There is a definite step-by-step process to becoming a successful Forex trader. This process does take some time, which accounts for many people not becoming successful on their first try. But those that take the journey and make it to consistent profits learn a lot along the way. Here are three things I feel are essential for becoming a Forex trading success story.
There are a lot of different ways to trade Forex, from scalping the lower time frames to trading on the daily and weekly time frames. But in my experience, it is the traders that have the persistence and stamina to trade the higher time frames that do the best. Lower time frames are less reliable, ironically take more time in front of the computer and end up being more stressful than higher time frames.
When I started, I was drawn to the lower time frames. I thought I could learn faster and make more money in a shorter period of time. I thought I could keep my stop losses super tight and use higher lot sizes to rake in big money in minutes. The opposite was true. However, when I switched to higher time frames, success started happening more regularly. So, the first secret is to start trading on time frames from 1 hour to daily. (My favorite is the 4 hour time frame).
New traders want to make more money on each trade by using big lot sizes. This leads to using an arbitrary number for their stops instead of letting the market chose the stop location. As a result, they get prematurely stopped out a lot, which is never fun.
A better way to trade is to manage your risk with your lot size. Place your stop where the market tells you, and then adjust your lot size to manage risk. This way, you can risk the same percentage of your account on each trade, regardless of whether the stop is 20 pips or 200 pips. Therefore, the second secret is to us proper stop loss size and manage risk by adjusting your lot size.
Forex trading is not gambling. And you can see by the first two recommendations, successful traders move away from the fast time frames with unrealistically short stops “hoping” the trade goes in their favor and makes them a ton a money. More often than not, this approach leads to losing a lot of money, and then any win you have only gets some of the loses back or to break even.
A better way is to have patience and treat your trading like a business. In the long run, creating a trading plan for slow, steady profits and developing the trading skills to trading the plan consistently is what creates a successful trader. In the end, treating your Forex trading like a serious business is what allows you to create serious profits.
To find out more tips and tricks of successful traders, join Forex Insider Pips. I’ll share with you more of what I’ve learned on my journey to become a successful trader, as well as unique trading tools. This training is free, and can make the difference between making real money as a trader, and only dreaming about it.
