Successful trading does not have to be complicated and very hard. In fact, the best traders do not possess secret tips and tricks but they do a few simple things differently than the regular amateur trader.
In this article, I provide a list with 8 tips and things that you rn do RIGHT NOW and that will have a huge impact on your trading.e
#1 Understand what a good market is
Many traders make the mistake of trading the same Forex pair all the time, regardless of how price action looks like. But Forex pairs undergo different phases.
The first step is, therefore, to understand what a good market and a bad market looks like for you. For my trading strategy, I look for nice trending markets and I stay away from whipsaw range markets.
My personal tip here is it to focus on more markets but be more selective. Every week screen the markets you want to trade and only follow the ones that have nice price action.
#2 Timeframe selection
This ties in with the previous point. I constantly switch between the Daily, 4H and 1H timeframe, depending on how the price action looks like. Sometimes the Daily timeframe is in a tight range but the 4H or 1H give you nice trends. In such times, I go to lower timeframes. But when the 1H or 4H are too erratic, I go to the Daily where there is usually less noise.
In our Forex trading course, we put great emphasis on market selection and understanding how to find the best trades every week. I strongly believe that being flexible and knowing how to adapt can make a big difference in anyone’s trading once you know how to find the best charts.
#3 Know when not to trade
This is maybe the most important trading skill: knowing when not to trade. You can often come up with reasons why you think price will go up and down but this does not automatically mean that you need to trade.
You must trade like a sniper, waiting only for the best setups and try not to screw up in the meantime. In my trading, I often encounter days when there are no trades and when I was new to trading, I easily got bored and forced trades. I then often lost so much money when I wasn’t supposed to trade that I was barely able to recover once the good trades happened.
#4 Look at chart context
Many traders make the mistake of focusing on just chart patterns or candlestick formations alone and do not look at the bigger picture.
Although chart patterns and candlesticks play a big role in my trading, I always look at whether it makes sense in the overall price action context. A Head and Shoulders pattern can be very powerful, but if it forms at a market level where it doesn’t make sense or if the trend waves (the Head and the Shoulders) do not look nice, I have no problem passing on such an opportunity; there will always be a next one.
Again, trade like a sniper and try to really understand what the chart is telling you. In our price action course, we go in-depth and explain very detailed how to read the little nuances of price action charts. It’s such an important skill.
#5 Know when to cut a loss
I just talked about that yesterday during my trade recap but this is something I believe can easily make the difference between a losing and a winning trader.
Once you understand to read price action in a way that allows you to see when a trade isn’t working out early on and you can reduce the loss, it will transform your trading.
The good trades will usually start working out early on and being able to get out of bad trades is something that anyone can learn.
#6 Be realistic with targets
Once you are in a good trade, don’t make the mistake to shoot for an unrealistic target. This happens often when traders have small accounts or try to make up for losses.
I usually recommend going for the first major support/resistance area. Generally, such targets will be 2R – 4R away from the entry which is more than enough. Always take what is ‘safe’ and don’t try to force a huge winner; what then often happens is that you end up with a good trade that ends up turning around and you are left with nothing.
#7 Small wins add up
You do not need to double your account every few weeks and you also have to stay away from promises or marketing slogans that offer trading strategies with absurd returns.
Just think about what a consistent 1R or 2R gain per MONTH (not day) can do for your trading. Even with a risk of 1% per trade, that quickly adds up to 12% – 24% per year.
Of course, it will take time to grow a small account with it but, at the same time, this is how you build a successful long term trading career. And once you have a track record of 20% annual return, every investor will be happy to give you some money.
#8 Have a mental stop
Here I don’t mean mental stops in the sense of when to get out of a trade but when to walk away from your trading desk and stop trading.
Emotions and impulsiveness are big problems for many amateur traders and revenge trading or over-leveraging create huge problems that often lead to big losses or even to account blowups.
Every trader should have a rule when to stop for the day or the week. For example, after 2/3 losses in a row, end your day and stop trading. If you are down 5% on the week, take an early weekend.
In this context I like to recommend the book “The Art Of Learning” which comes with many techniques and tips that can help you deal with emotions more effectively.
As you can see, none of those Forex trading tips gives you a better entry signal or talks about indicators that you should use, but I am sure that once you are honest with yourself, you understand the importance of each point.
Trading isn’t a sprint; it’s a marathon. You have to make sure that you work on those fundamental principles because they will make sure that your trading career is built in a solid foundation.
If you are unsure how to go about all this, take a look at our new Forex trading course where we help you get started,..