To be a successful trader, improving trading performance is essential. Even successful traders don’t have a 100% successful ratio of trades. But when you improve forex trading, you manage to be profitable in the forex market. Forex trading requires adaptation to different trading strategies to be a successful trader.
As a new trader, some tips that can help you improve your trading are: learning from your mistakes, keep a trading plan, analyzing your previous trades, practicing on a demo account, using a trading journal, etc.
This article will try to help you to become a successful forex trader and improve your trading skills in the foreign exchange market.
Limit your trades
As a forex trader, it can be frustrating sometimes when you don’t trade. Some traders don’t have much patience in trading and try to look for opportunities in markets more than it’s suggested.
You should open trades according to your analysis of the market. If you don’t have much confidence about the trades you will enter, it can lead to end trades in losses. Trying to make money in the foreign currency market, can be stressful, and opening many trades can have a negative result.
Following your trading rules and forex strategy is important and you should trade based on your analysis. Also, trading with emotions can be risky, so make sure to trade according to your analysis and don’t trade with emotion.
Stick to your trading style
Finding a trading style that proves a success, is important in Forex. And you should stick to your trading style that you’re most comfortable with. For example, if you’re a scalp trader, then sticking to scalp trading can improve your trading performance.
If you’re a day trader, then sticking your day trading style can improve your performance. Or if you’re a scalp trader then you should stick to scalping style as it can improve your trading.
With scalping style, it can be riskier for you as a forex trader than trading with swing trading style. And trading currency pairs with swing trading style, if you’re a scalp trader, it can affect your trades negatively.
The best way is to stick to your trading style even if you don’t find opportunities on the market to trade. By trading both timeframes it doesn’t mean you won’t be a successful trader. But it can affect your trading results, as you may not have enough knowledge about the other trading style.
Use Stop Loss
Placing stop loss on trades, from some traders it’s seen as something that won’t have much impact on trades. The reason why some traders don’t use stop-loss, it has to do with trading style (scalp and swing).
Some traders in the forex market, may not use stop losses on all orders. For example, if you’re scalping, then stop loss should be placed not very wide, and that’s one of the reasons why some traders don’t use a stop loss.
By not placing a stop loss on trades, can result in a huge balance downfall. The market movement can change in a couple of seconds due to fundamental analysis. Important economic events such as NFP, Employment Rate, Interest Rate, etc, in most situations, affect the market with a movement of 50 pips, 100 pips, etc.
Currency trading has different currency pairs to trade such as cross-currency pairs, major currency pairs, and exotic currency pairs. And the news has more impact on currencies that are more volatile like cross currency pairs and exotic currency pairs.
And if you trade without a stop loss, it can affect your account’s balance. With a stop loss, you can protect your trading account when unexpected movement occurs on the market.
Use Take Profit
Take profit may not save your account by closing your trades automatically. But it will close your trades when the market price reaches your take profit price.
In situations where you’re not able to access your trading account in a trading platform, take profit can be very helpful. Or when a huge market movement occurs in your market direction, it will increase your trade profit by moving the market price closer to your take profit.
The order will be automatically closed once the market reaches your take profit price. By using the take profit, you don’t have to worry about closing your trades, as take profit does this automatically.
Cut your losses
Cutting your losses before it’s too late can save your trading account balance by a further account balance loss. And this is one of the reasons why some traders don’t improve their trading performance and don’t follow their forex trading strategy.
The mistakes that new traders do, is that when the fx market moves in the opposite direction, they don’t close the trades. Having an entry point that’s considered a good buy price makes the traders think to not cut losses earlier.
And you as a forex trader if your trade is on a loss currently, you may not close the trade on a loss. You hope that if you wait more time, the market will change direction and your trade will go back in profit. By doing this, you may close your trades on a further loss and it will affect your account balance.
Also, it can affect your psychology negatively and your trading performance. To make trade decisions if you should close your trades earlier or not, you should analyze the market.
With technical analysis, you will find market patterns, price action, change of trend, etc. And with the analysis done correctly when your trade is currently on a loss, you can determine if you should close the trade or not.