As a forex trader, you need to be able to turn your strategy into action, to execute your trading plan while managing your risk. Beyond picking individual forex trades, there are some fundamental tips that will help you to become a more confident and competent forex trader.
Stick to your plan
Your choice of forex trading strategy will depend upon your trading goals, your attitude to risk and your reading of the market. Establishing how you intend to employ your investment capital to achieve your goals will give you a trading plan, every trader’s most essential tool.
Following your trading plan is easy when your forex trades are making money, much less so when your trades are losing. But remember, not even the most successful trader has a 100% strike rate. The key to your performance over the long term is how well you manage your losses as well as your profits, and this is where your plan is vital.
Don’t be tempted to chase your losses or to run your profits beyond your exit point unless you have a very good reason to stray from your trading plan. Learning to control your emotions during the highs and lows will help you develop the psychology of the successful forex trader.
Practice makes perfect
The best way to learn how forex trading works is by placing trades. When you’re starting, you should open a forex demo account. This will allow you to place virtual forex trades risk-free and learn by experience.
A demo account also helps you to explore the trading service offered by a forex provider before opening a live account. InterTrader offers a free Demo Account that allows you to trade a wide range of forex pairs and other markets risk-free, with a virtual cash balance of £10,000.
Test your provider
There are many forex trading providers out there and you should be able to find one to suit your trading needs. Do you need free charts or trading signals? Are you looking for reliable execution? Is personal customer service a high priority?
Your choice of forex provider is one of your most important trading decisions, as it affects both the value of your trades and the level of support you will receive. You should make sure your provider matches up to your checklist, and be prepared to switch providers to receive the service you need.
Choose your trading tools
There are many different trading tools available. As a new forex trader you need to work out which tools best suit your approach to trading. If you trade on the basis of macroeconomic data you’ll need one or more reliable news feeds. If you trade on the basis of financial statements you’ll need a fundamental analysis package. If you trade using technical analysis you’ll need access to historic price data and informative research.
Most forex traders need powerful charting software to spot forex chart patterns and test trading strategies against historic prices. With InterTrader all traders receive free unlimited use of IT-Finance advanced trading charts, a highly customisable package you can adapt to your needs.
Whatever tools you choose, over time they should become part of your daily trading routine. Planning, research and trading are all critical parts of your trading process. By establishing a routine that schedules uninterrupted time for each of these three activities you’ll ensure the basis of effective forex trading.