The 5 Rules To Help You Become A Successful Forex Trader
Forex trading is considered the great investing frontier. It is the one market where a minor investor with a little bit of trading capital can actually hope for a ‘rags to riches success story. However, it is the most widely traded market by large institutional investors with billions in flux globally, daily. The 5 Rules To Help You Become A Successful Forex Trader, therefore, become a necessity.
Daily pivot points
Paying due regard to daily pivot points is particularly important if you are a day trader. This becomes even more important if you are a position trader, swing trader, or just train long time frames. Thousands of traders do take careful note of pivot levels.
Pivot trading is close to a self-fulfilling prophecy. The implication is that markets will frequently find support or resistance or make market turns at pivot levels since they are confirmed pivot traders. Hence, frequently, when important trading moves take place off pivot levels, there is no basic reason for the move other than a lot of traders have placed trades expecting such a move.
Naturally, pivot trading cannot be the only prop up of your trading strategy. Rather, we are emphasising that irrespective of your personal trading strategy, you ought to look out for signs of if trend continuations or possible market reversals. Therefore, observe pivot points and the trading taking place around them as an affirming technical indicator that you may use jointly with your trading strategy.
Trading with an advantage
The most prosperous tradesare those that only put money at risk when an opportunity in the markets gives them an advantage, a quality that enhances the possibility of the trade they initiate being successful.
Your advantage could lie in anything at all. It could reside in something as simple as purchasing at a price level that has heretofore shown itself a level that gives important support for the market(or selling at a price level you have marked as strong resistance).
You may enhance your advantage and the likelihood of your success by having several technical factors in your favour. For instance, in case the 10 period, 50 period, and 100 periods moving average all come together at the same price level, that ought to give considerable support or resistance for a market.
A similar advantage given by the coming together of technical indicators comes up when several indicators on diverse time frames give support or resistance. An instance may be the price closing in on the 50-period moving average on the 15 minute time frame at the same price level where it’s closing in on the 10 periods moving average on the hourly/4 hour chart.
Another instance of having several indicators in your favour is getting the price to hit an identified support or resistance level. The price action at that level could point out a possible market reversal by a candlestick formation like a pin bar or doji.
Hold on to your capital
In forex trading, sidestepping large losses is vital relative to raking in large profits. Therefore, you must know how to preserve your capital. That’s a prerequisite to help you become a successful forex trader.
Most traders blow out their accounts by the time the juiciest trade comes along. Therefore, to trade well, one must have capital that does not deplete too fast.
Sticking to strict risk management rules nearly guarantees that you will be a profitable trader. If you just hang on to your trading capital, even a home run trade will exponentially increase your profits. The luck of the draw could lead you to make that trade that could compensate for all shortfalls for an entire year.
To make that trade, you must have enough investment capital to be deployed at that most opportune moment.
Simpler technical analysis
To do away with confusion, doubt, and indecision, the trader should use a maximum of three technical indicators. A profusion of indicators and charts will not necessarily make for better analysis.
Appropriate stop-loss orders placing
A leading factor that more often than not causes a lack of trading success is running stop orders too close to the entry point. So naturally, it’s vital to enter trades that permit you to place a stop-loss order sufficiently close to the entry point to sidestep a major loss. But it remains important, too, to place top orders at a price level that’s logical, per your analysis.
Conclusion
A lot of time and dedication will need to go into the drive to master the FX market. The market is complex and demands discipline and a stable perspective. Risk management, combined with a simpler approach, will get you good results. Only seasoned players ought to venture out into volatility with complex approaches and strategies. With vigilance and awareness of what’s happening around him, The 5 Rules To Help You Become A Successful Forex Trader can convert students into true practitioners.