Many individual investors are becoming very successful traders in the Forex market. However, being successful as a trader is rare indeed. As many as 95% of Forex traders fail. However, there are things you can do to help ensure that you going to succeed as a trader over the long-term. Here are a few pointers.
Fear, greed and inexperience are the three big reasons most traders fail and in fact can even cause themselves financial ruin. Take the time to learn the ropes as a trader so that you know what you’re doing and can help guarantee your own success.
What should you do, to help ensure that you’re successful as a Forex trader?
Inexperience will kill you. Therefore, get some experience first before you begin to trade with actual money. Here’s how.
One, do some research on the Forex market in a broad way. Learn what it is, and what you’ll need to study so that you know what trends to look for and how to make your trades. One caveat here is that this is not a small skill to learn. It’s going to take you substantial time for in-depth study to learn what you need to know before you even begin.
Second, do some research on some Forex brokers and decide which ones have good customer service so that you choose a good one. Most Forex brokers will have something called “demo trading” or a similar program that you can practice on. You’ll need this as an inexperienced trader so that you gain the experience you need to in order to become successful in the Forex market.
Once you’ve chosen a good broker, open an account with that broker and begin practice trading on your demo account without real money. This is how you learn your way around a successful trade.
A good point to remember with this particular part of the learning curve is that you’re going to fail, and in fact, this is necessary. You need to learn how to study trends and charts, and you’ll need to learn how to do two different kinds of analysis.
From there, you can learn how to properly buy, sell and hold orders based upon your own analysis and system you’ve established.
Another benefit to this particular kind of “pretend” trading is that you will to learn how to lose on a trade without panicking. That’s another fundamental point to emphasize. You ARE going to lose on trades sometimes. Everyone does. So will you, but if you don’t panic and you keep to your system, you should come out ahead on more trades than not. This is the key to any successful trader.
Now, some things you shouldn’t do:
One, don’t risk money you can’t afford to lose. Forex trading gets lots of press for being “easy” money, but it’s not and it’s still a risk to do trading in the Forex market. Therefore, don’t gamble with money meant for something you really need, such as your mortgage payment, groceries, or other necessities. Only trade with money that “extra” and that you can afford to lose.
Take the time to set up your system so that you won’t execute trades out of greed or fear. You need to know how to study the market, and when to get in and out at the right times. This means that you need to know when to get out of a trade even if you’re losing on it and you need to know when to stay in as a trade is going up.
You could stay in too long and lose money, and you can also stay in too long when you could have gotten out ahead. Once you’ve gotten your system established, you’ll know what to do and will use prudence and common sense instead of letting emotion, fear or greed run your trades.
If you follow the above tips, though, you should have more successful trades than not, and that’s the key to being a successful trader.