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Top 10 Tips In Trading – Forex Success

Trading success

 

To become a successful trader,

you must understand the mechanics of forex, trust your analysis, and follow the rules and strategy you set. This is the definitive key to reaping the benefits of forex. Emotions can ruin a trader’s experience, so it is vital to set them aside and not involve them in trading.

 

1. The most obvious reason: Financial freedom.

The term “financial freedom” means more than just having enough money to not have to worry about bills and other everyday problems, it’s also about having REAL freedom. Just thinking about having the ability to make enough money to live comfortably from anywhere in the world, only needing a computer and the internet, is a powerful and motivating thought.

Being a successful trader not only means that you can make a lot of money but much more importantly, it means you have freedom. You have the freedom to essentially do what you want when you want, and you really can’t put a price on that.

2. FX is a very liquid 24h market that trades around the clock.

Have you ever been stuck in a position overnight?  Has an opening gap ever majorly affected one of your positions — and maybe kicked you out of it with a loss larger than -1R?

Being a global 24h-market with around $5.3 trillion volume (USD daily), you obviously have easy and quick ways to enter or exit positions. Due to the huge depth in this market, there is virtually no risk of getting stuck in a position, experiencing price slippage or partials fills. Astonishingly, the Forex market is about 200 times larger than the NYSE.

Also, without opening or closing bells, there are no pronounced disruptions (or gaps) so price action is smooth & flowing. This fact alone opens up the market to a broad spectrum of trading styles where traders can choose to use long term systems, swing systems, day-trade or even quick scalp – at any time of the day/night.

3. It’s easy to learn

One of the biggest benefits of Forex is that everyone can participate. Yes, it is true that not everyone was born with a financial effort but it is also true that with easy access to the knowledge that the Internet offers, everyone can learn the basics for free. In addition, in Forex trading simulators, inexperienced traders can now get an idea of ​the real world of Forex without losing their hard-earned money. It allows amateur traders to learn the process and prepare their skills by placing fictitious trades.

4. You can always find a good trend.

If one economy is changing in relation to the economy of its currency pair partner, this effect shows up as a trend. With so many liquid currencies in the world, you will always find a combination with a strong trend. As in any other market, Forex prices are subject to the forces of short term supply and demand, however, Forex has some unique peculiarities.

The price of a currency pair reflects the conditions and activities of entire economies or even regions which very often leads to steady and smooth long term price development. It is quite common to experience nice, steady price momentum over several hours, days, weeks or even months — quite unlike equities or commodities.

5. Choose a trading style, a time frame, and a time of the day that fits you best.

You can trade Forex successfully using many different trading styles: from long-term macro, trend following, band trading to news trading, or other styles. It is also possible to trade any currency pair during any period of the full 24h open market hours. Therefore, you can choose from a wide array of timeframes: really long-term (daily or weekly chart), to a swing basis (eg 1h, 4h, 8h chart) and intraday (eg 1, 5 or 15min chart).

Usually, I am trading intraday or swing positions during European market hours, but if I want to do something else during the day, I can still trade — I just trade at a different time. Or if I am staying in a different time zone, I can trade Forex at times that are convenient for me there locally rather than sleeping in the day and trading at night.

6. Low cost and efficient order management.

Despite FX being unregulated, the market is very well coordinated through the Global FX interbank structure. The 15 biggest banks form a “transaction ring” that runs on a common platform. Similar to regulated exchanges, orders are processed efficiently by matching the best ask and bid prices. For incoming orders, this guarantees that the tightest bid/ask spread is chosen at that time — minimizing your transaction costs. No exchange commissions, broker fees, or other fees apply so usually, the bid/ask spread is the only transaction cost you have to pay for a round-trip.

Another unique cost advantage of Forex trading happens due to the structure of the currency trading market.   Price data vendors and brokers provide price data for free.

Note: Does this sound a little too good to be true?  Forex being unregulated, your broker choice is especially important. Choose one that offers a good and stable trading platform, is known for its good customer service, and does not “play tricks” with its clients – like taking the other side of your trades.

7. The ideal market for charting and pattern trading

Because Forex offers stable price development without pronounced gaps, spikes or long wicks, it is excellent for trend trading based on patterns. In addition, due to the sheer size of the market, price manipulations are nearly impossible. As a result, FX charts respect important charting lines and price levels very well. Entries and exits are less prone to breakout failures, stop runs, or other big-boy-games. Only important FX news has the potential to move currencies markets strongly in the short term. Luckily, you can manage the news announcements issue because these are well-publicized, pre-scheduled events during which you can choose to sit out or manage your risk accordingly.

FX charts are also unique and repetitive in one notable way: low-volatile range consolidations are quite common and they tend to develop into explosive volatility expansions.  After these volatility breakouts, smooth and persistent trends often develop. My Forex systems maintain a strong trading edge in identifying these low-risk consolidation patterns that occur regularly and very often develop into good trends.

8. FX is the ideal asset class to start or learn to trade – even with a small account

First, you can open an FX account with a very small amount of equity, in many cases much smaller than many other account types.  Second, you can day trade FX with a very small account size — unlike much larger minimum account sizes for other instrument types.  Third and most important, small FX traders are not disadvantaged in their methods or their trading as they are when attempting to trade many other asset classes.  With FX, you can trade small positions in the same way you would trade larger positions.  This allows you to learn small with minimal risk and then scale up trading the exact same way.

Starting out by trading small with real money is a better learning experience than paper trading or trading in a demo account. FX brokers allow you to choose between very small, mid-sized, and large Forex lot sizes. Even a very small account of less than $5000 USD is not dis-advantaged. Because only the spread needs to be paid, the transaction costs remain at the same proportional level. This allows you to scale-in and out of positions as often as you want without additional costs other than the spread.

Additionally, traders can choose to go long or short at any time without restrictions or even the typical psychological bias against shorting. The option of using high leverage available to FX traders allows you the opportunity to benefit from small moves in small timeframes which can increase your learning and growing from your trades.

9. The most flexible asset class to fit you.

Having traded several asset classes, I can say with confidence that there is no easier and no more cost-effective way to learn to trade than with a Forex account — wherever you live, at whatever timeframe or time of the day you might want to choose.

Forex offers a level playing field for a wide variety of market participants — be it newbies or veterans, small or large accounts, full-time or part-time traders. Forex allows you to choose what fits you best: your time of the day, your preferred holding period, your trading style, your account size, and your leverage.

10. Exit and sell whenever you want.

Forex allows you to enter and exit whenever you want. Along with this, through the trading places, Forex also allows you to buy or sell a currency just and there to take advantage of its current price. It also allows you to make a profit by going short (also known as a short sale). That’s when you buy a currency and sell it, then return it to a value lower than the one you originally sold it for. This difference is the income you earned. In addition, Forex also allows you to make profits by exploiting the value of money by taking (or making a long sale). This is when the money is sold in a later period for a price higher than what you paid.

 

Given this short but powerful list, why aren’t you trading Forex?

 


 

Learn To Trade Our Strategy

Our Strategy focuses on supply and demand, market sentiment, momentum and Stop Hunting ( Order Traps and Fakeouts)

Supply And Demand Trading

As supply and demand traders, we do not need to pay attention to the news, fundamentals, or any earnings reports. Why is it that you see positive News and then the underlying market drops like a rock, or a negative news announcement and the market rallies? You are probably missing the fact that big institutions are trying to make money!

Unless you are doing very short term trading and scalping, you should not worry about fundamentals or earnings announcements.

You can use these imbalances to plan your trades in lower timeframes. Trading is just waiting for the right trigger points and scenarios to present themselves. We need to patiently wait for the correct scenarios and setups to happen and wait for the price to react from our levels and we can take advantage of these moves!

If you want to learn how to trade using our trading strategy, join our Price Action Trading Course.

What are Fakeouts (Order Traps, Stop Hunting)?

First things first, before you can learn our strategy you have to understand how to use order traps to your advantage, you have to know what they are and how to identify them.

Order Trap ( Stop Hunting, Fakeouts ) are terms used in technical analysis to refer to a situation in which a trader enters into a position in anticipation of a future transaction signal or price movement, but the signal or movement never develops and the asset moves in the opposite direction.

Order Traps are when a trader puts on a position expecting it to move in a direction and it fails to do so.

Stop Hunting happen when many traders plan their exit by offsetting orders to make sure their potential losses are limited

Stop Hunting can cause considerable losses for a technical analyst. These traders will typically rely on well-tested patterns, multiple affirmations of an indicator and specific allowances to protect from significant losses. Sometimes the setup can look perfect, but outside factors can cause a signal to not develop as planned.

 

Learn more about Price Action Course.

 

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