The financial markets are a very exciting and rewarding way for anyone to earn profits. However, if you’ve been in the ecosystem, you’d noticed that online brokers always have disclaimers conspicuously placed, to warn traders about the risks involved. Even the most experienced traders still sometimes record substantial losses when their forecasts turn out to be wrong. Yet, they stay on. Why? Because despite all of these risks, trading on MTrading continues to help millions of people around the world to create wealth.
No one is saying that you’ll never record losses. But the way to succeed is to keep these losses at the barest minimum while scoring the stellar home runs that keep you in the green. To do this, there are a few keys that traders, either newbie or experienced, must take to heart. In this article, we examine a few keys to success in forex trading.
Keys to success in trading on the forex market
To succeed in the market, all any trader needs are the right sets of currency pairs, the right strategies, and the discipline to stick to a plan. Of course, easier said than done. Still, they are very achievable. Below, we outline some of these keys in detail.
1. Cohesive strategies and trading styles.
The very first key to forex trading is strategy cohesion. Too many traders simply log on whenever they feel like and then take positions. More often than not, they end up losing money. This is because, as with any other market, the forex market is friendlier to those who identify their goals and create a roadmap early on. Do you want to be a full-time trader, or do you just want to do it part-time? What is your risk tolerance? Can you handle leaving your capital in a position for long or would you prefer day trading? When you answer these questions early on, you can then decide on a trading style that best suits you and you’ll be better positioned to succeed in the market.
2. The right currency pairs
The next vital pillar of a successful forex trading run is the currency pairs that are chosen by the trader. Yes, there is a load of options on the market. There are about 154 recognized currencies issued by the different nations in the world; that would give about 11,781 unique currency pairs (this is all hypothetical though, most trading platforms, including MTrading, provide less than 100 pairs).
All of these pairs are not subject to the same conditions. While the more well-known currencies such as the USD, JPY, GBP, and EUR are all issued by countries with highly advanced Economies and are well stable, some other currencies from developing economies are more subject to political risk. But more importantly, liquidity risk. Unlike the top currencies which experience a lot of trading activity daily, currencies from developing countries may not always have ready buyers, and traders may find themselves stuck in a position for longer than they wanted.
So, the currency pairs chosen by a trader can go a long way in determining whether they succeed and by how much. Some of the top currency pairs on MTrading are;
- EUR/USD
- GBP/USD
- USD/CAD
- USD/JPY
- AUD/USD
- NZD/USD
- USD/CHF
- EUR/CHF
- EUR/GBP
3. Automation and algorithms
Traders today can choose algorithmic trading or copy trading, rather than barebacking it all. These technologies can analyze markets, and place orders, complete with stop-loss and all, with only little input from the trader. Since a large proportion of forex traders only do it part-time and do not have the time to spend every day on deep analyses, trading platforms like MTrading introduced these algorithms to enable them to participate. But, it’s not only that, these algorithms help to improve the possibility of success. The human mind can only examine so many indicators at one time, meanwhile, algorithms are much more capable of carrying out multiple calculations in split seconds, to a greater degree of accuracy. It’s not always all roses, however. For multiple reasons, these algorithms sometimes fail. No one, not even machines, can predict market direction 100%.
4. Discipline
The main attraction of automated trading is the absence of emotions. The algorithm simply takes action based on available figures and forecasts. On the other hand, more often than not, forex traders find themselves distracted and straying from their plans to take actions based on emotions.
Sometimes, it’s the urge to keep holding on, even after the asset has surpassed the price target; because one thinks the bull run will last a little bit longer. Other times, it’s the urge to hodl, even when an asset has sunk below the price floor initially set.
After all, humans are primarily emotional creatures. These emotions are known in trading parlance as FUD (fear, uncertainty, and doubt) and FOMO (fear of missing out). However, to succeed in the market, one must learn to simply ignore these, or one would end up incurring spectacular losses.
5. Simplicity
The final key to successful trading is simplicity. For most people, the depiction of a forex trader is that of one person at a desk with multiple screens and several charts, and all that paraphernalia. In reality, it doesn’t always have to be that way. When it comes to indicators, the full is that the less, the better. Taking on so many indicators can disorient traders, leaving them confused and prone to bad decisions. But with only a few, they can make more accurate decisions with the clearheadedness of a monk. On MTrading, two or three indicators are enough to tell you what you need to know about the market. The same goes for trading strategies, blueprints, technical analyses, and whatnot.
In conclusion
While there’s the potential to earn substantially in the forex market, it is also widely known for its volatility. It’s the Wild Wild West out here. To survive and thrive out here, traders need to be meticulous and methodical. Nothing is guaranteed, but with cohesive and simple trading plans, the right currency pairs, automation, and discipline, any trader can substantially increase their chances of earning those big bucks for themselves.