5 “Secrets” to Apply to make a Killing in Forex Trading
The journey to become profitable in Forex Trading can be long and painful.
The truth is, there’s no turnkey solution to transforming your fortunes in the Forex trading market. Does it mean you can’t succeed?
Absolutely not; it’s just that there’s a lot more than Forex that you need to invest in to be a master of this money market.
We’re talking about the investments of hard work, determined and continued learning, and dedicated tracking of industry and market trends.
This is where the followers get left behind, and the leaders come to the fore.
This guide is the beginning of your change of fortunes, the perfect foil for your determined efforts to making 2016 a booming year for your trading adventures.
Marry your hard work and dedication with these time-tested, well researched, and proven effective Forex trading secrets, and you’ve got a master success plan that could amplify your trading returns by 500%.
Here are five secrets you should consider if you are thinking to improve your trading in the coming 2016.
These are the most important pillars of every successful trader.
1. Establish Trading Journal
Trading Journal is a crucial tool for every serious Forex Trader.
It’s natural for forex traders to shirk from maintaining a trading journal, purely because all brokers provide real time records of trades, apart from other data (like margin usage, profits and losses per trade, and buying power) that a trading journal doesn’t capture.
However, you’ll seldom find a successful forex trader who doesn’t leverage a good old trading journal for intelligent trading moves.
For starters, a trading journal gives a historical perspective to your trading activity, helping you summarize the trade.
Important information such as the currency pairs that work best for you, the frequency with which you traded in a past period, per trade success, and time frames that yielded best profit percentages, can be accessed anytime from a trading journal.
This makes the trading journal a personal database from which you can learn and discern intelligible patterns, which can help you progress your trading skills, and avoid making same mistakes again.
A trade journal also lets you record your personal goals and expectations from every trade in the form of notes and comments.
This helps you control and plan each trade exceptionally well, and in a result-centric manner. Plus, over a period of time, your trade journal will capture enough data to help you work out and verify your methodologies of trading.
All these benefits significantly improve your chances of faring well with forex trading.
Trading Journal might not be time consuming or hard work at all. Even simple excel spreadsheet or WordPress blog can prove to be very efficient to track and record your trading.
2. Establish Trading Plan and Stress-Test It
Simply put, your trading plan is your Bible, the rule book governing your trading decisions.
Specify your entry and exit criteria and your money management goals in your trading plan, and stick to it religiously, of course, the assumption is that your trading plan is made after thorough deliberation and testing.
Technologies like simulation tools help you put your trading plan to the test without risking any real money. By ‘back-testing’ you can apply your trading rules and strategies to historical data and evaluate the returns. If the results are good, you can implement the same in real world scenarios.
simulation tools help you stress test your trading plan, by emulating market conditions similar to financial crises.
These tests yield massive insight into the flaws and strong points of your trading plans.
Remember, as a serious forex trader interested in long term gains, working without trading plans is like rowing upstream without your oars.
In fact, every successful trader has a well-guarded and customized trading plan, a rule book that they keep on fine tuning as they gain more market insight and verify the credibility of their trading methodologies.
Your trading plan must change over time together with changing markets.
The important thing is to remember that markets are constantly changing. Your plan must adopt to new conditions and improve over time.
Testing your strategies is crucial for your plan to work.
Make sure you test all hypothesis and have hard, statistically significant evidence of every test you perform.
3. Understand Macro Economics
A quick look at any financial news daily is not enough to succeed in this game.
Smart Money Traders know how to differentiate fads from trends, and that’s possible with working knowledge of concepts of macroeconomics and their practical significance.
Master traders always analyze market developments in terms of their impact on parameters like GDP. Plus, they are always able to make more sense of important macroeconomic policy changes such as interest rate revisions.
So, invest some time in grasping the essences of all macroeconomics concepts, right from interest rates and inflation to GDP, earning or manufacturing, to equip yourself with the foresight that’s vital for successful forex trading with a long term perspective.
Your course should start with inflation, GDP, Interest Rates, Earnings.
Ensure that, not only you understand these concepts, but also you know how that data is reported to the markets on weekly basis and does it impact every currency.
4. Follow Risk Event Calendar Weekly
Every serious Traders must follow weekly Risk Event Calendar
Risk calendars are vital tools in the hands of forex investors that can help prepare them for the upcoming buzz in the market, so that they can analyze and suss up the situation, and plan their moves to land up on the right side of the movements in the market.
There’s no alternative to dedicate tracking risk calendars, identifying the critical upcoming events that could move the markets, and then deciding on a strategy in accordance with your trading plan to buy or sell at the right times.
For cutting edge insight, forex traders can follow all meetings of the Central Banks, and can make informed estimates of the decisions likely to be made, and their impacts on the market.
The official website of the central bank is a ready source for meeting minutes. Financial news websites also publish copies of these minutes after they are publicly released by the banks.
Smart investors can pick up hints and cues, and can detect the pulse of the economy from the minutes, and can foretell events such as interest rate revisions, inflation control measures, etc.
5. Follow COT Report
The Commitment of Traders report (COT) is a valuable insight into the activities of large institutional traders
Who collectively have the power to influence the market. The Commodity Futures Trading Commission provides thus report every week, helping traders assess the stand of large institutional investors, and plan their market moves accordingly.
This report is a fair indicator of the degree of commitment that traders have for trends in commodity markets.
Just like any traditional technical indicator, the COT report can be used to analyze time and price, and to understand whether traders are net short or long, and also whether they are bullish or bearish.
Based on shifts in sentiments of investors, traders in money markets can foretell flips, and can hence plan entries and exits to record net profits.
Any trader who’s spent some active time trading in money markets can tell that there are no ‘tricks’ and ‘shortcuts’ to success.
Long term returns in money markets are a direct function of your propensity to gain knowledge and experience, and your ability put in the long hours to track and assess market movements.
Core fundamental knowledge of macroeconomics concepts, analytical skills, access to and ability to use financial tools and simulators to quickly and accurately devise short term trading tactics – all are the keys for success in forex trading.