Nick Goold
Many forex and CFD traders believe that trading is just about predicting the future. The reality, however, is that trading has many aspects to it. A trader needs to recognize and understand some important factors to be successful.
The basics
You need to know the basics of trading first before you start. Different trading and brokers' platforms operate in different ways. It is vital to thoroughly understand the system you will use and how to handle your account safely.
For example:
✓How to deposit funds into your account.
✓How to withdraw funds from your account
✓How to use the platform
✓How to display currency pairs and stocks
✓How to display indicators
✓Understanding leverage
✓Different trading styles
Although the platform may seem intuitive to use initially, it may take time to find more advanced features later, which you may need to use quickly. It may prove critical to your success if you don't understand how to use the platform.
Also, the following are essential to protect the value of your account and earn profits.
Markets
Develop a deep understanding of the market in which you plan to trade. Different markets move in different ways and for different reasons, so understand what these are.
Understand how economic indicator releases and news affect the market. Depending on the type of news, the impact may be limited, establish a new major trend, or create significant volatility. So, understand which type of news is most important for your market, and ensure you have access to services that publish it.
Strategy
Build on your strengths as a trader. To achieve consistent trading profits, it's important to have a clear and understandable strategy. Specializing in and mastering that strategy is the key to improving your trading.
✓Understand the market trend situation.
✓Understand where support and resistance will be.
✓Which indicators to use (moving averages, Bollinger bands, MACD, etc.)
✓Which signs of technical analysis to trade with
✓How to translate fundamental analysis into your trades
Risk management
No trader is 100% profitable or guaranteed to make money. Even the best professional traders can lose money. Therefore, risk management is critical. Professional traders have usually succeeded in accumulating large profits over time precisely because of their strong risk management.
✓How much risk (amount) to take in one trade
✓How to decide on position size
✓Where to set the target
✓Where to set your stops
It's important to decide the maximum risk (loss) you can take per trade. Defining that amount will determine the position size. The position size also needs to be adjusted depending on the profit target and stop-loss size. Reduce the position size for large targets and stops, and adjust the position size higher for small targets and stops. In this way, you'll maintain a consistent risk exposure.
Mental control
Many traders lose money solely because they can't control their emotions. In contrast, professional traders have strong self-discipline, which enables them to make long-term profits. Without strong mental control, it's difficult to make consistent profits in forex and CFD trading.
Can you remain calm under pressure?
Can you have the discipline to execute trades without deviation from your trading plan?
These are the key aspects of mental control you need to master to be a successful trader.
