Who is a successful Forex trader? What is the difference between a pro trader and an amateur, and what is the key to success in the foreign exchange market?
To answer the burning questions, “What is Forex?” and “How to succeed there?”, and to shed some light on matters newbies wonder about, we have compiled a list of 12 interesting life hacks used by experienced traders.
Some of them may seem surprising to you but keep in mind that Forex is a real trading, and the way we picture it initially often has nothing to do with the way it works in real-life scenarios. So, dive in and make the most out of these life hacks!
1. Life Hack 1. Don’t spend too much time on market analysis
2. Life Hack 2. Forex is trading based on the real market situation
3. Life Hack 3. Learn to trade without indicators
4. Life Hack 4. Robots and expert advisors are nothing but handy tools
5. Life Hack 5. Forex is a market where you should trust yourself
6. Life Hack 6. Don’t focus on fundamental analysis alone
7. Life Hack 7. Take off your rose-colored glasses
8. Life Hack 8. Learn to get the feel of the market
9. Life Hack 9. Self-discipline comes first
10. Life Hack 10. Forex is an exchange where you should risk cautiously
11. Life Hack 11. Nothing succeeds like simplicity
12. Life Hack 12. Money is not an end in itself
It’s likely that you will be taken aback by this statement. If you are convinced that the more you check the price charts and the economic news feed, the more money you will be able to make trading Forex, we have bad news for you - this couldn’t be further from the truth.
Pro traders do not spend hours on the market analysis. And if you have a solid strategy, this isn’t that necessary. E.g. If, based on your strategy, you trade double bottom or double top chart patterns, a couple of hours a day is enough to identify and analyze them.
Have you ever found yourself in a situation where the market environment was not right, yet you were dying to make trades anyway? You were obsessively checking the chart, and it seemed like the market was about to move in the desired direction. You opened a position in hopes that everything would play out in your favor. But eventually you suffered losses since the market failed to live up to your expectations.
PROFESSIONALS URGE,
Quit picturing things that simply are not there!
If there’s no pattern on the chart that you need, stop trying to find it. There is no room for experiments in the Forex market. Better take a pause, step away from your computer and do something else. Read a book, spend some quality time with your family, or take a stroll. Later on, you can take a fresh look at the chart again. You need to trade rationally without greed controlling you.
Perhaps you have previously heard someone claiming that successful trading is impossible without technical analysis and relevant indicators. However, more often than not, indicators scare traders more than help them. The majority of indicators tend to get delayed, which means that the market signals are generated a little later than they appear on the chart. Plus, some of them change their figures which can be even more confusing.
So, what is Forex and how to make money on it without indicators? A lot of market sharks are using the price action strategy which is based on candlestick chart analysis. It works for practically all timeframes and basic assets. Japanese candlesticks are timely and precise signals which is why the majority of profitable strategies are based on them.
The newbie traders tend to over-rely on trading robots and expert advisors. Many even mistakenly believe that they are a one-size-fits-all solution for consistent income in trading.
However, not even the most advanced technical solution can replace the trader’s keen intellect. This is why professionals rely on their skills and knowledge first and only then - on automated trading.
The expert advisors can only be useful in Forex when the market environment is stable. But in case of unforeseen changes caused by fundamental factors, the robot doesn’t have enough time to re-adjust and starts making mistakes.
This is when the trader has to immediately take over and trade according to the new market situation. That’s what every professional trader does.
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It is obviously important to listen to the opinion of experienced traders. But you shouldn’t fully rely on other people’s forecasts and analytics, for nobody is immune to making mistakes.
By the way, fraudsters often take advantage of it by pretending to be the market gurus while making the traders lose deposits.
You have probably faced a situation where you have analyzed the market and made a seemingly accurate forecast but then saw that a reputable trader voiced a different opinion on it. And so, you relied on it. Eventually, his or her forecast turned out incorrect and you incurred losses. But if you had gone through with your own forecast, you would have made profit.
Perhaps you are simply underestimating your own skills. To get rid of the unnecessary self-doubts, keep improving your trading knowledge constantly. Webinars on Gerchik & Co’s YouTube channel will help you with it, so make sure to check them out.
Fundamental analysis takes into account the impact of outside factors (economic, geopolitical, natural, etc.) on the market. It is a go-to tool for everyone who is making long-term investments. Forex is the stock exchange where traders typically use short-term strategies, so the fundamental data are less important than technical ones.
That said, it doesn’t mean that you should neglect the economic calendar. Such news as the meetings by the central bank boards, the GDP data and unemployment rate have a major impact on the quote. Factor in the main news only to be able to take profit and move stop loss timely. Ignore the rest to not confuse yourself.
Many people are attracted to trading Forex due to unlimited possibilities for profit, while the success stories of those who made a fortune there only fuel the newbies’ excitement.
BUT DON’T BE NAIVE:
Forex is not the place where cash is falling from the sky!
If you are only dipping the toe in trading, don’t fall down the rabbit hole by chasing unrealistic pipe dreams. Don’t expect every trade to be profitable or to double your deposit in a month’s time.
Staying motivated and setting daring goals is obviously not a bad thing. But be logical about it. For example, if you have only $500 in your account, the odds of turning them into $50,000 in a month are rather slim.
«Become a successful trader who makes consistent profit even if it isn’t huge.»
That way you will achieve your goal and can continue pushing yourself to the new heights.
Why do some traders profit while others lose money in the same market environment? Why does it happen even if they use the same trading strategy?
This can be explained by not only the mental endurance and ability to find accurate market signals. Real professionals have another important quality. This is their gut feeling.
Successful forex traders do not trade blindly like many newbies do. It is not some special gift that only the chosen ones have. Having trading intuition means getting the feel of the market which often comes with experience.
After having analyzed thousands of patterns and market situations and having learned from mistakes made along the way, the traders begin to understand the prize behavior almost subconsciously. By the way, that’s where Trader’s Diary comes in handy!
A consistent and successful trading is impossible without a proper trading plan and algorithm. There are two major trading misconceptions. “Why should I even plan anything ahead? I’ll see how the things go and will act accordingly.” Another one is this, “I’ll definitely work out a plan but not today.”
Don’t be too confident in yourself. Trading requires composure and self-discipline. Only these qualities will help to keep your cool even in the toughest of situations. Don’t be lazy to keep a trading log and make sure to develop a trading algorithm either yourself or with the help from professionals.
Professional traders never trade with money they can’t afford to lose.
THERE IS A NUMBER-ONE TRADING RULE:
Trade only capital you can afford to lose!
Forex market always implies risks. Even if you take into account every little detail and use the most conservative money management approach, the losses are still inevitable.
You need to be mentally and financially prepared to face certain losses along the way, so make sure to use the amount of money you are comfortable with. For example, if losing $2000 is too much for you, start out with a smaller deposit, say, $500. Thankfully, brokers provide such an option today. It also goes without saying that you should use only your money to trade with and never take out a loan for these purposes.
Do you wish to learn how to become a pro trader? If so, you need the right strategy. An effective trading strategy does not have to be complex and confusing. It is actually quite the opposite: simple and straightforward strategies without a huge number of expert advisors and indicators typically produce the best results.
Do not try to create your own strategy by unnecessarily over-complicating those that have long been used on the market. The more filters, indicators and patterns you use, the faster you will get lost in all this. Plus, the odds of making a profit will be pretty low.
A lot of famous traders have been using plain trading strategies with a couple of indicators or without them for many years. So, take a page from their book. The key to Forex success is to know your strategy like the back of your hand.
Making money is obviously one of the major trading goals. But greed and thrill are not the best companions on this path.
First of all, do not chase the here-and-now profit by trying to make money no matter what it takes. There are market situations that are not always ideal for your trading strategy. Keep in mind that even if you don’t make profit today or tomorrow, you will still be able to do that later as long as you do not rush.
Second of all, do not rely on trading as your only source of income until you can actually call yourself a pro.
Third of all, learn to enjoy the trading process. When you’re doing something you love, you will sooner or later become a profitable trader!
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