Since forex is based on a lot of trial and error, nobody struck gold right from the get-go. The best way to gain experience is to actually participate in the market. After tackling for a while with it just to learn the basics, you can think about developing a proper strategy that will turn a profit. Here’s how to improve your trading strategy when you have little experience.
Get Rid of the Tools You Don’t Use
Overflooding your workspace with tools will not necessarily improve your chances to succeed in the forex market, especially if you have very little prior experience. Instead, to get a feel of the market’s flow and how things are done, remove all the tools and leave the price chart alone.
The purpose of tools is to help you find a precise entry point, measuring average deviations and the volatility of price action and identifying trends. If too many tools are running in the background, you will keep receiving conflicting information from all over the place, encouraging you to make rushed decisions and trade haphazardly. So, it is obvious why filling the screen with dozens of charts is rather counterproductive.
Before adding a tool to your workspace, try to take them all one by one and identify their purpose, function and how it suits your particular needs.
Keep a Comprehensive Trading Journal
Actually, how does forex trading work? Do you know? Well, a simple way of improving your trading strategy is getting familiar with the forex mechanism by noting every move you make in a journal. The journal can be either written, filled with screenshots or a combination of both. Note every little detail from your investments, target your loses and entries. It will not only help you keep track and keep focus, but also get you acquainted with the finest inner workings of this fascinating machinery.
A journal will not only provide a historical perspective of your activity as a trader, but it will help you construct valid, objective criticisms to your work. Noting everything down will help you determine what didn’t work, why and how you can improve your technique. Moreover, it is a healthy thing to do from a psychological standpoint, because a clear record of trading activity will incentivize you to eliminate destructive, counterproductive habits and develop healthy ones.
In forex trading, trial and error is the best way to gain experience. Do not invest lots of money right from the get-go, because that will put you off any future attempts to trade. Make sure you have a decent amount of disposable income and invest a symbolic sum, let’s say 100 dollars. To eliminate any potential psychological burden, consider that money lost even before starting trading.
With all of these things out of the day, start practicing. Find out which tools and strategies are best suited to your trading style and start building a tight work discipline.
Steer Clear of Other’s Opinions on Trades
It is fine talking about strategies and your performance with other traders but try not to build your strategy around what others say. Be proud of your research, skills and plans, and follow them by the heart. This is the only way you can learn and gain experience, by seeing what strategy suits you and yielded the most positive results.
Constantly second guessing your own decisions, abandoning your methods or changing them on the fly will only add to your levels of stress and lead to poor performance. If one trader’s predictions were correct, don’t be upset you did not listen to him. Remember that every trader, no matter how successful, has had loses and made bad decisions. It is not the end of the world if you end up making an uninspired trading move.
Start Each Day with a Clear Head
Mental clarity and high focus are essential and will determine your chances of making successful trades. Before starting the trading day, take care of bills, family and other day to day obligations and focus solely on trading. Also, take five to ten minutes to check forex related news and data. If you feel like you have not done the proper research, it is wise to stop trading and dedicate your day just to doing that.
After the end of the trading session, take half an hour to sketch the plans and goals for the next day, and what strategies you need to apply in order to achieve the best results. If you feel upset, angry or frustrated, avoid trading. Again, forex requires high amounts of concentration and focus, and doing it in an inappropriate mental state will only lead to rushed, uninspired decisions that may cost you lots of money.
Forex trading is not for everybody, as it requires a specific subset of skills and constantly improving one’s trading strategy. That’s why it is important to start each day with a clear head, keeping a complete trading journal and trying to determine which tools are best suited to your needs and style. If you follow the tips presented in this article, you will find it much easier to enhance your trading strategy.