You Don’t Need To Be An Expert Trader To Trade Forex - Doo Prime News
Doo Prime News > Important Notice > You Don’t Need To Be An Expert Trader To Trade Forex

Forex trading is accessible, exciting, educational, and offers traders lots of opportunities. Despite all this, many traders fail to learn how to become successful traders, and don’t achieve good results in this market. In fact, a high percentage of forex traders are struggling to master forex trading. Learning to trade forex and learning how to trade in general can be difficult, and that’s why we have created this article for you.

This article will ultimately guide you on how to become a successful forex trader, and how to trade on the live markets. With that, you don’t need to be an expert trader to trade forex. Additionally, it will show you the best trading practices for beginners. In fact, since you’re reading this, you are already on the right path to becoming a successful forex trader. Below, you will find actionable advice for beginners and pros alike. Without further ado, let’s dive right in.

There is no single formula for success for trading in the financial markets. Think of the markets as being like the ocean and the trader as a surfer. Trading requires effort, balance, patience, proper equipment, and mindfulness of your surroundings. Would you go into water that had dangerous rip tides or was shark-infested? Hopefully not.

The attitude to trading in the forex markets is no different. By blending good analysis with effective implementation, your success rate will improve dramatically, and, like many skill sets, good trading comes from a combination of effort and hard work.

 

What is a Trader? 

A trader is someone who places orders on the market, sometimes on behalf of financial institutions (big banks, investment funds, hedge funds), or other times, as an independent trader. Exchange orders, such as purchasing or selling stocks, are either in the trader’s own name, or on behalf of clients or for the financial institution or broker that employs them.

There are several categories of traders depending on the traded markets: foreign exchange (forex), equities, bonds, metals, coffee, meat, etc. In today’s world, there is a trading market for almost all goods (meat, coffee, etc.) and commodities. Most existing contracts are settled in foreign currency, and do not deal with physical delivery.

For example, a professional money market trader manages the cash needs and surpluses on behalf of the bank or clients for which they work, in the short or medium term. A forex trader manages currencies based not only on client needs, but also on the various fluctuations expected in the short and medium-term. An equity trader, on the other hand, trades shares in anticipation of market behaviour, as the trader’s goal is to buy before the share price increases and sell before they fall.

 

Approaching Forex Trading 

Before you trade, recognize the value of proper preparation. It’s important to align your personal goals and temperament with relatable instruments and markets. For example, if you understand retail markets, then it makes sense to trade retail stocks rather than oil futures, about which you may know nothing. It also helps to begin by assessing the following three components:

 

Time Frame 

The time frame indicates the type of trading that is appropriate for your temperament. Trading off a five-minute chart suggests that you are more comfortable taking a position without exposure to overnight risk. On the other hand, choosing weekly charts indicates comfort with overnight risk and a willingness to see some days go contrary to your position.

In addition, decide if you have the time and willingness to sit in front of a screen all day or if you prefer to do your research over the weekend and then make a trading decision for the week ahead based on your analysis. Remember that the opportunity to earn substantial profit in the forex markets requires time. Short-term scalping, by definition, means small profits or losses. In this case, you will have to trade more frequently.

 

Methodology 

Once you choose a time frame, find a consistent methodology. For example, some traders like to buy support and sell resistance. Others prefer buying or selling breakouts. Some like to trade using indicators, such as MACD (moving average convergence divergence) and crossovers.

Once you choose a system or methodology, test it to see if it works on a consistent basis and provides an edge. If your system is reliable more than 50% of the time, you should consider that an edge, even if it’s a small one. Test a few strategies, and when you find one that delivers a consistently positive outcome, stay with it and test it with a variety of instruments and various time frames.

 

Market (Instrument) 

You will find that certain instruments trade much more orderly than others. Erratic trading instruments make it difficult to produce a winning system. Therefore, it is necessary to test your system on multiple instruments to determine that your system’s “personality” matches with the instrument being traded. For example, if you were trading the USD/JPY currency pair in the forex market, you may find that Fibonacci (commonly denoted Fn, form a sequence, called the Fibonacci sequence) support and resistance levels are more reliable.

an example of Fibonacci

Motivating Forex Trading Factors 

Instruments trade differently depending on the major players and their intent. For example, hedge funds vary in strategy and are motivated differently than mutual funds. Large banks that are trading in the spot currency markets usually have a different objective than currency traders buying or selling futures contracts. If you can determine what motivates the large players, you can often align that knowledge to your advantage.

 

Alignment

Pick a few currencies, stocks, or commodities, and chart them all in a variety of time frames. Then apply your particular methodology to all of them and see which time frame and instrument align to your system. This is how you discover alignment within your system. Repeat this exercise regularly to adapt to changing market conditions.

 

Make Use of Forex Community Platforms & Trading Strategies  

While many still find it a challenge to understand the mechanics of trading, there are existing guides and insights that can assist and guide new traders in forex trading. Forex community platforms and trading strategies, such as OuTradeMyfxbookTrading CentralStrategic Alpha all work together with one of Asia’s best online trading platforms, Doo Prime. These platforms constantly delivers trading insights, strategies, share top trader’s transaction list and analyse your forex account.

 

 

Implementing a Forex Trading Strategy 

There is no such thing as only profitable trades, just as no system is a 100% sure thing. Even a profitable system, say with a 65% profit-to-loss ratio, still, has 35% losing trades. Therefore, the art of profitability is in the management and execution of the trade.

 

Risk Control 

In the end, successful trading is all about risk control. Try to get your trade in the correct direction right out of the gate. Evaluate your trading system, make adjustments, and try again. Often, it is on the second or third attempt that your trade will move in the right direction. This practice requires patience and discipline to achieve success.

 

The Bottom Line 

Trading is nuanced and requires as much art as science to execute successfully, which means that there is only a profit-making trade or a loss-making trade. Warren Buffet said that there are two rules in trading: Rule 1: Never lose money. Rule 2: Remember Rule 1.1 Stick a note on your computer that will remind you to take small losses often and quickly rather than wait for the big losses.

Given its low commissions and fees, the Forex market is very accessible to individual investors. However, before you trade, make sure you have a solid understanding of what the Forex market is and the smart ways to navigate it. Learn the basics and see real-time examples of the approaches and strategies detailed in Doo Prime’s website.  

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