Making money in forex trading can sound simple – buy low, sell high. But as statistics indicate, with 90 percent of traders reported to lose money on their forex ventures, trading currencies, or any financial asset, it can be more than what average Joes and Janes can handle.
Fortunately, it doesn’t take an Ivy League education or decades of investing experience to make money in the trillion-dollar foreign exchange industry. Here are six ways on how to sharpen your investment skills:
Stay on Top Of the News
According to Casey Stubbs, the three market-moving factors to follow include microeconomics, macroeconomics, and, who is an experienced forex trader and writer of various investment-related content.
These three things can move currency pairs up and down by a significant amount. If you aren’t aware of an upcoming monetary policy announcement, such as the Feds deciding to cut interest rates in half, your account could get swept off its feet.
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Substantial financial losses can be incurred if you do not pay attention to these three factors. Stay on top of them by watching economic news on TV or reading articles. While most of these financial reports are lagging, meaning they’ve already happened before the news came out, having a good sense of where big players and market makers stand can help you position yourself on the safe and potentially profitable side.
Learn How to Decipher Investment-Related Content
Investment-related articles posted on sites like know how to use them to their advantage. Stock , while forex traders have meeting minutes released by central banks and interest rate hikes/slashes announced every few months., , and benefit traders and investors. Yet, only a handful of people
Deciphering the information involves understanding the keywords and terminologies used in this paraphernalia, such as pip, margin call, spread, distribution and accumulation, and overnight swaps.
Make Use of Indicators
Technical indicators and analytical tools can help sharpen your investing decisions using statistical data and historical prices. Bollinger bands, Stochastics oscillators, moving averages, and the powerful are good tools to implement.
It gives your trading approach some structure and minimizes chances of committing the most common trader pitfalls, such as overtrading, that lose them money over time. Put your chosen indicators to the test through rigorous back-testing and forward-testing. Make any necessary adjustments to increase the effectiveness of the said indicator/s.
Trade With a Demo Account
Demo accounts are helpful to traders of all skill and experience levels. It lets you test out custom-designed and existing strategies other traders use to see how they would perform in a real trading environment. Since all trades on a demo account are not real, zero risks are involved.
Many articles advise trading with a demo account for at least six months before moving on to a real account. But even after six months, intermediate and experienced traders can benefit from regularly using their demo accounts to refine their strategies or satisfy their need to trade.
Stick to Basics
In an interview for the book “Inside the House of Money” by Steven Drobny,that the basic underlying principles behind money management remain the same despite the constantly changing markets.
The technologies, stories, and players might change, but the characteristics that make the market dangerous and appealing simultaneously, such as market volatility and bubbles, continue to endure.
Many novice traders enter the markets armed with their newly learned technical indicators and strategies and the hope that they’ll make it big in forex. Unfortunately, these rookies tend to complicate things. They try to absorb advanced mathematical models and algorithms to try and outwit everyone else. As a result, they get mentally burnt out and make mistakes that cost them money.
Track Your Progress
Record your trades in detail, down to the reason/s why you opened and closed them. Having access to this data helps you determine which types of trade work and gives you the ability to adjust accordingly rather than just unthinkingly making trades.
Track your progress by writing trade details in a notebook or starting a blog. Record important trade details, such as the position size, currency pair, and time frame. A fact that many traders who blog overlook is the psychology behind each trade. What did you feel when you entered and closed the business?
Sharpening your forex trading skills is an investment worthy of your time and energy; otherwise, you are no different from a gambler losing money on casino tables night after night. Use the information above as guidelines to help steer you in the right direction.