Nick Goold
Step 1. Choose a time
Choose a time when you can concentrate 100% on trading - one hour a day is sufficient for trading. Staring at the charts for extended periods will dull your trading judgment and increase the likelihood that you will ignore your rules and make risky trades.
While the forex market moves 24 hours a day, there are times of the day that are better for trading than others. Trading at the same time of day will help you understand the price movements during that time of day and will increase your expertise.
Step 2. Choose a market
There are many different markets, so it can be difficult for a trader to choose which market to trade.
Even though there are many different markets, one thing they all have in common is that volatility is required to make profits. Therefore, you need to trade in markets with high volatility rather than markets with low volatility. It is helpful to experiment with trading various markets when starting trading. Analyse your performance and focus on the markets with the best results.
Step 3. Choose a trading strategy
There are two types of trading techniques; trend and reversal. Before you trade, you should focus on whether you are looking for trend or reversal trading opportunities. If you think about both possibilities, you will be at the mercy of price movements and miss trade opportunities. Focusing on one trading opportunity will allow you to follow your plan and increase your chance of making a profit.
There are many different indicators, and many people need clarification about which indicator to use. The best thing to do is to display the widely used moving average on your chart. The parameter "10" can help find many profitable trading opportunities.
There are eight moving average entry patterns. Analyse which entry pattern is appropriate for the current market situation and wait for that entry timing to arrive.
Confirm the location of support and resistance. Support and resistance helps find entry and exit points. Support and resistance analysis is required because all traders, regardless of their strategy, are aware of them.
Step 4. Money management
The maximum risk per trade should be below 2% of your trading capital. Risking more than 2% is dangerous, as you can lose money quickly. The key is to be able to continue trading after making a loss.
Also, if you lose a large amount of money, you will lose motivation and confidence. Scalping, in particular, requires quick judgment, so any hesitation can result in losses. Therefore, a complete money management strategy is essential for all traders.
Step 5. Determine stop loss and profit target
Setting stops and targets is very important. For most markets, a stop loss of 3 to 5 pips and the target at 5 to 15 pips. A risk-reward ratio of "1" or better (higher average profit than loss) should be a goal of traders.
Step 6. Psychology
Always prepare for a trade before trading. Avoiding negative emotions such as revenge, anger, and impatience is essential. Being able to make clear decisions in a controlled manner is one of the skills necessary for a trader.
