How to Succeed In Forex In Five Simple Steps

04 January,, Amsterdam  Finally the first full 2015 trading week is here, in less than 12 hours markets will be opening for those traders, investors and speculators. Let’s hope for the best, be ready for the worst and wish a prosperous 2015 to you and to your loved ones.

Like in every job Forex trading involves tips and tricks to get more successful. Below I have outlined 5 simple steps for those of new traders asking themselves "How to Succeed In Forex trading":

1. Invest in knowledge

Anybody who wishes to get a piece of the large Forex profit cake must first seek to acquire the necessary knowledge and skill set. To do so, you don’t necessarily have to pay hefty training fees. There are a number of free Forex academies out there where you can follow free of charge. Many brokers also offer free of charge educational webinars. Invest your time wisely, chose right channels to follow but test what you learn on Demo account first then go live.

Benjamin Franklin: “An Investment in knowledge pays the best interest.” Benjamin Franklin: “An Investment in knowledge pays the best interest.”

2. Plan your trade, trade your plan

Some people fail to understand that without a sound planning, may it be scalping or swing strategy, that strategy will be a failing strategy. There is a famous saying in the book of investment ”Plan your trade, trade your plan and repeat it again.”

Planning your Forex trading activities also involves keeping a record of your traders in a trading journal where you should include why you plan to get in, how you plan to get out, risk management and actual results of your actions.

3. Risk management

Although the Risk Disclosures with bit “Trading Forex Involves High Risk” may and do sound scary, by using proper Risk Management tools this risk can be reduced significantly. So, if you are planning to enter to the Forex market in 2015 or get over your losing entries and become a winning trader this year you better learn the fundamentals of risk management. To start with, get over your greed and start using at least 1.5X risk reward ratio to stay positive at least in a 50/50 probability.

Warren Buffet “Risk comes from not knowing what you are doing.” Warren Buffet “Risk comes from not knowing what you are doing.”

I know it feels like you can get a millionaire in a day and probably you are making plans to buy that yacht you saw at the marina the other day. Well let me bring you back to the world, the bigger risk profit opportunity, the bigger the risk is involved.

The worst mistake every trader makes is risking more than his account could handle. So make a favour to your account and your heart and start using the following Position Size calculation formula:

Position Size = (Account size * percent exposure)/# pips risk * pip value (10 = standard, 1 = mini, 0.1 = micro)

Stick to the position size that your risk management allows and aim to be consecutive, eventually you will manage your loss and be consequently positive at the end.

4. Small investment is no investment

Especially the fact that there are many brokers now which offers deposits as low as $5 with 1:1000 leverage and so on and so forth, my recommendation for those of newbie traders is that invest wisely, when you deposit anything less than $1,000 you will no longer be able to apply proper risk management.

So make it part of your learning perspective, do not invest the money that you cannot support losing, control your greed and make sure to log your trading journal.

5. Chose the right broker

You may have the necessary knowledge and skill set but if you end up with a wrong broker all your efforts may be lost, especially the fact that there are too many brokers going bust these days you must spend enough time to find the right broker.

The real challenge in choosing a broker comes when a trader does not know what he is looking for in a broker. So first thing first, determine what attributes you are looking for.

There are a number of elements I am looking for in a broker these are:

  • Regulation. If your broker is not fully licensed and regulated by the US, UK, Swiss, Australian or Japanese regulatory bodies, you should be risk aware.
  • Trading Platform: Trading platforms can often be hard to use. MT4, MT5 and cTrader are the most common platforms retail traders will use. But even then, you must check if your broker’s platform is stable, in another way does your platform go offline during news times or Asian session?
  • Trading cost: What type of account does your broker provide? There are three types of accounts out there, these are Fixed Spread, Variable Spread and Commission accounts. It is up to you to decide which one is the most convenient one for your strategy.
  • Leverage and Margin call: This becomes especially important if your account equity is lower than $10,000. So you don’t want to end up with full margin being used and being stuck in a margin call situation
  • Personal Account Manager: Although the term personal account manager is not an old term, but it is relatively new in Forex industry. Every trader must have a personal account manager who can help him in case of any unexpected trouble.

Of course these points can go on and on depending on your personal criteria and you should be as specific as possible while choosing your broker.

6. Be positive

As an extra point for 2015, Be Positive. As I always say "It Starts Within". Start with yourself and find a reason to smile and be positive, because the energy you share with your surrounding has a direct effect in your decision-making, hence your success.

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