Commitment. That is all it takes. Sure, it helps to have knowledge, experience and a large amount of capital to trade, but the key to long term success- forex is not a get rich quick scheme-is the burning desire to succeed, and the dedication to stay in the game. At some point, it all comes together. Here are a few hard fought lessons: 

top forex tips for beginner traders

Don’t quit. Basketball player Michael Jordan, arguably one of the best ever to play the game, was benched while in high school. Anyone whom has seen him play during his professional career would have a hard time imaging that. He was that good. Fortunately for him, and for us, he didn’t give up. He just dedicated himself to improving, and doubled his training efforts. Ray Kroc, the founder of fast food behemoth McDonalds, was 52 years old when he founded the company, and had never known real business success before. Despite his age, he kept at his “game” until he was successful. The rest is history. Forex trading is difficult. Stick around. At some point, you will look back on the challenges and laugh. 

Risk Management means living to fight another day. Forex trading is a marathon, not a sprint. The longer you trade, the better you get. Only way to do this, is preserving capital by careful money and risk management.

Patience. The top traders are like military snipers. They understand it’s usually better not to shoot, than to miss a shot. They wait as long as they have to for the best setups, just as professional traders do. They don’t jump in unless trades conform to their standards, indicators and prerequisites, and when they do, they act decisively.

Acknowledge your strengths and weaknesses. Forex trading has many casualties.   A huge number of new traders try forex each year, but few succeed. The primary reason many fail can be attributed more to a lack of self knowledge, than to a lack of forex knowledge. Trading puts us on the front lines where we cannot fake it or bluff the market. It strips bare, and exposes any illusions we may have about ourselves. It requires emotional control and delay of gratification.  It also requires absolute honesty and self appraisal, self acceptance, and the ability to address what motivates us, and what deters us. Only when we have gained this knowledge, can we move forward.

Relax, and enjoy what you do. If you are not enjoying trading, or if it is too stressful, then you might want to consider some other way to earn money. Trading is not for everyone. It can wreak havoc on our health as well as every other aspect of our lives. As traders, we have to accept that we’ll have bad periods, but if the emotional and financial stress is too great to bear, then we should pause, or stop completely, and examine another path.

Don’t overtrade.  After poor money management, over trading is arguably the cause of more losses than any other factor. More trades equals more risk and does not necessarily translate into more profit. While it is normal for scalpers to make many trades each day, all traders need to guard against excessive trading and trade only those setups that conform to our strategy. This assumes that traders have a strategy. When traders don’t, they are like ships without rudders and the odds are, they will run aground.

Treat trading as a business. Many traders love gambling. Indeed, quite a few professional traders are also poker players. There are similarities, but unless one does either solely for kicks, they should be treated as money making opportunities. Forex traders need to define what they want to get out of trading. How much do they want to make and how much time they can dedicate to making it happen.

Keep the ego in check. Neither crying in our beer when we lose, or bragging at the bar when we win. A healthy ego is necessary to become a winner, but it is a double edged sword that can cut deeply.  The best do not brag or gloat when they win, or sulk when they lose. They view BOTH events as part of the game. Be humble, or be humbled.

Cut losses. The oldest rule in trading is to cut your losses quickly and let your profits run. It is also the hardest thing to do. The natural tendency is to let losses run, and to grab profits as they appear. It takes time and experience to over ride this impulse. Usually, traders whom are proficient, have positive win loss ratios, but have declining account balances, are doing this. The odds favor those that cut losses rapidly, even before a trade hits a stop loss.

Avoid dollar cost averaging. Some rather slick traders will add to a losing position so that when or if the trade turns around, they will have reduced their aggregate cost and have substantially greater profits. The key word here is if. This might be a good long term strategy to employ when buying equities, but it can be highly risky when trading currencies. Adding to winners-sometimes referred to as layering- is the better way to go.

 Be rational. The markets may not always be rational, but we must be. When the markets are behaving strangely or not conforming to our expectations, step aside. There is always another day and other trades.

Keep an open mind. A tree either bends with the wind, or it breaks. Flexibility is key to long term survival and success. Markets change. Indeed, the markets are always changing. Many traders for example, have noted that in 2012, markets changed due to increased use of algorithms and high speed trading systems deployed by large banks. As traders, we need to adapt.

Audition your forex broker. The most critical trading decision is Choosing the Right Forex Broker. Here is when reading Forex Brokers Reviews comes in handy. Spreads, leverage and platform technology are important, but so is reputation. Poor reviews on forex websites may not tell the whole story, but should be considered when choosing a broker to trust with your money.

Try new Trading Strategies. If you are not learning, you are dying. Conditions change and so must we. By constantly testing, learning and developing new strategies, we keep ahead of the market. As individual traders, our real edge is constant analysis-both technical as well as fundamental-and a constant adjustment of own attitude towards trading.

Passion to the task. Trading is an art. It takes time and dedication to do it well, but it also takes a certain degree of passion. Indeed, many traders are miserable on weekends as they cannot wait till markets open up so they can trade.  People tend to accomplish more doing the things they love. Nothing better than doing something we love and making money too.

Don’t lose money. Pretty obvious, huh? At the end of the day, keeping what we earn is critical. It is far easier to lose money than to make it. Defining acceptable risk tolerance is crucial. Some traders can afford to blow thousands of dollars, while others cannot, but both need to stick to realistic trading and financial plans.

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