In order to succeed in the Forex market, you need to strictly follow a strategic plan. Many people enter the Forex market without a good strategy and end up losing a lot of money. They also lose their confidence in the process, which is probably a much greater loss than money. Here are five steps you need to follow to ensure success in your Forex business.
At the very outset, you need to make up your mind to learn the basics of Forex trading. You need to have a good practical understanding about money management, emotional management, technical analysis and other skills. Learning these will lay a strong foundation for a successful Forex business.
Although many of the terms and concepts used in the industry could be difficult to grasp, you just need to focus on the most essential parameters like trend-lines, resistance lines, RSI, moving averages, Fibonacci levels and MACD. Every other trader in the business would be making trading decisions based on these parameters. Therefore, you too need to know how to use these tools to make your trading decisions.
Next, you should learn to keep your emotions from taking control of your decisions. In some circumstances, your own emotions can become your worst enemy. Fear, greed, haste, impulsiveness, carelessness and a number of other negative traits can force you to make wrong decisions. Therefore, you need to have strong control over your own emotions while trading.
Minimizing your risk should be the next important goal in Forex trading. When you manage to keep your risk small compared to your account size, then half the battle is already won. Your emotions play a large part in risk management. That is why, the previous step spoke about harnessing your emotions and keeping them under control. If you stick to the rules and keep your risk level low no matter how much your emotions force you to take a rash decision, you will eventually win the Forex game.
Maintain detailed records of each of your trades. Get a screenshot of the chart of each trade. Also write down why you entered and exited a particular trade. Take some time to go back and analyze the trades that you had done in the past by going these records. This will help you understand the strengths and weaknesses of each strategy, and help you improve your trading comprehensively.
Apart from analyzing your own strategies, begin to learn how other people trade as well. Learn the different strategies that they use and see how you can incorporate those strategies in your trading decisions. There are a number of Forex trading books that explain various processes in great detail. Use these resources wisely and learn from them to improve your trading strategies.
When you implement this 5 step formula, you will begin to see your Forex trading business improve considerably. These are some of the most effective steps to Forex success.