The world of forex can be quite rough. It takes skills, knowledge, hard work, and resilience to make it in the forex market. As a beginner, navigating the market can be challenging, but you shouldn’t be scared; your skills can improve gradually through dedication and continuous learning.
The following are tips to help you improve your trading skills and performance.
As a forex beginner, there is still much to learn to get you started. Although you might have obtained some knowledge through textbooks, ebooks, online courses, and demo accounts, it will be better also to seek wisdom from experienced traders.
Standing on the shoulders of a giant can give you a better view. Get yourself an experienced trading mentor from whom you can gain insights. Getting a mentor doesn’t mean taking your mentor’s trading advice verbatim. It’s just for you to learn from factors that influenced their past failures and wins.
Your mentor can also serve as your accountability partner and get you on track when you are wavering in your discipline. Having a mentor who keeps you in check can help you avoid mistakes and stay focused. Mentors can also motivate and encourage you during down periods.
Aside from mentorship, join a community of link-minded and forward-thinking forex traders. There are various forums and chatrooms where they exchange meaningful trading insights and knowledge. Listen to other people’s opinions, share your opinion and performance, ask questions and seek others’ feedback.
Mentorship and trading communities can broaden your knowledge and improve your trading skills. However, be cautious about who you choose as your mentor and community. Selecting the wrong source of trading insights can be detrimental to your forex trading career.
Be wary of toxic and opinionated individuals. Don’t hesitate to quit groups that don’t align with your values and principles.
Don’t follow the crowd
It’s good to listen to other people’s opinions, but you are not obligated to follow a view that does not align with your plan.
Establish your trading strategy and craft a plan upon careful analysis. Be confident in your well-crafted plan. Don’t change your plan because it doesn’t align with that of your mentor or forum members. Don’t change your trading position because your celebrity market analyst said something contrary.
No one is perfect; even experienced traders do make mistakes. Once you’ve made a thorough analysis, drawn out a plan, and open a position, you don’t have to discuss it with anyone who may discourage you or put you in doubt. Trust your plan and follow it through. Only make adjustments when there are clear fundamental and technical indicators to the contrary.
By following your plans, you will know what works for you and what doesn’t.
Practice makes perfection. You can’t get better at it if you are not consistently trying. To avoid trading mistakes, practise your strategies with a demo account and see the result before going live. The forex market is quite dynamic and tricky. Theories are different from what is happening in the real market. Practising with a demo account will subtly improve your skill since your money is not on the line.
Practice can help you minimise preventable losses. Losing with a demo account will give you an insight into what to avoid and what to do during live trading. Practising your strategy will provide you with a view of the best time to open and close a position- when it’s too late and too early. You will know position sizing and a reasonable amount of leverage to apply.
Clear your head and be focused
Your mental state has a considerable influence on your trading performance. Before you start live trading, ensure you are in the right mental state. Free your mind of any anxiety or emotion that can affect your reasoning. You need mental clarity now more than any other time—free your mind of anger, grief, or distracting thoughts. Negative emotions can affect your logic and lead to monumental loss.
Secondly, eliminate any physical distractions. Trade in a calm environment. Don’t perform any other task while trading. Things like email, social media notifications, or online videos can distract you. Block off any of these channels before you start trading. Step into the trading mode and stay distracted-free till the end.
Record and review all your trades
Keeping a record of your trades and creating a time to review them is good. This will give you an insight into strategies that are working and those that are not. You can recognise your mistakes and improve on them in the future. You can also see your winning points and capitalise on them.
While recording your daily trading activities in a journal is reasonable, taking screen records and screenshots is better. Videos and pictures will show your actual performance without missing any details.
Do not just take records, have a review schedule. Reviewing your performance and learning from your mistakes and wins is the purpose of recording. You can check your record weekly or monthly if you are a day trader. As a long-term trader, you can choose to do yours monthly, quarterly, or annually.
Diversify your strategy
Being dynamic with your strategies will broaden your knowledge and populate your forex trading arsenal. Although you have your specific trading strategy, it is good to be open to other approaches; you can try different techniques with similar concepts. Along the line, you may discover you are good at several other strategies than the one you apply religiously.
Trade different currency pairs
Trading dynamically also applies to currency pairs. You don’t have to be attached to a currency pair or always trade the most valuable pairs.
If you have mastered USD/AUD pair movements, you can broaden your trading skills by trading similar pairs like AUD/EUR, JPY/AUD, or AUD NZD. You can improve and make more profit in different currency pairs if you make the necessary analysis before opening a position.
Forex trading is not rocket science. You can improve your trading skills through continuous learning and unlearning. Trust the process, associate with like-minded people, follow your plans and be open to new strategies. Believe in yourself; you can do it!