Learning to trade successfully is a challenging endeavour, and the data from forex brokers shows that the majority of retail traders lose their trading capital in a couple of months. Fortunately, many successful traders in the world have made huge returns by trading in the currency market. There are certain traits they have, and if you want to get similar results, you can emulate their traits. If you want to learn the characteristics of profitable traders, then keep reading to learn 7 tips that would transform your trading today.
1 Trade With A Profitable Strategy
As a new trader, you need to trade with a profitable strategy to have a reliable edge. This let’s you trade with confidence while executing trades on forex trading platforms. You don’t need to come up with a novel or groundbreaking strategy because profitable traders around the world have developed many reliable trading systems. You can find one that suits your trading style, learn it and then fine-tune it over time.
You can check the accuracy and win rate of your strategy by backtesting or practising in live market conditions. Backtesting involves testing your trading system by using past price data. Whichever trading strategy you wish to adopt should have satisfactory backtesting results, with a reliable win rate and risk to reward ratio.
2 Stay Disciplined
If you have learnt a profitable trading system, then you must stay disciplined and trade in line with the rules stipulated by your strategy. These rules are included in your trading plan. Be disciplined enough to follow your trading plan because this ensures that your trading results are reproducible and reliable.
Different traders using the same strategy would have different results depending on their level of discipline. Make sure you stick to your trading rules at all times.
3 Trade With Enough Capital
Before trading, make sure you have enough capital to invest with. Sufficient trading capital isn’t just about the amount of capital, but it’s also about its significance to you. Avoid trading with any amount that you can’t survive without. Don’t invest with borrowed funds, retirement funds, or life savings. While these are legitimate sources of capital, they’re not the best options for new traders.
Trade with a small fraction of the money you have and stay consistent with it. This amount should be significant enough to allow you to make profit without overleveraging. It should be any amount that prevents you from being emotionally attached to your trade outcomes.
4 Be Patient
Patience is crucial to your success in the currency market. A huge part of learning how to trade forex is knowing when not to. It would be best always to wait until your trading opportunities present themselves before you risk your money. There are times when the forex market becomes highly volatile, with random and unpredictable price movement. Once you feel confused and unable to trade, you can stay out and wait for the market environment to align in your favour.
5 Use Proper Risk Management
Risk management involves predetermining your risk before executing orders on your trading platform. This is a crucial aspect of money management that can protect your capital and help you recover any losses you incur.
Having a profitable strategy means that your strategy has enough profits to recover your losses. This is contingent on proper risk management. Proper control of your risk per trade helps you develop trading discipline and get better results.
6 Don’t Compare Yourself to Others
As a beginner, you should focus on your growth and development by finding ways to work on your strengths and weaknesses. Every trader is unique, and as such, they can become profitable at different times. Some take less than a year, while others require several years to reach this milestone. Either way, remain focused on your growth and don’t get distracted or discouraged by other people.
7 Become Passionate About Forex
Trading for several years cannot be done by the mere desire to make profits. It requires a genuine interest in the forex market and the financial market in general.
If you’re new to trading, then you must become a ‘student of the market’.
Never get tired of studying and learning. The only way to gain mastery of your trading strategy is to study and practice often. Doing this consistently requires a passion for trading and a desire to succeed.
