10 Powerful Tips to Kickstart Your Forex Trading Success

How to Get Off to a Great Start in Forex Trading? Certainly, it's no small feat. Especially since, according to statistics, only 15% of traders end the year in profit, and this includes not only beginners but also, and above all, long-time traders. The secret, if a secret exists, is to adopt good habits, or at least follow some winning tips. Here are ten of them.

Create a Trading Plan and Stick to It

Every good trader invests through a solid trading plan. It guides the trader, suggesting what to do, how to do it, and when to do it. This is regardless of the underlying strategy and approach. Whether you are an intraday trader, swing trader, or, even worse, a scalper, you need a plan. How do you build a good trading plan? The first step is to identify your goals. The questions to ask are: Do I want to trade full-time or part-time? What level of risk am I willing to take? How much starting capital do I want to invest? The other steps are self-explanatory and involve purely technical matters such as the assets to invest in, the tools to use, etc. An important aspect concerns the plan development mechanisms. The temptation is to take a proven plan used by others and adopt it point by point. This is potentially wrong, as the trading plan should be a personal tool that adapts to the trading style of the user.

Start Small

Beginners often get carried away with enthusiasm. Well, this is a huge mistake. Firstly, because this attitude pushes and leads to spending a lot, i.e., placing orders that are too large. Secondly, because an overly "excited" trader has the bad habit of trading always and in any case, thus exposing themselves in an imprudent manner. Winning trades strike at the right moment, seizing opportunities when they exist, not when they seem to exist. So, how should you proceed? The advice is to take it slowly, very slowly, at least initially. This means choosing one instrument (which can be CFDs or direct trading) and one Forex pair. Once that choice is made, it's necessary to specialize in it. This means identifying the market movers, behavioral patterns, and the most suitable indicators to predict prices.

Manage Risk

Okay, managing risk in a rational, technical, even pedantic way is boring and takes away the allure of trading. However, it can save your life. The reason for this is almost obvious: managing risk means saving, and saving means having more capital compared to uncontrolled activity. How do you manage risk? The discipline that deals with it is called risk management. Without going into details, we can anticipate that a fundamental step consists of identifying the amount you are willing to allocate to your trading account and, proportionally, the amount you are willing to allocate per single trade. A good rule, which must be validated by the trading plan, is to never spend more than 3% of your capital per single trade. According to this approach, it would take more than thirty consecutive losing trades before going bust.

Set Stop Loss

Stop Loss is a fundamental tool for limiting losses. In fact, it is a significant part of risk management. Specifically, Stop Loss is the price level beyond which the order is immediately closed. If you use automatic trading, exiting the market occurs, precisely, automatically and is therefore placed outside the trader's discretionary space. If you use manual trading, obviously, the exit must be manual and spontaneous. The crucial point of using Stop Loss is its placement. What is the most appropriate price level? Well, it must be found trade by trade. One of the many ways to identify it is to leverage pivot points, i.e., resistance and support levels.

Manage Your Open Positions

According to a certain notion, actually clear only to beginners, trading is planning and waiting. This is only partially true. In fact, there is operational management in between. Which, to be honest, is absent if you do automatic trading (but that's another story). If you do manual trading, operational management is an essential part of your activity, or at least it should be. In most cases, this means modifying the Stop Loss as needed. That's right, Stop Loss is not a rigid element. If market conditions change radically, suddenly, and, above all, on the fly, changing the Stop Loss is almost mandatory. Unfortunately, managing operations and open positions is very difficult. It requires not only analytical skills but also coolness and short-term decision-making ability.

Follow an Expert

Obviously, the advice is not to cling to a trader's skirt and do exactly what they say. The idea is to proceed on your own, until your legs give out or reveal a step that is too short. In short, if you start doubting yourself, look to others. In some cases, following another trader meticulously (and not occasionally) is wise and even constitutes a strategy in itself. It's the copy trading strategy. There are, however, different ways to follow others. It's not about faithfully replicating orders, even from a quantitative point of view. It's actually about following other people's strategies and operations, especially in terms of the set of indicators and, in general, the approach to analysis.

Manage Your Emotions

Managing your emotions is even more difficult than managing risk. To manage risk, after all, discipline and a bit of technical knowledge are necessary. To manage emotions, you need a moral and mental stature that, honestly, is not present in all traders. This is no small detail, because, as all insiders agree, psychology is an integral part of trading. It is not possible to embark on a profitable trading career without having done some work on yourself, a path of analysis that, for once, does not concern markets and charts, but rather your own psychic, psychological, and emotional sphere. What mental characteristics must a trader have to succeed? First of all, they must have a lot of coolness, which means great resistance to stress. Secondly, they must be endowed with quick thinking, which is essential for managing emergencies, especially in the midst of operations. Finally, they must have courage and a certain determination, which translates into the ability to get back up when things go wrong. Defeat, in fact, is the faithful companion of all traders, including - paradoxically - the winning ones. Also read: 20 Statements that Prove You're Not a Professional Trader

Study

In general, studying is a concept associated with the phase prior to actual trading, the preparatory phase. In short, the training path that transforms an absolute beginner into a trader ready to face the market. Well, this is a partial truth. Studying, in reality, is a practice that should never leave the trader. They must continue to study throughout their career, updating themselves without interruption. What should the subject of study be for someone who is simply no longer a beginner? There are many: new trading systems, assets other than the usual ones, and, of course, the economic environment in all its forms and phenomena. Studying is important because the market changes, and those who don't study remain perpetually the same.

Don't Be Guided by the Past

Incidentally, by "past" in this paragraph, we mean previous trades. Regardless of whether you won or lost, the guiding star must be the trading plan. Very often, however, traders, especially inexperienced traders, tend not so much to act, but to react. With their trades, they react to what happened in the past, either to ride the wave or to seek redemption. The worst approach between the two is the one that consists of seeking redemption. Well, it's the most effective way to lose again. To break free from this approach, which, it must be said, is completely spontaneous, natural, and physiological, you need a lot of courage and resistance. In short, it comes back to the issue of psychology.

Choose Your Broker Carefully

Fortunately, this is advice that more or less everyone follows, as it is well internalized even by beginners. The broker, in fact, is anything but a neutral component in the life of each trader. Especially if you operate with a market maker broker. Therefore, choose a broker that is first and foremost honest, one that does not row in the opposite direction to that pursued by the trader. Secondly, a broker must provide a sufficiently comprehensive offering. If possible, it should be affordable. The advice is to not stray from the beaten path and rely on the most well-known brokers. Their success is well-deserved and testified by the high number of users.