Forex is a part of everyday life. The currency fluctuations influence the cost of goods imported from abroad. In countries that are heavily tied to imports or exports, the forex fluctuations can mean the life or death of a company or a farm. Forex’s value rests only for a short period over the weekend, after the US markets are closed and before the Japanese markets open.
We believe there should always be some kind of plan if you decide to invest. It is your money, so you should treat it with respect. It is not daunting as many people think, and you can benefit greatly from learning a few “tricks”. Here are some of the secrets we consider crucial in keeping your numbers out of the red and profitable.
1. Trading Journal
Trading journals aren’t in vogue with the real-time data that brokers can provide. However, although they are time-intensive, they are one of the keys to keeping your trades profitable in the long-term. This approach lets you keep a manual overview of your trading history, which will inform your strategy on whether it needs altering and where it needs to be tightened.
2. Stress test
After you have come up with a trading strategy, you need to test it. While a plan may look great on paper and is very logical, the markets aren’t always so. There are plenty of simulation tools out there to help you test your strategy before implementing it on a “live” account and risking your capital. Stress-testing your system may be daunting, as no one wants to have their plan perhaps destroyed (even though something better will come out of the experience).
3. Fads and Trends
Understanding the difference between these two is vital. Fads are like soap bubbles and will burst quickly, leaving you high and dry, while trends are longer-term shifts that can inform a trader which way the winds are blowing and how to adjust. While a daily dose of news is necessary for a forex trader, understanding the significant reports like GDP, employment, etc., will be more useful in breaking down what you’re seeing and determining whether those are fads or trends.
4. Use the Wire
A lot of news outlets produce a wire service, allowing you to get a feed of stories as they are written, rather than waiting for them to pop up in a crowded feed. A profitable trader will need to stay abreast of developments, and a wire service is excellent at keeping you updated. As mentioned before, you should not base your trading solely upon the news cycle, but keeping your strategy informed and spotting any black swan events even a short time before they hit the less attentive traders can help you maximize profit or minimize losses, keeping you in the black!
Nothing profitable or worth doing is ever that easy. Committing to forex and improving your skills is the same, just like any other skill you want to get good at. Having a trading schedule, with mental and time stops, will keep your skills honed and help you develop your trading instincts. Commitment will also help you create a structure for your trading rather than it being a one-off even when you feel like it and, therefore, probably miss out on many lucrative opportunities.
Getting into something new like forex trading may seem daunting, but there are tips, tricks, and hacks for everything worth doing to make you more successful. These were just some of the practical tips for traders that want to up their forex game. There are a lot of other resources as well, with our blog detailing a lot of them!