Successful professional traders perform 3 simple actions that amateur traders often forget. They set up a trading strategy, they follow the markets and they keep a trading log in which they record, follow and analyze all the orders they have placed.
Define a strategy
- You probably already know, “if you don’t have a plan you will fail.” This is especially true for trading in the forex market.
- Winning traders determine a good strategy and follow it no matter what.
- Choose the currency pairs that suit you.
Some pairs are volatile and their prices vary enormously in the same day. Some, on the contrary, are stable and do not move much over long periods. Depending on your risk aversion, define which currency pairs are best suited to your trading strategy. Using the algorithmic trading software happens to be essential there.
Decide how long to leave an open position
Depending on your choice of currency pair, know how long you want to hold your positions: a few minutes, a few hours, or several days. Note that on some accounts rollover fees are charged if your positions remain open after 11pm.
Set your stops and limits
Before placing an order, you must establish your exit strategy. If the trade is winning, at what level will you cash your winnings? If the trade is losing, how much will your losses be? Set your stops and limits accordingly.
Follow the forex market
Use forex charts and news to monitor market information and technical levels that affect your positions.
Use the graphics
Charts are essential tools to improve your trading performance. You can easily profit from the purchase of a professional tool thanks to a single past trade by following the analyzes of the pros ( translator’s note : we can’t help but say what we think about it. Many free tools exist and are more than enough. To find free professional analyzes, take a look at the site which is now in French!)
Follow Forex News
Many sites allow you to follow the news of forex, economic and political decisions that influence the currency market. You can also read comments from experienced traders and see their trading strategies.
Keep a trading log
Most traders fail because they keep making the same mistakes over and over . A journal can help you identify what works and what doesn’t for you. Used regularly, a well-kept journal is your best ally. When filling out your trading log, make sure that it contains at least the following information:
- The date and time when the order was placed.
- The rate at which you entered the market.
- The reason you opened the position.
- Your strategy for this particular position.
- The date and time when you closed the position.
- The rate at which you left the market.
- Your profit / loss on the position.
- The reason why you closed the position. Did you follow the initial strategy?