Forex trading is full of uncertainties because the market constantly goes up and down. Professional traders have all spent a lot of time practicing.
On average, it takes 1 – 2 years for a beginner to master forex and become a successful trader.
Table of Contents
Tips on Becoming a Successful Forex Trader
The first step in forex trading is to choose a broker. The broker you choose should match your forex trading skill level and investment amount. Besides, the broker should offer good customer service and a reliable platform.
After you have chosen the broker, you must select the account type. Brokers usually offer different types of accounts for traders to choose from. If you are a newbie, you should sign up for a mini account first to get hands on experience in forex trading.
Traders should start trading in small sums and with a low leverage until they have learned the skills to make profits. It can be difficult for a beginner to trade on a large number of forex pairs. As a beginner, you should focus on trading one currency pair first.
It is not advisable that traders trade on rumour news. You should not react to the news unless you are able to accurately determine the consequences it will bring.
The actions of traders are unlikely to affect the market if it is very liquid. This is because the traders will not be able to manipulate it much.
On the contrary, traders’ activities can have a huge impact on the market when it is not very liquid. Most of the time, it will be very difficult for traders who trade on small amount of money to manipulate the market.
Banks that trade billions of dollars on forex currencies daily are able to manipulate the market easily.
There are 2 types of forex manipulation techniques, including front running and banging the close.
Front running occurs when the bank has information that there is a very large order at a fixed rate. The bank can therefore manipulate the market by making trades according to that information.
Banging the close focuses on the orders of clients before and during the 60 second fix. In banging the close, traders can manipulate the currency pairs fixed rate and make profits from it.
Tracking Your Forex Trading History
Traders should review their forex trading history from time to time. There are many advantages in reviewing your trading history.
First of all it enables you to monitor the market and detect opportunities.
It also enables you to detect reversal signals in the forex market. To detect trade opportunities, you should review the action analysis. Action analysis can be found on forex sites.
Many news on TV channels such as CNN and CNBC also broadcast action analysis. You can watch forex channels and listen to advice from forex experts to learn how to trade professionally.
Traders can make use Forex charts and tools to check the market patterns and look for trading opportunities.
Traders can use trading reports to keep track of their trading activities. Keeping a statistic enables you to find out which forex currency pair works. Many forex trading platforms can generate a detailed report on your activities since the day you open the account. You should be able to determine which period of trading activities the report shows from the trading platform.
Forex reports can be exported in several formats such as HTML, XLS, and PDF. It can take some time for the platform to generate the report though.
Traders can use the average profit to average loss ratio to track their trading. If you have a higher average loss than average profit, it means you must change your trading plan.
You can also find out the time you carry out forex trading. Besides, you can find out currency pairs that are most profitable by reviewing your trading history. You can use alert software to alert you through phone or email whenever there is a trade entry and exit opportunity.
Best Forex Trading Times
The most active forex trading time is between 8:00 GMT and 22:00 GMT. The busiest forex trading time is 13:00 GMt to 17:00 GMT.
Traders should not trade during the most active forex trading time. The best time for traders to trade is during the busiest forex time, from 13:00 to 17:00 when there are most activities in the European and US forex market.
About 60% of forex turnovers occur during the London and US sessions. The period where there is the least risk is from 21:00 – 6:00 GMT.
Range traders should trade during this period. There are many factors that can have an impact on forex markets including forex news, national holidays, political conditions, economy conditions, and international trade.
The 3 major sessions in the forex market are London, New York, and Tokyo.
The London session begins from 8:00 GMT – 16:00 GMT. London is the capital of the global forex market. The London forex market accounts for 34% of forex trading in the world. London has a huge influence on the world currencies because the Bank of England is situated there.
The Bank of England is responsible for controlling the monetary policy of the British Pound (GBP). Many forex trends in the news are extracted from the London forex market. The most traded currencies in the London forex market are EUR, GBP and USD.
The New York session begins from 1300 GMT – 2200 GMT. New York provides the second largest forex trading platform in the global forex market.
The US dollar is traded in 90% of the world trades. The rise and fall of the New York forex market Stock Exchange (NYSE) can affect the USD dollar.
Merging or acquisitions of companies can also cause the dollar value to increase or decrease. The most traded currencies in the US forex market are AUD, EUR, GBP, JPY and USD.
The Tokyo forex market accounts for the most forex trading activities in Asian forex market. The Japanese Yen is the most traded currency in the Asian forex market. The best currency pair in the Tokyo forex market is USD/JPY because the Bank of Japan has a big influence in the Tokyo forex market.
Traders must keep in mind that it is important not be too excited or panic when trading forex. Controlling your emotions can prevent you from making the wrong decision and lose money in your trading. To reduce the risk of making wrong a forex decision, you must use a logical approach and stay calm at all times.