3 Steps to Improving Your Forex Trading

For new beginner traders wanting to improve their forex trading education will play a fundamental role to improve their understanding of the forex market and this will lead to the trader becoming more successful.

After traders have learned the forex trading lessons required to start forex trading and well as the various forex trading strategies then traders need to follow these three steps below so as to improve their trading. If you have not learnt about the forex lessons needed to start forex trading or you are looking for a forex trading course that provides these forex lessons then you can find these forex lessons on the learn forex section of this website. You can also find forex trading strategies from the learn forex trading strategies section of this website. After you have completed reading these tutorials traders can then follow these steps to improve their trading.

Come Up with a Forex Trading Plan

Traders need to plan their trading and to do this, traders will have to come up with a forex trading plan. Traders looking for an example forex trading plan can find one on this website, the lesson of writing a forex trading plan can be found on the learn forex lessons of this website, this is the last lesson on this learn forex trading lessons section.

Use a Forex Trading Plan and Stick to the Forex Trading Plan

Traders should always use the forex trading plan they come up with to trade the online currency market. The strategy that a trader chooses should be well written in this forex trading plan and the trader should always follow the rules of this forex trading plan when deciding when to open and close trades.

The currency pairs that a trader will be trading will also be specified within this forex trading plan, the currency pairs chosen will be the currency pairs that are best suited for trading based on the trader’s forex strategy.

The forex plan will also specify which chart time frame that the trader will be trading with, whether the trader will use the minute forex charts or hourly forex charts. The chart time frames used will depend on the trading style of a trader. A scalper will use the one minute charts, a day trader may use the 15 minute forex charts and the swing trader may use hourly charts.

The forex plan will also set the take profit targets for each trade as well as the stop loss for each trade. Once a trade is open then a trader will close their trade once the take profit level is reached or once the stop loss level is reached. By sticking to this method of closing trades at pre determined levels will ensure that traders will be more successful because they will have determined the points to close trades before opening the trade.

The forex trading plan will also include money management rules that the trader will follow. For example a trader should follow the money management rule that specifies that they should not risk more than 2% of their account capital on any one single trade. The money management rules tutorial can also be found on this website on the learn forex trading lessons section under the forex key concepts topics.

If as a trader your chosen strategy is to use automated trading strategies and Expert Advisors then these automated strategy should be specified in your trading plan. Whatever strategy you decide to trade with as a trader, write it down in your forex plan and stick to trading with that strategy.

Traders should also avoid emotions of fear and greed when trading in the forex market. The forex trading plan will help traders plan their trades and this way traders will not make trades based on their emotions. A Forex trading plan will help a trader set clear goals when trading and at the same time will help traders to stay organized when trading and thus ensuring the traders become more successful when trading in the forex market.

Trade with The Forex Trend

Traders should always make sure that they open trades in the direction of the market trend. The market trend is the general direction of the market prices and this direction can be upwards or downwards. Once the market trends start to move in a particular direction price will continue to move in that direction for a while because the trends will have gained momentum that will keep pushing prices in the direction of the market trend.

This is why traders should always open trades in the direction of the market trend so as to trade in the direction that has momentum and this way traders can increase their chances of being successful when trading the forex market.

Trader always have a saying in the forex market - The trend is your friend - which means that traders should always trade in the direction of the trend and never open a trade against the market trend. This is because the most reliable method of trading forex, and not just forex even stocks and other financial instruments is to follow the trend and only open trades in the direction of the trend.

There are various methods of determining the direction of a market trend and to do this trader should use forex trend lines or moving averages or Bollinger bands indicator.

Keep a Forex Trading Journal To Track Your Trading Results

Forex traders should always keep a forex trading journal and write down all trades that they open in this journal, they should write why they opened each trade, when they closed the trade and also the amount of profit or loss generated from that trade.

After a while traders can then review the trades they have made try and look at why the losing trades made a loss and why the winning trades were successful and after that they can then try and do more of what makes them successful and less of what is making them to open losing trades and that way keep on improving on their trading strategy.

As a trader if you do not keep a trading journal you might continue making the same mistakes over and over again without knowing, but if you keep a forex trading journal and keep reviewing this journal from time to time then you give yourself a chance to identify the mistakes you make in trading from reviewing your trading journal.

Once a trader gains some experience in the market and start to recognizes the successful trading patterns from their winning forex trades they can then use this information to identify the trading setups that will have more probability of producing winning trades and this way they can then continue to improve their forex trading.