Never failing to win in the Forex market is difficult but achievable. However, what might happen is that you keep losing your equity rapidly, which will make your head go round.
You might get sucked into a spiral of doom and lose your confidence. Well, it's not that bad. After all, one of the ways to grow as an individual is to learn and learning also comes from failing. Unfortunately, many traders neglect the most important aspects of trading.
Education and preparation are key to turning your losses into profits. That is the key difference. You might be wondering, what makes me an authority on winning in Forex. Among many other things, I know what it takes to be profitable. Yet I learned it from my own mistakes.
Here are six pro tips to stay on the positive side of trading.
Focus on Different Markets
How many times have you experienced the market reversing for no reason and you losing a trade because of it?
I always tell my students that the key to understanding the industry is to focus on both commodities and equities market instead of just one. Every market is related, and your performance will improve once you take that into account. Gaining knowledge never hurts, especially, if you're a trader, investor, or businessman.
Capital Preservation and Risk Management
You should always manage your risk on every single trade you make. The moment you loosen your control over your trades, you allow emotions to creep in. And before you know it, you're going straight into a downward spiral of hope trading.
Capital preservation should be a priority. What does that mean? Think of your capital as your account's lifeblood. Without it, you obviously cannot trade and the more of it you lose, the harder it is to recover. Risk management and capital preservation are two sides of the same coin: you have to manage your risk in order to preserve your capital.
Many people get into trading, finance, and business expecting instant and effortless success. But with a mindset like that, losing a single trade might mean losing your confidence as well. You shouldn't quit something because it "doesn't work" or because "it's not for you".
Think about it as a sacrifice of some sort. You learn from your mistakes, and you need to give something in order to learn from it. You're not alone in this – every trader comes across some losses in their career.
Maybe, the reason of your failure is negativity around you. One solution is to not let the so-called energy vampires get near you. Who are energy vampires? Those are people who make you feel guilty, unworthy, or insecure.
In short, they suck the life out of you – and you should avoid them in your life. There is another way, however. You can use the negativity around you to further improve your results. After all, even a negative person can inspire us to work harder.
Grow Your Account Slowly
The best way to achieve this is to start out with a small amount of money and low leverage, each day or week, adding more money to your account as it generates profit. Compounding is an excellent way to exponentially boost your profits if you can consistently follow it. Remember – a more substantial account does not necessarily mean higher profits.
If you can increase the size of your account through trading, great. If not, there's no point burning cash in the Forex furnace.
Limit Your Risks
To limit the risk of every trade you make, your trades should start with between 0.2% and 1% of your account balance, and overall risk exposure should be at most 3% per day.
You should base your risk on your performance, but as noted earlier – it is better to start your day with less risk. This way, you can make more trades while remaining under the risk limit and eventually end your day (or week) in a profit. I hope these tips will help you out.
Cheers and safe trading,