Successful traders are disciplined, and a very small percentage of traders actually make money and continue trading (less than 10%). There’s a learning curve when trading forex, and if you don’t have enough start-up capital or do your research, you’re starting at a major disadvantage.
Tips to help you become a successful trader, include:
1. Start With Sufficient Capital
You need to have sufficient capital and not invest when you’re in debt. If you plan on making small trades, called micro lots, you can safely begin trading when you have $1,000. Limited capital leads to emotional trading and this is a recipe for disaster.
2. Trading Isn’t Easy Money
If you’re looking for easy money, get a part-time job. Do not start trading with the intent of getting out of debt or making money fast. Emotions are going to make you trade with too much risk involved.
3. Be Very Cautious With Leverage
Does your online trading platform allow you to use leverage when making trades? If so, you may make a $3,000 trade on just $100 capital. If you end up with a loss, you’ve lost more money than you have in your bankroll.
It’s important to be very careful with leveraging because you can also suffer significant losses.
Keep leverage trading to the experts, or at the very least, do not start your trading activities with leveraging until you have a good grasp of what works and doesn’t work.
4. Learn All About Risk Management
If you haven’t learned about risk management, it’s time to start. Every trade has its own inherent risks, and it’s up to you to make smart trades with risks in mind. You need to remember to protect what you have.
Profits come second because if your capital is wiped out, you lose your ability to make any profit.
One method of risk management is to put stop-loss orders in place. Lot sizes should be reasonable, and know when to exit a trade.
5. Don’t Become Emotionally Attached
You made a trade based on your own research. You’re sure a currency is going to go up, but you’re starting to get close to a loss. It’s time to pull out of the trade, but a lot of traders get emotionally attached and never actually exit the trade.
If you become emotionally attached to any investment, this puts you at risk of losing money.
Leave emotions behind and use trading as an investment only. When an investment starts losing money or no longer makes sense, exit it.
6. Build Your Own Success Strategy
You can purchase trading systems, but they will not be 100% accurate at all times. When you rely on someone’s system, you may find success until or you may be stuck in a losing system. You should build your own method and strategy to find what works.
A lot of marketers are selling systems to make quick money, and these systems don’t work well.
The best way to find success as a forex trader is to learn from your mistakes and successes, building a system along the way that you can follow.