It was Confucius who said “Life is really simple, but we insist on making it complicated.”
Of course, I bet Confucius never had a go at forex trading. As a newbie forex trader you’ll probably find a swathe of confusing and even contradictory information, as you try and grapple your way to consistent trading profits. You’ll find a sea of strategies, an army of self-proclaimed forex gurus and about a thousand automated forex trading bots all telling you that they have what you need to nick profits from the market.
So, with such an array of possibilities how can a newbie home based forex trader make those all important, first few profitable trades? Well, simplicity and planning are important, and often overlooked factors in forex trading success:
- First, Get Your Mindset Right And Have A PLAN In Place
Whatever project you undertake in life – be it a total redecoration of your home, or setting up a new business, you would have a plan right? Forex trading is no different. You should have an overall plan that focuses your mind – it should include things like what trading indicators you will be using, and what stop loss levels you will set. Your grand plan should also set out what hours you’ll be trading, and there should be some allowance every day within that plan to learn new forex strategies. In this game, the more you learn, the more you’ll earn.
Beyond your main trading plan, each and every trade you make should also have a concise mini plan. Before you pull the trigger and get into a trade, it’s crucial to know why you’re getting in and where you plan on exiting. You can’t just stumble in and out like a drunk trying to find his way home, or you may find that you burn through your trading capital pretty quickly.
- Create A Forex Trading Diary
I have a folder on my PC called “trading diary” – it contains a word doc that details every single trade that I have ever did. The diary includes details such as the strategy that was used, what prompted me to enter the trade and what made me exit. Let me tell you right now, documenting your trades in this way can be a superb way of helping you become a consistent and profitable trader. Because, as your case history builds up into the hundreds and ultimately spills over into the thousands, you’ll be able to identify and cut out the mistakes and jump on the situations that you recognize as nailed on certs.
Always remember – forex trading is all about identifying patterns that recur. They recur every single day, in every single currency pair. When you see them – well it’s as good as picking up money from the floor. And your personal trading diary will be one of the most powerful tools in your trading arsenal to help you identify these patterns.
- Trade Without Emotion
Emotions can be a good thing – when for example you’re at a football game, or when you’re about to propose to your better half. In the world of forex however, it can be your downfall. You must always trade in a calm and structured way. If you have a trading system in place, this helps you to trade without having to make emotive decisions. Because if the system says cut your loss, you cut it. And move on. And if the system says take your profits. You bank them. And move on.
The more you think of it, the more you suspect that old Confucius got it spot on. Forex trading can, and should be simple – maybe it’s the industry, with its never ending offerings of complex courses, systems, bots and gurus that have made it harder than it should be.