To be the best you must perform the same actions as the best. Forex trading has become a sensation. However, a tiny percentage of traders make a profit. This ‘elite’ group aren’t more intelligent or gifted than other traders. However, there are 10 strategies which tie a majority of them together. We will be taking a look at what these 10 elements are, and how you can implement them into your workflow.
- Trading environment
With the growth of mobile trading, this is often overlooked. Trading forex requires an immense level of concentration. This isn’t something you can do in between Netflix episodes. Every top Forex trader I have met have two things:
– A desktop pc setup
– Dual monitors
A dual monitor enables them to see more data at the same time. Therefore, they can spot opportunities more quickly. Moreover, a desktop computer forces them to sit down and trade. Plus, they don’t need to worry about the battery life running out at a crucial time.
The sounds and distractions you have around make a big difference. Therefore, I also see them use headphones to play calming music. Listen to whatever gets you in the zone. Moreover, they sit n a comfortable chair and make sure that whatever they need is close by.
This environment enables elite traders to endure peak levels of concentration for hours.
- Technical analysis
Guessing isn’t a good trading strategy. Technical analysis involves carrying out calculations and reading patterns on the currency chart. When carried out correctly, you get trades right more times than you get them wrong. Technical analysis can also be used to validate your hypothesis. I am yet to meet a successful forex trader who doesn’t have technical analysis as a crucial part of their strategy.
- Fundamental analysis
Fundamental analysis enables you to spot the intrinsic value of a currency. Therefore, you can see opportunities most traders can’t. For instance, declining unemployment figures could forewarn increased consumer spending over the next few months. This might have an effect on a currency’s value.
If you want to take it one step further, use several data points to validate your hypothesis. For instance, in the past did a decline in unemployment figures result in an increase in consumer spending, or did people opt to save their money. Fundamental analysis combined with technical analysis can result in a ‘psychic-like’ insight into the currency market.
- Automation
The industrial revolution and civilization were a result of our innate need to be efficient. Why does something the hard way when there is an easier option? I am yet to come across a fully automated and profitable forex trading system. However, you can automate part of it.
Remember when I said elite traders always have dual monitors? That is because a ‘forex robot’ software does the technical analysis on one screen, while they view graphs on the other. Analysis which might take half an hour is completed in a second. And it happens in real-time. As a result, they are free to use the results of fundamental analysis and their own knowledge to make trades. As you can see it is the same game, but the blueprint is different.
If your strategy relies a lot on technical analysis, much of it can be automated.
- Practice
Nothing good comes without consistent effort. What is more important to you: becoming a successful forex trader or catching up on your favourite tv series? If entertainment is more important, you aren’t ready. Top forex traders practice at an obsessive level. The grind is tough but when you begin making more in a day than most people see in a month, you can enjoy time off in a grand style.
- Entrepreneurial mindset
You can’t improve on what you don’t measure. Therefore, you need to know the average amount you spend on each trade, how many trades you carry out in a day, your profit margin, etc. Without this information, you might as well be trading blindfolded. The aim is to improve every trading metric over time.
Yes, it will be tough at times. Despite your best efforts, you will run into a bad set of results. The key is to know why a trade was successful or unsuccessful. This isn’t an investment for quitters.
- Research
There is so much information on forex trading that it is easy to become confused. I certainly did. I bought as many books, courses and webinars as possible. Most of them contained information I could have found with a Google search.
You need to have knowledge of your chosen currency pairs; however, you also need to be selective. It is easy to get into a mindset of needing that shiny new course or book. This is valuable time and money you could spend trading. Dive in head first with a demo account and implement strategies as and when it is needed.
- Time management
We all have 24 hours in a day, but how come some are able to become millionaires while others die broke? It comes down to how you use time. If you spent 90% of your free time playing video games and 10% trading forex, what would be the end result? You would become a fantastic gamer, but an average Forex trader. Sadly, average forex traders lose money. To profit on a consistent basis, you need to dedicate time.
- Capital management
The size of your trading capital is of less importance than how you use it. Don’t invest more than you can afford to lose. Taking care of basic necessities is more important. Trading under the stress of high debts won’t help. I am yet to meet a successful Forex trader who borrowed money to trade with. They either saved up, took up more hours at work, or launched a low-cost service business. Money is a critical part of any trading strategy, so be careful how you invest it.
- Focus
You can’t achieve anything without Focus. What do you want out of trading forex? What do more free time and income mean to you? Forget about reaching 6 or 7 figures, and focus on the real end goal. That is what you are striving for every day.
Final thoughts
I hope you found this article insightful. Nothing good comes easy. If becoming an elite forex trader was easy, everyone would do it. Remember, exceptional results require exceptional actions.
