It is not easy to become successful Forex trader because the trading is a skill and the Forex market is changing all the time.
To be successful trader you must to adopt to new surrounding and by that I mean you need to change yourself. You need to be patient, skilled, talented, strong enough to control emotions and greed. As I have explained the greed is the root cause why Forex traders fail.
Read more: Why Forex Traders Fail? The Root Cause?
Have in mind that success will not come over night and you need to give your time to learn and practice.
You will be tested during your road by the temptation to jump into live trading with real money. You should not rush through your learning, you should take your time demo trading before going live and constantly evaluate your performance.
There are certain steps you should take in order to become successful Forex trader. Each step is important so write them down and learn them.
Read more: How Long Demo Trade Before Going Live
Define Successful Forex Trader
To be successful Forex Trader you need to define what that means. In Forex you can be successful in more than one area.
Being successful Forex trader you can be if you reach certain percentage of profit by each month. Maybe certain amount of pips per day or a week will make you successful Forex trader.
Read more: Do I Need 1000 Pips to Get Rich
Defining realistic and achievable goals is one step closer to be successful trader. You should define long term goal, like annual goal instead short term goals, weekly or monthly.
With the goals in front of you the next step is to define which tools and resources you need to achieve those goals. Maybe you need to increase your knowledge on some parts of Forex trading. Maybe the account size must be larger, maybe you need to find more time for trading.
Successful Forex trader is:
- Trader that have a trading plan. Trading plan guide the trader in the right direction when there are fluctuations on the market which could make harm to a trader
- Trader with risk management plan. The trader knows how much he will lose on the trade if the trade is losing one. He knows how much will earn if trade is profitable. He have stop loss and take profit level and he does need to watch the trade all the time.
- Trader with patience, discipline, knowledge, controlled emotions, skilled
- Trader that does not hunt for quick money but with financial goals on the monthly and yearly basis
You have to be realistic and not obsessed with the profits. Do not run for the unrealistic goals where you will earn 1000% in a day. The quick rich scheme should not be your goal.
If you define to large expectations you will make great emotional pressure. The pressure will force you to open to much trades and over sizing those trades.
When you open to much trades you start over trading which eventually leads to destroying your account balance.
Over sizing the trades puts you to higher risk which also eventually leads to losing all the money you have on your trading account.
Do not make the biggest errors people make when trying to become successful Forex trader.
When you define all what you need the next step is to make a plan. How will you reach that and with which steps.
Have a Trading Strategy and Trading Plan
One of the first steps to reach a goal being successful Forex trader is to make a trading strategy. It is trading plan that will guide you how to detect, analyse and finally open and close order.
Trading plan is there to guide you through each step and to maintain the focus on the correct steps. If the market changes, your trading strategy and plan will drive you in the correct way.
The trading strategy should be inline with your personality so you do not deviate to much. If your trading strategy is not for you, you will see that you cannot follow the steps on each trade. You will start to change some rules because you feel you should change them.
Any trading strategy you develop you have to test on the past price. History will tell you does the trading strategy is profitable or not.
The trading strategy must also follow the risk management plan because those two should work together.
When you use the trading plan for a while you will become aware of certain things which influence on your trading results. When you are aware of them you can improve them or you can use them more, it depends what kind of the thing is.
Develop Risk Management Plan
Risk management plan is there to protect your money. If you do proper preparation with risk management plan you will save a lot of money in the long run.
If you do not make risk management plan you will not have control over the money on your account balance. It will happen that you open to much orders with large lot size and after trades you will lose all what you have.
Risk management plan will tell you how much you can invest in each trade. How much can you lose if the trade is losing trade how much you will earn after the trade is close with profit.
By defining the risk you are comfortable with you will know how long you can stay in the trading until you lose all the money you have. Also, you will know how much you will earn after certain number of trades.
All that is necessary to know so you know which financial goal will be fulfilled and when. That way you can control yourself from random trades looking for quick profit.
If the risk management plan does not suit you, then change the risk management plan so you are satisfied with it. You need to be friendly with the risk management plan because it will be your best friend.
Control Your Emotions to Become Successful Forex Trader
If you can you should remove emotions from the trading if you want to be successful Forex trader. Emotions are the worst enemy of Forex traders.
If you lose the money do not revenge on the market. Do not blame yourself being wrong because trading will give you wining and losing trades. And you need to accept both as a normal thing.
When you are down because of a losing trade do not trade until you refresh yourself. That way you will prevent doing the same trading mistake and losing more money.
If you win order after order do not get excited and to confident. To much confidence will drive you to open order with larger lot size. If trade becomes losing trade you will lose to much money.
To prevent emotions influence on your trading you should follow the trading strategy which will force you to do the right steps. The risk management plan will prevent you from opening to large lot size.
If you automate trading then you have done step to eliminate all emotions from trading.
Be Patient Forex Trader
Being patient in trading is very important because you need to stop over trading. Patience will help you not to trade to often but to wait the best possible trade.
When the best possible trade appears you will take the money from the market. And I mean lots of money.
Patience is not easy to have unless you are generally patient person. Patience requires from you to calm down your nerves. If you are nervous person then you will have very hard job to become patient Forex trader.
If you like to be in front of the screen and to click on the mouse button you will hardly be patient trader. For you the best is to have demo account next to live account so you can open a trade on live account, only the best signal, and on the demo account you can click anything you like. Just to satisfy your need for clicking on something.
After some period of trading you will see that the best signals do not appear to often. And because of that you need to wait patiently.
Be Disciplined Forex Trader
Being disciplined Forex trader means following all your rules you have set for you. Discipline will make you follow the trading plan, risk management plan, being patient, using stop loss level, taking the profit from the account and force you to consistently improve.
Not taking the trade during the day because there is not trade signal is one way of testing yourself are you disciplined. If you can watch the market for the whole day without trade open with correct signal, you can confirm that you are disciplined following your trading plan.
Read more: How to Stay Consistent Forex Trader
Avoid Over Trading
When you think that you see the trading opportunity and there is no signal that confirms that opportunity, it means you want to over trade. You want to open a trade when there is no confirmed trading signal just to have open trade to watch.
Having a goal and to reach that goal thinking that you need to open a trade not matter what will lead you to lose the money you have on your trading account.
You should avoid having these two types of over trading:
- trading to frequently
- trading with too much volume
If you have any of these two types of trading styles you are over trading and you should stop doing it.
Have a Trading Mentor to Become Successful Forex Trader
Trading mentor gives you the speed and guidance that all beginners need at the start. Mentor knows what you need to know and he knows what you should not do.
If you are not a beginner or you know at least something about Forex trading then you know how much time you have lost only for reading. Watching the video and testing all the thing you have seen.
It takes a lot of time and it is the question do you you have it done correctly. Have you test the indicator or strategy in a correct way.
If you do not know anything and you are learning it will take a lot of time to become a successful Forex trader. It will take years to see what you are doing correctly and what incorrectly.
All that can be compensated with the trading mentor who knows all that stuff. Mentor have years behind him and he have pass all the obstacles you are going through.
That is why is advisable to take one mentor who can teach you how to trade. Who can teach you all about trading station and the charts. What so look on the chart, how to enter the trade and what to look for when trading.
You will learn what is risk management and how to protect yourself from losing money.
To be successful trader it is smart thing to invest in professional trader who will shows you all what you need to be on the right path.