Traders today have become more savvy and smarter. This may be attributed to educational trading websites that abound, offering valuable and useful insights into trading.
A large number of beginner traders may come into forex with certain preconceived ideas and misconceptions. However, it’s never too late to expand your learning and develop a clearer and more insightful view of the industry.
Here we offer some useful trading tips to get you started and help you build a strong trading process. Finding your trading strength and discovering fresh trading ideas is part of the trading process of becoming the trader you aspire to.
Choosing a trading style
Based on the length of time that trades are held, we have four main trading styles: scalping, day trading, swing trading and position trading.
Scalping trades are very quick and are held for just a few seconds or a few minutes. Day trades can be held from a few seconds to a few hours. Swing trades can be held for a few days while position trades can be held for a few days up to several years.
If you are just starting, you may find it difficult to decide which style suits you best. But there are certain personality traits that go with each trading style. Here are a few pointers. Scalping suits traders who can make fast decisions.
Day trading is for those who want to complete a task on the same day. More patient traders who may leave trades open overnight are best suited for swing trading. For the most patient and those traders who are not after quick trades, position trading is more suitable as it is a long-term trading style.
Trading as a business
You need to treat trading as a business, cultivate consistency and follow a specific program. Like a business, which promotes its products consistently, a trader needs to remain focused and follow a specific plan, pattern, and setup. It’s all about commitment.
Choose the best broker you can find
With so much choice nowadays, traders can find a broker who provides what they want. There are brokers with the best education, the best platforms and the best trading conditions. Choose wisely and leverage as many benefits and tools as you can to streamline your trades. First and foremost, make sure that you have the right tools for the trade.
Once you have access to the right platforms and the best trading conditions, you can test different trading strategies so you can work towards a successful trading process for the long term. T4Trade provides access to 300 trading instruments across 6 asset classes with superb trading conditions.
Traders can open one of the different account types and trade with zero commission on any of T4Trade’s trading platforms. Additionally, T4Trade supports its traders with exclusive trading education including webinars, podcasts and video on demand.
Look at the bigger picture
Check the bigger timeframes to look for long-term trends and avoid just looking at weekly and daily charts. Forming trading ideas and understanding the bigger picture will allow you to have an overall understanding of the market. Once you do that, you can begin looking at smaller timeframes and explore short-term opportunities.
Understand Asset Correlations
By understanding the positive or negative correlation between two assets you can grasp better opportunities. A positive correlation means that the two assets will move in a similar direction, while a negative correlation means that the two assets will move in oppositie directions. The US dollar and gold have a negative correlation, whereas commoditiy currencies such as the Australian and New Zealand Dollars have a positive correlation due to the proximity of the two countries as well as their trading relationship. Australia is New Zealand’s biggest trading partner.
Understanding about these dynamics will enable you to speculate on the movement of currencies more confidently and create a strong trading process.
Manage your risk
No one wants to lose money, but trading is unpredictable and even the best traders incur losses. To better manage your risk and limit your losses, you need to calculate your risk on each trade and know when to enter or close a trade. Ensure you always use stop losses to protect yourself from unexpected moves.
Check your emotion
One of the biggest risks to traders is their own psychology. Fear and greed can lead to increased losses as traders may make rushed and irrational decisions. Emotional trading is risky and in order to develop a successful trading process, you have to reduce emotion to the minimum. Too many traders trade on emotions instead of following cold hard facts. Having a trading plan and keeping a trading journal can help you keep your emotions in check so you can trade with your mind and not your emotions.
Trading is a process
Developing a strong trading process and having clear trading ideas will not happen overnight. Trading is a process of learning, testing strategies, making mistakes and learning from them. While traders need to act fast to grasp opportunities, this doesn’t mean that it’s easy. Very often, it takes years of knowledge, patience and practice to get to a point where you can trade with some confidence.
Impatience has no room in trading, as this can lead to mistakes. Those who study, practice and remain focused will be rewarded in the long term.
Stay in the loop
The forex market is changing and along with it there are new trends in trading and software. Being aware of new trends and new technologies will help you stay ahead of the game. With new indicators, advances in AI technology and back-testing software, understanding the tools of the market and how to use them to your benefit will keep you informed and ready to face new exciting challenges.
Trading is a long process. However, if you know what you’re doing, you will eventually build your trading strength and develop a successful trading process. It won’t happen in a few months, but it may take a few years of consistent work.
As Bill Lipschutz said, “If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.” Keep trying and if you need to, take the necessary risks.
Trading is a balancing act of doing too much and too little. As many have said, trading is an art rather than a science, with its own rules and patterns. Learning how to navigate this challenging landscape is part of becoming a better trader.
DISCLAIMER: This information is not considered as investment advice or an investment recommendation, but is instead a marketing communication
