Many people think that forex (foreign exchange trading) must be simple as it is a growing trend, and, in fact, it can be simple to get started and place trades. The problems really start to arise for new traders when they want to start making profits. Of course, making a profit is really the point. Forex is not just a gamble or a bit of luck – it is a market that operates on the laws of supply and demand and therefore, to reach a stable profit in forex, you need to understand how the market works.
Research and Practice
Like any new job, if you want to get involved in forex trading and become successful, you need to put in the work. This starts with understanding the theory, learning the market and finding out what impacts that market. With the Internet full of information, it is not difficult to find resources and you need to spend a fair amount of time reading and researching. Understand the different types of analysis that are available and practice reading charts. Sit down and develop a strategy that you feel will work for your personality and trading style. This will be different for everyone as you need to consider your triggers and emotional limitations. Once you have developed a strategy, you need to open a demo account. This allows you to place trades without risking any real money. Trading with virtual money takes away the stress and allows you to coolly analyze your strategy and work on it without letting emotions cloud your judgement. The hardest part is then sticking to this strategy when you are trading with real money and your emotions and anxiety will be in full play. However, having a strategy that you have practiced and perfected can help you keep your cool when you are under pressure. Make sure not to become complacent if you find a strategy that works for you. Your strategy constantly needs to be reviewed and updated. Spend time analyzing your trades to maintain a stable profit.
Self-analysis is important while you are developing your trading strategy, but it is also necessary going forward. To reach a stable profit in forex, you need to understand how your personality and trading style impact the trading decisions you make. Understanding the nature of losses is part of this as well. All traders have losses, even the most experienced traders. No-one can make a profit all the time. The aim when trading forex is to have your profits outweigh your losses, not to win 100% of the time as that is not possible. By understanding that losses are part of trading, it is easier to take them in your stride and move on to the next, and hopefully profitable trade. Getting consumed by your losses and chasing those losses is a way to ruin your overall profit. Make sure you have firm limits in place and stick to them always.