The majority of new traders on the FX trading market are looking to make profits. While this is possible, not all traders will experience great amounts of profits. In fact, only 10% of forex traders earn a steady income off the foreign exchange market. In order to be consistently profitable you must have an understanding of the market and trading.
Be comfortable with FX trading
There are a lot of new traders who feel that they cannot move from their desk while they are trading. This is an incorrect assumption as staying at your desk can actually cause more harm than good. It is important that you take small breaks throughout the day to rest your body and mind. When you stay at your desk all day watching your trades you increase the mental stress of trading and this can easily lead to emotional decisions. The strain on your body should also be considered. The longer you start into the computer the more tired your body becomes and the slower your cognitive functions are.
It is recommended that you take short 5 minute breaks throughout the day. Some traders structure their breaks to occur every hour while others take a break when they feel they need to.
Keep your FX trading strategies simple
All profitable traders have simple trading strategies. The more complex your trading strategy the more likely you are to have a weak point. One weak point in a strategy can cause the entire strategy to be unprofitable. It is also harder to find the weak point when you review your strategy because of the number of parts. Simple strategies should be able to fit onto a single post-it note. If you are unable to do this you should consider revising the strategy to make it simpler.
Consider your trading capital
Something that profitable trader do is ensure they have enough money to cover their trading. While you can open a trading account for very small amounts, this will not cover the costs of your trading. You need to be realistic in the amount of capital you use for trading. If you are only able to invest $20 then you cannot expect great returns. You also have to consider the overall cost of your trading strategy. Range traders need to have more money to buffer the movements during their long-term trades. However, short-term traders need higher capital to decrease the amount of leverage they will need to use in order to be profitable.
Take advantage of the internet
A mistake that many new traders make is thinking that you can only find forex information on forex websites. It is important that you use search engines when you need to look for something. This could be historical data on a fundamental event or a review for a product you are looking at. Search engines are also the best way to find forex trader communities and forums.
These social tools are important because they allow you to connect with other traders and get new information. When you connect with other traders you can find out about market trends, upcoming directional changes and new systems that you should know about.