There is a brutal truth and an old saying in Wall Street, which is “Bulls make money, bears make money and pigs get slaughtered”.
Institutional traders, Banks and MM brokers call newbies pigs in the market. Most new traders lose their first few accounts due to a few facts which they could’ve avoided. The open secret in Forex trading is, 90% of traders lose money. And the surprising reason is not because they don’t know trading but they don’t stick to the plan and risk management.
Having no money management is the primary enemy of a new trader which they can improve by practicing and being disciplined. Read our top 10 trading tips for the beginners and you can improve your trading skills by following them:
1. Having a great trading education:
Trading in the currency market is not so easy but it’s not that complex either. Knowing how to sell or buy a currency pair is not Forex education. You must learn from a complete and organized trading course where you will get deep knowledge in trading and other relevant topics step by step.
There is no shortcut in the journey of becoming a successful trader. No ‘Holy Grails’ exists in the trading market. Don’t waste your time searching for them. You don’t need them. You are not perfect which is a great thing in trading, more confident you get more risk you take, which ultimately end your trading account.
The core components of any Forex trading course should be:
The first step of any Forex trading course would teach you about the basic Forex trading stuffs (like pips, spreads, swaps, Leverage, lot or volume sizing, trading software, economic news and events, central banks etc.), and then teach you about currency pairs, their correlations, chart, candles and many more.
Next, it would teach you a trading strategy, without a trading plan you won’t be successful, no matter how much you know. A good Forex trading strategy always focused on how to filter (analyze) and minimize the risk from a trade. It would tell you where to trigger a position, where to put a stop loss and where the take profit. And if the trade is worth risking at all.
Finally, it would tell you how much to risk and how to improve your trading skills, psychology and control your emotions.
My recommended Traders and their trading courses:
Our core price action course will save your 5 years and tons of money which you could’ve lose in that 5 years. Our goal is to make you a profitable trader. I’m not telling you that you will only be profitable by following our course. We take the minimum fees and mentor newcomers till they make money.
When you pick a trading course you make sure they have at least 10 years of successful experience. There are few other successful traders I will recommend you. I don’t take any referral money from them (even its loss for me), all I want that you learn from the best.
I’m sharing Twitter accounts, ITPM of AntonKreil is the best in the industry but he charges huge fees, trust me its worth every penny if you can afford it. His twitter is @AntonKreil . You can take Peter’s course @PeterLBrandt 30+ years of solid experience, he is very respected in the trading community. You can learn from Linda @LindaRaschke , She is a real badass. Have a solid ROI of last 30 years. Brian Beamish is one of my very favorite trader, trading is so fun and safe if you learn from him. His twitter @CRInvestor . Francis Hunt is very unique trader, he hunts continuous trend , his Stop loss are so minimum comparing take profit. His twitter is @themarketsniper
But before going to them I suggest you take our course, we will shape you and we charge minimum fees.
2. Money/Risk Management:
How good a professional trader is defined by how good they were in managing their capital (risk management). This the number one fact in Forex trading. You stay in the business if you follow it or you blow your account. Nothing can save your account if you don’t follow a disciplined risk management method in your trading. There is nothing absolute in trading, trading is all about probability and risk is everywhere.
71% of the trades in a losing account are usually closed in profit. Amateurs traders often blow their account using higher leverage with trades. They over trade without any calculation. Only risk the amount you can afford to lose with a trade or it would destroy your account. You must follow a good money management method if you want to survive in the game, there is no alternative. As soon as you learn it is better for you, I learned it in a hard way after wasting a couple of years and tons of hard earn money. Don’t get me wrong, I am just being honest with you here. You will never score well If your focus is only the score, you need to enjoy the game and wait for weakest moment of the opponents.
3. Learn an Easy trading strategy based on basics and master it.
You need to learn an easy and simple trading method which based on the classic price action like ‘core price action’ strategy. A good trading strategy always focuses on risks and losses. A sound trading plan is a set of rules to filter a trade to minimize the risk.
All losing traders have a common mindset – that they depend on only indicators rather than the price itself. An indicator might work for the parson who made it but not for you as you don’t know the strategy/weakness behind it. You can take an indication but make your decision based on your strategy. Learn how price behave and their patterns to become a successful trader.
4. Trading Journal:
You have to put notes why you are trading and if those trades matches your trading filters (strategy). Having a trading journal seems a bit of extra work, but you will regret later if you don’t manage one. You lose money when you mistake and a journal will show you what your mistakes are at a glance. It will improve your trading success rate dramatically. Most new traders don’t value it unless they realize the truth. You won’t be making money even if you follow the best strategy of the world, because everybody interact with the market differently, you need to adjust the strategy according to your understanding. You will never improve, unless you know your weakness. More you wait it becomes your habit and harder to overcome. Only 16% people lose money who follow a trading journal! This is a must for a new trader.
5. Try Higher Time Frames:
You must trade on higher time frames (Daily Chart) if you want to be successful, there is no exception. Many traders have the misconception that they would find more trading opportunities on a lower timeframes and can earn more money. But the reality is the exact opposite. Trading more frequently increases your risk, and the price action of a lower time frame is messy and easy to get fooled. It makes the trade setups more complicated.
But in the higher time frames, you will get clearer price action and it’s easier to identify a trade zone. I trade in a daily chart and check weekly chart if I’m having trouble to find a clear support or resistance line. Price action in H4 seems okay but it’s more accurate in a daily chart. I highly recommend daily chart for new traders.
6. Stop following others blindly:
Stop following other traders blindly. They could trade on a different strategy and different time frame than yours. It could be a sell on 15 minutes chart and Buy in a daily chart. You should know their strategy first.
You can ignore major finical news events if you don’t understand them. There are successful traders who trade only news (not TV news but financial data) and fundamental and there are plenty of traders who trade only technical chart. You don’t have to pick a side but understand the logic behind it. I follow both.
You should also avoid newspapers and financial TV channel if you are a technical trader, newspapers could add fiction to make it more eye catchy. Remember they are journalist not traders, they make money from fancy eye catching news. Be an independent thinker, no fundamental traders trade by TV news. Show me a single successful trader who become successful by following financial news channels. Successful traders often think from a different perspective than the retail crowds.
7. Be realistic on profit target:
Be realistic, don’t dream of a million-dollar profit by investing $1000, that is not possible. Warren buffet would’ve made ten trillion dollars each year if that was possible. Traders who want to get rich quick always lose quicker.
A strategy is good if it can make more than 10% a month. It is a great strategy if makes more than 15% a month. Even professional traders don’t make money month after month. Luck will help you in gambling or lottery, not in the Forex market.
8. Choosing a right broker is important:
As I mentioned earlier, MM brokers (not all) often get happy by new traders as they trade against them. There are some non-regulated brokers who do some bad trading practices but a well regulated broker can’t do that.
There are some brokers which have higher spreads, higher swaps rates and other trade restrictions that could make your trade costlier. Compare the Forex brokers and choose the right one that suits your trading style. A good Forex broker is important. Don’t choose a broker just because someone told you to do so. They could have benefit by referring you. Don’t choose a broker which is offering eye catching deposit bonus, there is no such thing as free meal. It is easy to fool you and starts over trading if you have more than you invested. More trades always carry more risk not more profit.
9. Less you trade more you profit:
Trading with smaller volumes/size often makes you profitable. Planning a big win using higher leverage is a primary reason amateur traders wipe out their trading accounts. Slow and steady wins the trading race. You don’t need jump on all the trades to make profit. Remain patient and disciplined, control your emotions.
Controlling emotions is not controlling your joy and sadness when you win a trade or lose one, it’s how you interact with the market with your running positions. Your only duty as a trader is to protect your trading capital, making profit is not your priority. Profit is a byproduct of losing less and following a process. Try a ‘cent account’ if you are feeling less confident at first.
10. Know your Stop Losses before triggering an entry: Exit Plan
Using a stop loss is must for a new trader. But most newcomers get so afraid of losing money and put a very tight stop loss. A close stop loss won’t save your money, rather it will hunt your balance. Using a fixed pips SL is a bad idea. Follow price action and give the SL room to breathe.Use, small lot size If you are so afraid to lose money.
You should have your exit plan before you trigger the entry. Never ever move a stop loss further away once market tries to hit it. Don’t get panicked by the losses. Don’t count your winning and losing ratio until you complete your first 30-50 trades by following your trading strategy. Use half trading size if you loose 3-4 continuous trades, it will give you confident. But you should stop trading for 10-15 days if you loose 10 trades continuously, it will give you a chance to understand the mistakes you are making from your trading journal.
As you can see, greed can kill a trader’s profit and trading capital. Follow money management put your stops in a safe distance and be disciplined. Learning price action and keeping a trading journal would help you to lose less.
Its your turn. Let me know in the comment section if you are facing any trouble with your Forex trading.