time and energy?
Tip #1: Conduct a SWOT Analysis of Yourself as a Trader
You might be familiar with this popular tool that is central to any business, campaign, or project. However, did you know that it can also be applied to careers, specifically your trading career?
Conducting a SWOT analysis will help identify your internal strengths and weaknesses as a trader, while also considering the external opportunities and threats. When conducting an internal analysis (strengths and weaknesses), it is important to ask yourself; what am I good at when trading? What am I doing wrong? When you are analyzing external factors (opportunities and threats), ask yourself what are the current opportunities in trading crypto or forex? What threats am I currently facing when trading on the market?
Being aware of all these things will ensure you have the correct mindset before you risk any capital. It will also make sure that you build your trading strategy on carefully assessed pillars, tailored to your strengths and weaknesses.
Tip #2: Practice Does Make Perfect
One of the advantages of being part of an online broker such as Sage FX is the perk of being able to practice your trades with real market conditions without risking any of your hard-earned money. When you use a free demo account such as ours, you can foresee how price action develops and understand the risks you might face when trading with your own money. It can also help you learn how to develop trading strategies by analyzing charts, support/resistance lines, study correlations, and more.
Tip #3: Apply the 80/20 Performance Rule to Your Process
As a general rule, keep in mind that only 20% of their time trading will yield 80% of their profits. Surprisingly enough, the process you maintain when you spend your time trading is just as important as your trading strategy. When you refine your trading process and you stick to an 80/20 performance rule you start noticing that focusing on the process and not the results will yield more success, given you will become more consistent. Profits will start being generated automatically once the right trades are done with the right timings and the right setups.
Tip #4: Establish a Routine that Delivers Consistency
As any trader knows, consistency is key. Establishing healthy trading habits will train you to become an efficient, accurate trader. So, what are some of the practices you can include in your daily routine? You can monitor the market every day at the same time for trends. You can also analyze support and resistance levels, at the start and at the end of every week. These practices will stop you from wasting hours staring at your screen analyzing potential entry and exit points. Instead, you can build a strategy and make sure you stick to it without any distractions.
Tip #5: Avoid Indicator Overload
Technical indicators are a crucial tool for any financial trader. However, having too many indicators can backfire, causing even the most seasoned trader to start second-guessing. If the candlesticks on your chart are no longer visible due to the indicators, it might be time to rethink your strategy and remove some of them. You should try and keep your chart as clear as possible, ensuring that only the most vital indicators are set.
Tip #6: Create Two Watch Lists
As every trader knows, once you start a watch list it is easy to end up putting every stock which is of interest on your watchlist. So, why not try creating two lists; one commanding your full attention (an active watch list) while the other to monitor stocks that might be worthwhile considering in the future (a general watch list). Avoiding distraction is key as the fewer stocks you monitor, the more likely you are able to focus on specific stocks and the higher the chance for profitability.
Tip #7: Start a Trading Journal
If you don’t have one already, start documenting all your trades in a journal. Record the holding periods, final profit, or loss numbers as well as the reasons why you took risks in specific trades.
Recording and reading back these notes will make you more aware of your successes and losses, leading the way to a trading career that is more consistent and efficient with more opportunities for profitability.
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