Forex trading isn’t about winning the odd trade here and there. It’s about having a long-term strategy, growing your account steadily and being prepared to build your success over a long period of time. What follows are some tips to help you do just that…
Relax and prepare for a long innings
In many ways, Forex trading in Australia can be thought of in similar terms to a batsman trying making runs in the Australian cricket team. Forex trading, like a test match, is a long game that leaves you plenty of time to consider your approach. As a batsman, you should be relaxed and decide whether you want to play the next ball or just leave it and wait for the next one. By keeping calm and patient, but also focused, you can accumulate your runs slowly and steadily. That’s the same approach you can use to accumulate winning trades.
What you don’t want is to treat Forex trading like a short 20 over cricket match where the pressure forces you to throw everything in. As pressure goes up, the level of risk also goes up. You start to make poor decisions and end up throwing your wicket – and your money – away. In the long run, you’ll do better from Forex trading if you’re relaxed and patient.
Don’t just focus on profit
Considering that the point of Forex trading – in Australia or anywhere – is to make money, it might seem contrary to suggest you shouldn’t focus on it. But it’s true; rather than focusing on how much profit, you should really be focusing on learning how to trade. That’s because the more you know, the better your decisions should be. And the better decisions you make, the more money you should make. If you’re just focused on speeding towards the final destination of ‘Profit’, chances are you’ll miss all the signs along the way that actually tell you the best way to get there.
Manage your money
A big part of Forex trading is about being aware of how much you’re prepared to lose. Obviously every decision you make as a trader is geared towards helping your trades win, but the fact remains that sometimes your trades will go against you – not even top traders are immune to this reality. As a responsible trader, you need to put your own rules in place. It might be as simple as asking yourself before you place a trade, “Can I afford to lose this?”. If the answer is “No”, perhaps you shouldn’t be doing it.
It doesn’t matter if you’ve got a big pile of cash in the bank or more modest savings, every trader has their own level of what they’re prepared to lose. It’s up to you to manage your money properly and make sure you’re not trading beyond your means. Remember that with Forex trading, no one is forcing your hand and you’re in control of every trade you make.
Don’t be greedy
Greed. It’s one of the seven deadly sins and the one that Forex traders are most susceptible to. And it’s easy to understand why. You’re sitting there, about to place a trade when the thought crosses your mind, “if I put just a little bit more into this trade, I’ll get a lot more in return”. The temptation and reward are very difficult to resist, but you have to learn to do just that. For a Forex trader, it’s a painful experience missing out on a solid profit because you got greedy and decided you wanted just a little more of the action.
It might help to keep in mind that you don’t need to do everything in one big hit to be a successful Forex trader. Stick to your strategy, manage your risk and be comfortable knowing that there’s nothing wrong with modest success. Besides, when you add a whole lot of small successes together, that’s just as satisfying as a big win.
Hold onto your profits
You’ve had a few winning trades, your profit’s growing, your account is looking healthy and things are generally going well. Basically, you’re on a roll and it feels like you can’t do any wrong. That sort of success is so easy to view as permanent, but in the trading world you’re always only one trade away from a loss. And that’s why it’s so important to hold onto your profits. By doing that, even if you do end up losing some trades, you’ll still have something to fall back on. Besides, you’ve probably worked hard to earn that profit so there’s little point in risking it all again straight away.
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