Trading foreign exchanges has never been easier, thanks to the advent of new technology, and as a result many people are getting into this potentially lucrative form of trading.

However, like any form of financial activity, Forex trading isn’t something that you can make money from overnight. Many of the experts whose advice can be found at forextraders.comworked hard to develop their skills, and Forex trading is not simply a matter of following a simple pattern and collecting a profit. In fact, it is more of an art than a science.

Fortunately there are strategies that can help to improve your trading performance. So if you are a newcomer to Forex trading, or you simply want to boost your profits, here are some useful tips and ideas that can help you become a better trader.

Set realistic goals

Your long-term goal is no doubt to become a professional Forex trader and make a lot of money. But how are you going to get there? Knowing your eventual destination is important, of course, but it isn’t a plan. You need to set out a series of achievable goals that you can hit in the short-term, and build towards your long-term aim. Those goals might be to stick to your strategy for a month or to make a certain level of profit. Set small, achievable goals to plot your course towards the ultimate aim.

Keep it simple

One of the most important things to learn is that Forex trading is not technically complicated. There are straightforward techniques and strategies that can prove profitable. The tough parts of Forex trading are the emotional and psychological aspects. Getting your psychology right and controlling your emotions is hard enough without having to operate a complicated trading system. Keep it simple and make your trading easier.

Trade less

It may seem counter-intuitive, but one of the easiest improvements you can make to your trading strategy is to trade less. That applies particularly if you’re a man, as there is abundant evidence that men are prone to be too active when they trade and make smaller profits than women as a result. You should be focusing primarily on the quality of your trades, not the quantity, as a high-frequency trading approach rarely works. If you can get to a point where you are happy not to trade for a week if you can’t see an opportunity, they you will have the right balance. Those who trade frequently are often just gambling.

Ditch the indicators

Many Forex traders make the mistake of relying too heavily on indicators. They are essentially looking for a magical system that guarantees them a profit, and they will almost always fail. Ditch the search for these mythical profitable indicators and focus instead on developing strategies and techniques that work in the real world.

Do your homework

Unfortunately, many new traders want to take a fast track to profit. They read one or two books, get the latest trading software and expect to make their fortune. It doesn’t quite work like that. While your trading systems don’t need to be complicated, that doesn’t mean that you can afford to skimp on your research. Trading is a skill and it takes time to learn. The less you read, the longer that process will take. And with such a mass of information easily available online there is really no excuse not to do your homework.

Against the crowd

Against The Crowd is the title of a seminal horse racing betting book by professional backer Alan Potts, and it is a handy little phrase to remember whenever you find yourself watching one of those financial TV shows or reading the business section of your newspaper. Going against the crowd is, of course, no guarantee of success, but following the crowd is a certain guarantee of failure. If you are reading a piece of advice in the Financial Times, then so are thousands of other Forex traders. Chasing after the crowd is a fool’s errand, so develop your own ideas, your own strategies and go your own way.

Don’t give up the day job

The desire to get out of your mundane office job can be powerful, but it takes time to build up the skills to be a successful Forex trader. Don’t try to be a full time trader until you are confident that you have the knowledge, the mindset and the funds to succeed. The unwary and the impatient rarely last long as traders. Take your time, practice your skills diligently, and you will increase the chances of one day being able to leave your job.

Conclusion

Forex trading is not easy. It requires a certain amount of technical knowledge, a degree of diligence and discipline, and an array of psychological qualities. But by following these strategies you will be giving yourself a solid grounding towards what may one day be a lucrative career as a full time Forex trader.

By James MacDonald

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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