How to Become a Successful Forex Trader

by Andrew McGuinness     lip 16, 2019

How to Become a Successful Forex Trader

Many traders taking their first steps in the Forex market are usually uncertain of what to expect. This results in first-timers making the same mistake: going all in and then losing a sizable investment. At this point, traders either give up and convince themselves that Forex Trading isn’t for them, or they take a deep breath and teach themselves how to be better.

There’s no reason why you have to make the first mistake of losing your first account before teaching yourself the right way to become a successful Forex trader. Here are some basic tips you need to know to start your path towards Forex trading like a pro:

Decide What Kind of Trader You Want to Be

Before anything else, you need to develop your own trading philosophy. Sticking to a philosophy over your trading career is the most effective way to make long-term gains, and it will also make it easiest for you when you are faced with tough decisions. There are three types of traders and trading strategies. These include:

Short-Term: Short-term traders are trying to find profitable trades that they can open and close in just a few minutes. They rely on the price dips and jumps that can occur in just moments.

  • Pro: You will never have to wait long to know your profits or losses on any given day. You take a very active approach in your trading.
  • Con: Prepare to have a large capital, allowing you to afford the risk requirements of potential losses.

Medium-Term: Medium-term traders have timelines of one or several days. They sell low and buy high based on immediate technical situations around the asset they are trading.

  • Pro: Low requirements in capital, since the trader only requires leverage to raise profits.
  • Con: Finding profitable medium-term trades can be difficult, resulting in fewer opportunities to exercise this type of trading.

Long-Term: Long-term traders are sometimes referred to as holders. These are the traders who purchase their assets knowing that they are in it for the long-haul, believing in long-term factors over short-term dips and highs.

  • Pro: Reliable, if research has been done. It can result in very high profits if you invest properly, and requires very little day-to-day work.
  • Con: Must be willing to withstand long-term investments, without taking it out through highs or lows.

When deciding which strategy you want to pursue, make sure that you choose which one is comfortable for you over the long-term. It may take a trial-and-error process before you truly find the strategy that works for you.

Run a Demo Account Before a Live One

Practice makes perfect, the saying we all know but never practice. Before dealing with real money and real trades, the value of practicing with a demo account cannot be further emphasized. The demo account is exactly what you need to understand the ins and outs of trading on the Forex market, without losing anything.

There are several valuable demo account platforms you can begin your Forex market education. Generally, you should only make the jump from demo to live when you are comfortable with trading on the Forex market. This means that you shouldn’t rush it, and anything less than a month is too little time.

General Tips

After you’ve decided on your personal trading philosophy and taught yourself everything you need to know with a demo account, there isn’t much else you can do to make the jump to becoming a professional Forex trader than through trading itself. Here are a few tips you need to keep in mind:

  • Never let your emotions define your trades.
  • Risking over 2% of your margin in a single trade is unadvisable.
  • Create stop-losses in every trade that you make, or prepare to lose everything.
  • Don’t let your losses define you; they are a part of the trading game.
  • Don’t let previous losses or gains set your next ones.

The difference between a lucky beginner Forex trader and a professional Forex trader may not seem like much, but there are many small things you can only learn after long years of trading. But if you put in the time and the effort, someday soon you will be trading for a living.

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