How to Practice
Effective Forex Trading? To do so, an in-depth understanding of market dynamics is essential.
In the hope of transforming their trading activity into effective Forex trading, traders, especially the less experienced ones, engage in studying sophisticated and complicated techniques, without knowing that this is not the right path, at least not initially. First of all, it is necessary to have a clear idea of
the logic of the market, and to do so, it is necessary to debunk some myths and reiterate old truths. Here they are.
The Myth of Adverse Fate
Many novice traders think that if they have lost once, they will lose for a lifetime. This is absolutely not true. Many success stories start from one or more defeats. It's enough to think that yes, you just need to roll up your sleeves and understand where you are going wrong, and finally correct yourself in the most resolute way possible.
Thinking instead that your path is already marked leads to a sort of spiral of pessimism, which is capable of causing incalculable damage.
The Myth of the Fortune Teller
One of the mistakes that beginners make, which precludes access to effective Forex trading, is thinking that prices can be predicted. There is no magic wand, and there are too many factors that can influence the price to make a prediction more realistic than any opinion.
Traders must focus on the trend and on trend breakouts. They can sense the direction, the price movements, but never the exact price.
The Myth of Technical Analysis "Uber Alles"
Technical analysis is of paramount importance in trading activity. However, it is not enough to guarantee effective Forex trading. In fact, if practiced alone, the risk is stumbling into heavy defeats. Let's be clear, the trading community is divided on this point, but there is no doubt that fundamental analysis must also be practiced consistently.
This is true because only fundamental analysis gives full awareness of what is happening outside the market, thus allowing to take measurements and calculate the effects of important events such as the release of economic data, central bank conferences, interest rate announcements.
Forex as a Business
Among the most toxic thoughts for a trader is that Forex is a sort of gambling game where luck counts and that therefore, sooner or later, the wheel will turn in one's favor. This is absolutely not true. Forex is an investment activity with the same dignity as stock trading, commodities, etc. This means that to succeed in currency trading, it is necessary to adopt an investor's mindset, and specifically a speculative investor's mindset. Far from betting. It's about setting goals, developing a strategy, studying the market with the most scientific tools possible, and operating with discipline.
The Importance of Strategy
From here, one easily arrives at the next point. Strategy is an essential element, for a whole series of reasons. First, because it is not possible to improvise: analysis, strategy, and operation are the triad of activities that all traders must respect. Secondly, the strategy allows you to keep under control, as far as possible, the element of unpredictability that characterizes markets in general and the Forex market in particular.
The strategy can follow a specific model, but it is good that it is enriched by a personal touch, as the goals it hopefully allows to achieve are personal.
The Importance of Discipline
We have talked about the importance of goals and the importance of strategy. But discipline is also an element of fundamental importance. Why? Simple, because an undisciplined trader is a trader who fails to follow his own strategy, and therefore is a trader destined to lose. Discipline is also decisive because it allows you to shield yourself from emotionality, which is the number one enemy of all traders.
If there is no discipline, there is improvisation; if there is improvisation, the need to decide on the spot emerges, the fear of making mistakes, stress, etc. With discipline, however, the trade goes its own way, which was traced during the strategy development phase, therefore in a moment of clarity, free from particular emotional tensions.
The Choice of Broker and Indicators
Many traders succumb because, quite simply, they have not rationally chosen their work tools. The most important tool is the
broker, which must be fast, efficient, and able to provide adequate assistance. Other important tools are indicators, which allow you to measure the market from a more technical point of view and provide buy signals, sell signals, etc. Choosing bad indicators, or indicators not suited to your style, means drawing the wrong conclusions, with all the negative consequences that entails.
