Every day, the forex market offers plenty of opportunities for traders to reap profits. However, it’s the minority of traders who manage to do so. What is giving them the edge over other traders? Perhaps they are applying some tricks that other traders haven’t learned yet. Luckily, we’ll share with you some invaluable tips that will put you ahead of the game.
Using an Economic Calendar
Many traders usually overlook the potential of an economic calendar to help them make forex predictions. Calendars track market-moving events, but they can be of even more help if used correctly. An economic calendar analyzes certain influential events such as:
- Changes in non-farm payroll numbers
- Changes in the Gross Domestic Product (GDP)
- Employment Reports
- Retail sales
- Interest rates
- Purchasing Managers Index
With this information, an economic calendar can help you anticipate and plan your trades around future opportunities. Remember when using this info, it’s important that you understand how the volatility of these events can cause an uptrend or a downtrend in prices. An economic calendar usually indicates the volatility levels attached to each event.
Keeping a Trade Journal
Some people may not see the need for a trading diary considering almost every broker provides a real-time account of your trades. The truth is, it will benefit you to keep a trade journal. A journal will help you identify flaws and strengths in your execution. It will also help you remain consistent and stick to your trading outline. It will help keep you disciplined and accountable and it can help you identify which strategies are working. A journal is especially crucial for traders doing forex hedging as they need to keep track of every move and countermove.
When coming up with a trade journal, consider what type of information you’d like to record. This may include the date of trade, observations about the market, position size, etc. Also, remember to record your trades immediately you place your Stop Loss and Take Profit orders. After each week or month, compile the data and reflect on your trades. Notice common mistakes and see what you did right. Based on your conclusion, decide what you need to do so you can improve your trading skills.
An event far off the other side of the world can affect market prices. It could be a natural disaster, an election, a war, or even rising tensions in a country. These types of reports often impact the market. Thus, paying attention to new political, economic and natural developments is a necessity for success in day trading.
Remember, no matter how keenly you follow market trends or how accurately you can read market sentiment; news can hit instantly, sideswiping even the most experienced trader. This emphasizes the need to have unfolding world events right at your fingertips.
Success with day trading will require more than knowledge. You need to practice. Practicing will save you from losing money until you gain confidence. A forex trading practice account is called a demo account.
These accounts help novice traders hone their trading skills and familiarize themselves with various market conditions. Demo accounts are equipped with virtual capital to use while placing your virtual trades. The results will help you identify your shortcomings and sharpen your approach until you start generating consistent profits. Then you can apply the technique in a real account.
Having Emotional Discipline
One of the most overlooked aspects of successful day trading is having emotional discipline. Your level of experience, knowledge or being able to foresee market movements are just not enough. The secret is having the ability to stay emotionally neutral no matter which way your trades go. Emotional discipline means the following:
- Being consistent: This means you can stick to your trading plan
- Starting small: Focusing only on big position sizes will lead to frustration if you lose Instead, taking small positions helps you assert more control
- Planning according to your lifestyle: This means you only select the number of charts that you have sufficient time to monitor
- Trusting yourself: This means making market moves according to lessons you’ve learned in the past and your expertise. Don’t get swayed by opinions on trading forums or chat rooms.
While these tips are certain to help any trader succeed, no one trading trick works for everyone. The most important thing to remember is to adopt the tips that complement your trading style.