In many ways, it has never been easier to launch as a career in forex trading. After all, technological innovation has removed many of the historic barriers to entry, enabling the forex market to generate around $5.1 trillion per day in trading volumes
However, while it may be easier than ever to set out as a forex trader, this does not mean that you’re guaranteed to succeed or achieve the desired profit levels. In fact, the volatile and margin-based nature of forex trading can set many people up to fail, especially those who have failed to develop a knowledge base before they begin to invest.
In this post, we’ll discuss some of the most effective and basic strategies that can lead to a successful career in forex trading.
Recognise the Market’s Safe Zones and Manage Your Risk
As a starting point, you’ll need to develop a sense of self-awareness and acknowledge the level of risk associated with forex trading.
In practical terms, this means ensuring that your capital investment and risk tolerance to forex trading are at the right levels, as you look to trade according to your wealth, objectives and the currency pairings that you deal in.
Another key aspect of this is successfully managing your risk. To achieve this, we’d recommend only ever investing what you can afford to lose, while increasing the capacity of your account in line with your profitability.
When using an online brokerage platform like Oanda, you should also use features like stop-losses to safeguard your capital. This feature will automatically close positions once they’ve encountered a predetermined level of loss, and it’s a must have for any aspiring trader.
Start with a Single Currency Pairs
There are a myriad of currency pairings available in the current marketplace, each of which boasts its own level of risk and potential reward.
However, there are a select few major currency pairings, including options such as the pound and the U.S. Dollar, the Swiss Franc and the greenback and the Euro and the Yen.
These pairings are typically more predictable and open to accurate analysis, meaning that they’re more likely to deliver a consistent return over a sustained period of time.
When starting out, we’d also recommend focusing on one of these major currencies, while selecting one that you’re familiar and ultimately comfortable with.
Don’t Keep Count of Your Profits from Your First 20 Trades
When you first start out, it can be tempting to become obsessed with tracking your profits and the precise margins generated by each trade.
Rather than keeping count of your profit during the first 20 trades, however, it’s far better to focus on the overall percentage of wins instead.
This information can prove to be a far more informative metric over time, and one that helps you to develop your strategy and increase your profits through multi-plot trading.