Forex market is the fast-moving market which is continuously evolving. In this market the success can not be achieved by luck or guessing the trades. Profitable forex trader gains this success with the help of trading strategies, self-developed trading rules and proper trading mindset. The absence of any of these can lead to failure in the trading world. In this article, we are going to share 5 strategies that will help you to be profitable forex trader. These strategies have been tested over a period of time and in different market conditions and are found to be most reliable ones. Irrespective of the face that you are beginner trader or professional one, these strategies will help to fine-tune your trading knowledge and skills. These strategies will help you to develop your trading principles and trading mindset which are essential to be successful in forex trading. So, lets discover the secrets of profitable forex trading.
Strategy 1: Technical Analysis
Technical analysis is one of the most used strategies by profitable forex trader. In technical analysis, traders analyze price patterns, historical price data, price trends and predict the potential price movements. Traders use many technical indicators like moving average convergence divergence (MACD), exponential moving average, Relative strength index and stochastic to make the trading decisions. These decisions are when to enter and exit the market, when to trade and when to stay out of the market. Technical indicators help the traders to take profit from price fluctuations. But remember that technical charts are not the holy grails that predict the price movements accurately every time. You have to apply risk management decisions with that. Technical indicators help the traders to make the educated guess based on historical data. To be successful forex trader, you have to apply other strategies along with technical analysis.
Strategy 2: Fundamental Analysis
As technical analysis focuses only on the price movements, fundamental analysis presents a bigger picture by analyzing the political, economic and social factors that may have an impact on currency price. Profitable forex trader believes that the currency price of any country is influenced by the economic situations and other fundamentals of that country. If traders have any eye on the economic indicators of that country like GDP growth, political situations, employment rate, then they can make more accurate decisions and can predict the price movement more precisely. Fundamental analysis helps to predicts the price movements in the longer run that may not be possible with the help of technical analysis as they may not appear on price chart immediately. Profitable forex traders incorporate both fundamental and technical analysis into their trading strategies to make trading decisions based. As these decisions are based well-informed view of the market.
Strategy 3: Trading Psychology
Profitable forex trader is aware of the fact that trading is not all about looking at price chart and making the predictions based on technical and fundamental analysis. The major part of the profitable trading comes from mastering your own mind. It is about managing your mindset and follow a disciplined approach rather than trading on the basis of emotions. The psychological factors are often underestimated but it plays a key role in the long-term trading success. Fear and the greed are the two basic emotions that can lead to poor decision making and costly mistakes. Profitable traders are the ones who can control their emotions and make trades as per their pre-determined trading plans. This helps them to save in the era of uncertainty and high volatility. They work as a sniper trader and understand the value of patience and discipline. They accept the losses as a part of the game and move forward. But developing the proper trading mindset takes time and practice but it is the key ingredient of profitable forex trading.
Strategy 4: Risk Management
Managing risk is the core aspect of profitable forex trading that the beginner trades are not aware of. It is inevitable to have losing trades and the profitable traders understand well that strict risk management criteria will help them to save their capital. One of the core principles of risk management that do not trade more than the predefined percentage on a single trade. Also keep the position size with predefined percentage according to your trading strategy. It means than even if trade do not go in favor and go in the opposite direction, you will lose only a small proportion of your trading capital. As you take the trade, put your stop loss order so that it can hit automatically if trade goes against you to a certain level. This helps the traders to trades based on logic not emotions. This also prevent the traders from clouding judgement and they can easily move to the next trading opportunity. Through this way they can protect their capital and can stay in the market for a longer period of time and their success rate also increases.
Strategy 5: Continuous Learning and Adaptation
The forex market is the fast-paced market and is continuously evolving. The profitable traders are well aware of the fact that they have to stay updated with the market. They have to update their trading principles and trading strategies that best suits the recent market conditions. The profitable traders remain trading students throughout their trading career and always seeks new knowledge and insights to improve their trading skills. Books, seminars financial news sources and the websites like theprofitscore.com are the excellent source of gain insights on new trading strategies and techniques. What worked yesterday may not work today, so they have to adopt with the recent market conditions. Continuous learning and adaptation are the core characteristics of profitable forex traders.
Common Mistakes to Avoid in Forex Trading
As we discussed five strategies that profitable forex trader follows. Now it is imminent to discuss common mistakes that trades should avoid.
The first one is the overtrading. Trade only the best setups and keep yourself away from the market when the market is not worth trading. In simple words, do not overtrade and invest only in the best opportunities.
The second most common mistake is not having a proper trading plan. Having no plans means you have plan to fail. If you do not have a proper trading plan better in written form then you will make trades on the basis of emotions which leads to losses in trades.
Lake of risk management and failure to set stop loss order is another heavy mistake that trader should avoid. Do not loss most of your trading capital on a single trade. Accept small loss so that you can survive to play for another day.
Do not rely solely on a single strategy. There is no holy grail in the trading world. Update your strategy from time to time and develop proper trading mindset as well.
Tools and Resources for profitable forex trading
There are various tools and resources are available in the market to assist the profitable forex traders. Most of the trading platforms provide real time information to traders along with advance charting tools and order execution capabilities. Economic calendars are also available in the market for traders to stay up to date with the economic news that can impact the currency prices. Most of the trading platform also provide technical analysis tools and indicators to identify the proper trends and market conditions. Different online forums are also available where traders can share their experiences and learn from each other. It is better to utilize many of these tools to enhance your trading strategies and stay ahead of the competition.
Case Studies of Successful Forex Traders
Look for the famous successful forex traders and study their trading career. How these traders have achieved their trading success, what strategies they have use and how they apply the risk management strategies. Select your role models in the forex trading world and study their professional lives to get better insight of their trading habits. These case studies will not only provide you inspiration but also a proof that successful forex trading achievable if you have the right strategies and mindset to do so.
Profitable forex trading is not possible with the help of luck or guesswork. It is only possible with the help of knowledge, experience, and proper trading mindset. By implementing the above mentioned five strategies, technical analysis, fundamental analysis, risk management, trading psychology and continuous learning, you can increase your chances of winning in the competitive forex trading world. The journey will be swifter if you avoid the common mistakes discussed above. To be successful in the forex trading, only trading strategies are not sufficient, you should have proper trading mindset. You should trade based on your trading rules not on emotions. Keep in mind that profitable forex trading requires dedication, discipline and commitment in terms of time and efforts. If you develop the right strategies and right mindset than you can join the ranks of successful forex traders. So, get started, stay focused and tuned and may the profits be with you.