Many novice traders neglect to create a working strategy using a demo account. A desire to make quick money and an exceptional belief in luck often lead to reducing the trading account to zero. If you do not want to become one of those who lost the entire deposit due to neglect of the basic principles of trading in the financial market, we recommend that you start your acquaintance with Forex by developing the simplest trading plans.
It would be a mistake to assume that trading is a kind of roulette. Here your success largely depends on the chosen strategy. All successful traders treat Forex trading as a business, so all their actions are based on a realistic concept adapted to current market conditions. As with any other business, it is important to make timely adjustments to your Forex trading plan, without ceasing to evaluate each winning or losing trade.
The reality is that many traders have a problem not with devising a trading plan, but strict adherence to the chosen strategy. Therefore, it is very important to remember that no matter how perfect your Forex behavioral strategy is, it will not bring you any benefits if you do not follow it.
Unfortunately, there is no telling what exactly an efficient and profitable strategy should be. To begin with, every trader must take into account his or her personal characteristics, goals, and circumstances. In particular, it is worth evaluating your character traits, the time you are willing to spend trading, the amount of initial capital, acceptable risks, the most convenient time of day for trading, etc.
The trading plan must be adapted exclusively for the trader. Just as there are no two identical people in the world, there should not be identical strategies in the financial market. Mindless copying of other people's behavioral models always leads to failure.
One of the main advantages of a successful trader is calmness, which can only be achieved by working in a comfortable environment. Therefore, you should first figure out which Forex behavioral strategy suits you: moderate, dynamic, aggressive. After all, some strategies signal the opening or closing of positions a few times an hour, while others once a week. You should take it into account, focusing on your personal preferences. Do not overestimate your strengths and start small. First, test your abilities, and only then set ambitious plans and achieve them.
One of the most important elements of a trading plan is the exit strategy. Do not neglect stop loss and take profit management. It is paying attention to small details and adjusting risks that distinguish successful traders from losers.
With a well-designed exit strategy, any trader will be able to receive a stable income and minimize losses, even if the simplest and uncommon trading system is used.
When creating your own strategy, you cannot be 100 percent sure of its perfection and universal effectiveness. The market is very volatile and it is just impossible to predict anything with absolute accuracy. A well-designed behavioral strategy will enable you to minimize risks and stabilize profits, and the scheme will always be relevant if you regularly get back to and assess it.
This requires analyzing your work efficiency: the efficiency of daily trading, weekly trading, and monthly trading. Seeing the dynamics and following the main Forex events, you will be able to make timely adjustments to your strategy and maintain your income while continuing to progress.
The adjustment should be made at least once a month.
Every successful businessman always follows the company's books, which allow him or her to make reasonable plans for the future. Traders should behave the same way and do not stop analyzing their activities. In particular, take note of the following: the currency pairs that they work with, preconditions for entering the market and closing a trade, the size of profits and losses.
Successful market players always keep a so-called trader's diary. In addition to technical aspects, it is important to write down there your psychological and emotional state at a particular moment. This will allow you not only to analyze the market but also analyze yourself, adjusting your strategy and eliminating situations that will make you nervous. After all, an unstable psychological state leads to reckless actions, which in Forex can be compared to losing your entire deposit voluntarily.
Many novice traders are overly emotional and overestimate their strengths, believing that Forex is just a casino ruled by Fortune. It is their biggest mistake. You cannot enter the market whenever you want, open trades out of boredom, switch to your friend's trading strategy because he or she constantly praises it. Only strict adherence to your trading plan can protect you from feeling nervous and losing money.
If you doubt that you can keep everything under control, you can use an efficient modern solution called algorithmic trading. Advanced trading robots always follow the established strategy, constantly analyzing the market and accurately selecting potentially profitable positions.Trading advisors never get tired or make rash decisions. Algorithmic trading allows account holders to enjoy life and do things that are more appealing to them, while the robot will operate around the clock to increase their capital.