When it comes to the financial markets around the world, the Foreign Exchange market is the biggest and most popular. Also known as the forex or FX market, it sees global currencies traded against each other with around $5 trillion worth of trades being conducted each day. As a result of this daily trading volume it is the most liquid and largest financial market.
All this attracts many people to try their hand at investing money and becoming a trader on the FX market. If you are thinking of doing so or have already taken your first steps, you are in good company. Being a successful forex trader can help you achieve financial freedom, work in a career you love and make some serious money. Of course, the real secret is finding out how to trade successfully on this market, making healthy profits and avoiding losing any of your money.
Learn the basics
The best piece of advice on how to become a successful trader is to spend some time learning the basics. Getting a sound education on how the market works will help greatly in making your trading decisions and interpreting the charts for each currency pair. Find out what the most popular currency pairs are and how much they move on average each day; read up on the best candlestick patterns to look out for and how to draw the basic trend lines on a chart, figure out which are the best timeframes to trade on and what the various trading styles are. Once you have done all this and more, then you are taking your first proper steps toward becoming a successful trader.
More ways to become an awesome FX trader
Once you have put the hard work in learning how the FX market works, then these are some great tips to follow afterwards:
- Pick your trading strategy – one vital step to take is to pick a trading strategy that you understand and like and can confidently implement regularly. There are lots of different ones in books or on the internet so find one that works for you and make sure to stick with it.
- Demo trade – although you may think you know all you need and are ready to jump in with real money, that is not advised. It is better to learn your trading craft and test out the strategy you will follow on a demo account first. These are available at all the major brokers and enable you to trade as normal but with fake money. Just don’t get stuck demo trading too long! When you feel ready and you are winning more trades than you lose, go for it!
- Copy trading – social trading has become very popular in recent times with traders now interacting with each other via broker’s platforms. An aspect of this which is great for success is copy trading. It allows you to see which traders on the platform are doing well and to simply copy them! This is a good option if you want to make trading as easy as possible or can’t find your own strategy that works.
- Use stop losses – if there is one golden rule for successful trading, it is this one. Don’t be tempted to ever place a trade with no stop loss limit set. The stop loss is the price at which you will automatically exit the trade if it goes against you. Setting one protects your trading account and stops you taking massive losses on one trade.
- Don’t overtrade – for new traders especially, it is very tempting to always have an open trade or to trade every day. That can be a mistake though as it can see you entering trades that aren’t wise, simply to get the buzz of doing it. Try to make sure that you only open trades when your plan merits it or if the person you are copying also opens it up.
Take action to become a successful FX trader
Although many people feel that success on the forex market is out of reach or is solely down to luck, that is not true. It is really about finding ways to succeed and having an understanding of the market, so you can use your knowledge to a positive effect. With the rise of copy trading, it has now become easier than ever to trade successfully with even the bare minimum of knowledge. If you take the time to think about how you will rise to the top as a trader, then you will be well prepared to actually do it.