Traders who are deemed to be best are known to improve their skills via discipline and practice. They also ensure that they carry out a self-analysis to find out what is able to drive their trades, learning the way to keep their fears and any greed from the equation. The following are some of the skills that should be practised by any forex trader as explained by the top 8 forex brokers in South Africa:
Define trading style and goals
Before you begin to set on a journey, it is important that you have some ideas regarding where you are heading and the way you will ensure to get there. On the other hand, it is important to have in your mind clear goals, then go ahead and ensure that your method of trading is capable of achieving the goals. each of the styles of trading has a different profile when it comes to risk, which requires a certain approach and attitude to be able to successfully trade.
If you are the type who cannot be able to tolerate having to sleep with a position that is open in the market, then you should consider doing the day trading. But if you are the type that has funds and you have a feeling that you are likely going to benefit from the trade appreciation over a time of few months, then you should consider becoming a position trader. Just ensure that your personality is able to fit your trading style that you embrace. A mismatch of a personality will end up leading to certain losses as well as stress.
Trading platform and broker
To choose a broker who is reputable is an important quality and to spend time having to research the difference which is there between brokers might be quite helpful. You have to know each of the policies of the brokers and the way they go on with making a market. For example, trading the spot market and the over the counter market is different from having to trade the markets which are exchange driven.
Also, you have to make sure that your trading platform broker is one that is suitable for the analysis that you would wish to do. If you like to trade off for example of the Fibonacci numbers, you have to ensure that the platform of the broker can draw the lines of the Fibonacci. A broker who is good with a platform that is poor or a poor broker on a good platform can be problematic. You have to ensure that you get the best out of everything.
The methodology which is consistent
Before entering any market as a trader, you are required to have some ideas of the way you will make certain decisions to execute your trader. You have to know the information that you will require to make the right decision on exiting or entering a trade.
There are some people who choose to look at the fundamentals which are underlying the economy and as a chart in determining the best time to be able to execute the trade. There are some who only utilize the technical analysis. Whichever method that you embrace, you need to be consistent and ensure that your methodology is one that is adaptive. Your system needs to keep up with the dynamics which are changing the market.
Determine the exit and entry points
Most traders get very confused by information that is conflicting which occur when they look at the charts in various timeframes. What happens to be displayed as an opportunity for buying on a chart for weekly, might show up as a sell signal on an intraday chart.
Therefore, if you decide to take your basic trading direction from a chart for weekly and use a daily chart to the time entry, you have to ensure that you synchronize the two. What it means is that, if the chart for the week gives you a signal for buy, you should wait for the daily chart to confirm a buy chart signal also. You have to ensure that your timings are in sync.
Your expectancy calculation
It is a formula that you utilize in determining the way the system works in terms of reliability. You have to retract back, measuring all the trades which happened to win against the losers, then go ahead and determine the profitability of the winning trades against the amount you lost on the trades.
Try taking a look at the trades that you made last. If you have not been able to make actual trades yet, you can go back to the chart to where the system would have an indicator of when you should exit and enter a trade. Determine if there are chances of you making a loss or a profit. Write them down. Try totalling down all your trades winnings and then divide the answer with the number of winnings which you have made.
Try focusing and small losses
Once you fund your account, the important thing that you have to remember is the risk on your money. Thus, your money shouldn’t be needed for living expenses regularly. You should think of your trading money like vacation money. Once the vacation gets over, your money will have been spent.
You need to have the same attitude towards trading. It is psychological preparation to prepare you to be able to accept the small losses, which could be key to having to manage your risk. When you focus on the trades and accept the small losses instead of having to count your equity consistently, you will become more successful
Loops for positive feedback
The feedback that is positive is a loop that is created due to a trade that is well-executed as per the plan. With a trading plan and go ahead carry it well; you will be able to form a positive pattern of feedback. Success is known to breed success, which then breeds confidence mostly when the trade becomes profitable. Even if you decide to take a small loss but do so as per the trade that is planned, then you will build a feedback loop that is positive.