What is the secret behind profitable forex trading? Major traders fail as they are unable to read the market successfully or because they are impatient. Yet, trading is no rocket science. I have a simple mantra: Emotional discipline and patience.
Your goal as a trader must be to make the best trades; money is secondary. Trade well, rather than trading often. A smart trader will always use the “take-profit and stop-loss” method of trading, which keeps your profits and losses well calculated, and you are not exposed to high risk ever.
One also needs to be vigilant about choosing one’s forex broker. The right broker will provide the trader with his own Client Cabinet where the trader’s information and documents are safe, and he can view his entire history of all activities in one go.
Needless to say, one should deal only with reputable forex brokers. Unfortunately, in the early days of online forex trading, fraud was an all-too-common problem. Great efforts have been made to clear out unscrupulous brokers, but you must still exercise caution when selecting a new broker.
Other important things to consider while trading in forex:
The time to buy is when a trader analyses that the market is moving in an uptrend, and the time to sell is when analysis shows it is moving in a downtrend.
And the best way to minimise risk?
A trader should choose a session he is comfortable with: Asian Session, European Session or American Session. Always try to analyse and trade intra-day, which means your trades should be executed within the same day and in doing so you are not exposed to swap charges.
What is the right approach to trading in forex or commodities?
Always practice on a demo account to get the hang of the trading systems. Of course, the experience of trading on a live account is different, but at least you are sure you know your trading terminal well.
Another important thing: Avoid greed. Once you have made profits always remember to withdraw them. It always boosts traders morale to account profit separately from his invested principle amount.
Always trade in a calculated manner and do not get over-excited or depressed. Remember, it is a floating profit or loss, unless you have closed your trades. Again, use “take-profit and stop-loss” options while initiating a trade.
Keep yourself updated with market news and preferably follow some expert advisers who have been in the market for at least a decade or more. One can find them on channels in the currency market bulletin.
(Renu Gupta is Branch Head, Liteforex, Dubai. Views expressed are personal. She can be contacted at [email protected])