While most forex traders go through extensive forex training courses which teach them the intricacies of foreign exchange rates and the market, very few manage to turn their education into a sustainable source of income. Instead, despite their training, these traders end up treating the forex market like a casino and start gambling with the foreign exchange rates.
Once this kind of behaviour has set in, it becomes very difficult to break the habit for the forex trader. However, it is required to be broken because otherwise the trader will end up losing everything rather soon.
If you are an individual who has just realised that he has also developed this habit then it is high time you climbed out of this rut and become competent at handling forex rates. How can you do this? Here are some suggestions.
Stop Trading with Real Money
The first order of the business should be for you to stop your gambling nature to prevent any further losses through fluctuating foreign exchange rates. For this, you should immediately let your live account go dormant and open a new demo account. This demo account is where you, the phoenix, will rise from the ashes and improve your future.
Go Back to the Basics of Your Strategy
In the demo account, you should start practising your chosen forex trading strategy and do so from the very basics. In fact, you have to start from the very beginning by wiping your mental slate clean and trying to understand foreign exchange rates all over again. One of the reasons why your trades were not able to bring you the profits that you expected could be that you never really understood your strategy.
Formulate a Forex Trading Plan
Within the safety of the demo account, you have to create a forex trading plan that will bring the most out of your forex trading strategy and your own potential. The trick is to make sure that the trading plan is detailed and contains multiple checklists designed to keep you on track in the future.
Supplement It with a Risk Management Strategy
Next, you have to supplement your forex trading strategy with a risk management strategy. Regardless of how wonderful your chosen strategy is or what its success rates are like, you cannot trade foreign exchange rates without a risk management strategy. Such a strategy would prevent your trades from being exposed to the risks posed by volatile FX rates.
Create a Record Book
You should also use the demo account to instil the habit of recording all your trades in yourself. This record book or journal would help you stay accountable to your own account. Furthermore, the journal can also be used to review your strategy and plan so that you are constantly improving.
Always Beware of Your Mindset
The main reason why you failed with foreign exchange rates earlier and started taking punts instead of trading would be your emotional state of mind. In order to prevent a relapse in the future, you have to consciously be aware of your mindset and always keep on the right track.