A trading procedure consists of the entry and exit rules, but it’s much more than having a set of guidelines. The trading strategy considers six significant factors and your personality, and all these factors together create a rule-based Forex trading system. This article is all about the discussion ofsix amazing steps which will help you to become a good trader.
Step 1: Know Yourself
At the time of trading, knowing yourself should prioritize and focus on your personality. Examine, analyze, and point out the strengths and weaknesses and then explore your reaction to a prospect or how you will react if your position becomes vulnerable. This analysis is called an individual SWOT assessment.
Don’t lie and hide the fact from your own. If youare confused about your acting, ask for someone else opinion.
You will go through various transaction conditions across multiple time frames and be sure you are comfortable with all those conditions. Unless the trading style and personality become the same, one will not benefit from the transaction, and they will rapidly lose passion.
Prepare a trading plan so that you could trade well. Preparing yourself for the trade is a type of attire rehearsal that a trader needs for potential work. Planning means you are placing your limits along with the ground rules.
Step 2: Setting up the goal
One needs to determine and calculate the financial goals and the return types one expects from their trading in investing terms. Next, a trader needs to realize how often he can trade and how much he should earn to achieve the trade-off goals. This factor is also essential, which will help a trader to realize that the goals and transaction methodology may conflict with each other. Hence, it is crucial to align the trade-off goal and method. To know more about the optimized goals, visit https://www.home.saxo/en-sg/products/forex and enhance your knowledge.
Step 3: Make Sure You Have Sufficient Money
Trading fuel is cash, and you need it significantly in starting a transaction. Therefore, lack of enough money means lack of liquidity, and unavailability of liquid assets will hamper the trading. But a more important fact is that losing trades cushion is cash. Without cash, preventing a transitory drawdown of trade is impossible, and the trade-off will lose its breathing space in lack of money.
Step 4: Harmonious Market Selection
Choose a currency duo and, at various time frames, test it. At first, with weekly charts, start your trade, and after that, continue to daily, 6-hour, 3-hour, two-hour, 30-minute, 15 minute, and 5-minute charts.Try to ascertain the strategic point at which the market moves, and the issues may be trendlines, Fibonacci levels, or moving averages.This will provide you the currency trade idea at various time frames.
Step 5: Expects the Positive Results and Test Methodology
Probably for most traders, the most crucial transaction part is this step; it’s a system through which only profitable trades enter and exit, with no losses at all. This system will make an investor more prosperous than their dream. But the fact is that no such method is available there.
There are the best methodologies available, and using a very low or average method, a trader can earn money. The transaction system performance is farther about the trader’s account than the methodology.
Step 6: Measure the Risk-Reward Ratios and Establish Limits
You need to draw your exit position to exit from the market if the marketplace rules act against you. This is the place where you need to set up the stop loss.
For example, if the ending is away by 20 pips from the entrance point and you are dealing with a standard lot, approximately every pip’s worth is $10. Using a pip calculator would be easy for you to obtain the pip value in cross currencies trading.
You’ll have the tools to choose a suitable currency pair if you combine psychology, fundamentals, a trading approach, and risk management.All that remains is to continuously practice trading until the technique becomes imprinted in your mind.You may become a successful trader if you have the enthusiasm and determination.