The path to riches when trading on foreign exchange can prove to be a long one. It can be a torturous for many who will never achieve any level of success from their trading, in spite of their best efforts.
Here are five signals that you can use to help identify if you have set yourself on the path to Forex profits.
If you can recognize some or all of these traits, then you will be able to measure how far along the path you have traveled. The ultimate destination is Forex success, but you first have to be on the path to stand a chance of getting there..
1. You Trade Like a Business
Treating your trading like a business is important. If you trade with discipline and a business mindset you will be in a much better position to achieve your goals. A number of the skills that you need to make a business successful are also needed to achieve success when trading currencies. It is important that you are level headed, put in hard work and create and stick to a plan for growth.
If you can plan, create and stick to a plan and show the drive and passion that is needed to get your business up and running then you will have every chance of succeeding from your efforts.
2. You Understand Your Charts
You chart is your biggest friend when it comes to trading. Being able to successfully read and understand the implications of price action it shows is a skill and your biggest ally.
There is more to mastering your chart than simply being able to load it up with indicators. By studying price movements and getting in tune with the markets you should be able to interpret and successfully forecast upcoming moves.
Once you have mastered you chart and are able to digest the information it shows in a glance you will be well on your way to achieving your trading goals.
3. You Test Your Strategies
If you are serious about achieving success with Forex then it is important that you are serious about testing your Forex strategies. It is vital that you known what to expect from your strategies and that they will hold up over time.
By using a demo account you can identify the success rate of each strategy and tune and refine the risk to reward on each position. You can also plan and ready yourself for the inevitable periods of draw down that will occur when you start trading live.
4. You Create Your Own Trading Approach
Creating your own personal trading style is fundamental to developing a profitable approach to the markets. Learning to trade and mould your trading around your own personal strengths is a recipe for trading success.
There is no ‘one size fits all’ trading method so it pays to remain wary of guru’s. Your strategy should fit in with your trading window and play to your strengths. If you can develop, test and trade your own strategies you will be in a much better position to understand the mechanics of trading and put in place a base for your future trading career.
5. You Only Trade Valid Signals
Once you have tested your strategy and formed your own trading approach that you are happy with, it is essential that you stick to your plan. Although it can be tempting to abandon your strategy if an ‘opportunity’ comes up that looks profitable, it is more beneficial to stick with your core strategy.
Sticking with your strategy and avoiding succumbing to emotions are the hallmarks of a successful trader. New traders fail with both these aspects so it will testament to how far you have progressed if you can observe both of these rules. Success with Forex will ultimately be that much closer.