Forex trading 2021 » How to Become A Successful Forex Trader» Top 10 Tips

— Earning is the dream of every youth, that's why today I will teach how you can make up to 5Lakhs per month with Forex trading in 2021

Forex trading is really fun to engage traders and investors smoothly over a day. Despite all these a growing number of forex traders and investors increasingly find it difficult to achieve substantial success or maintain any good result in the FX market. Factually, a sizable percentage of Forex traders would wind up with more losses than gains. As far as the financial market is concerned, learning to trade is by no means a feat achievable in one month.

Forex trading is the world's biggest market where everyday 5trillion transactions occur, to become a successful forex trader in 2021 you need to follow these things.

Forex trading 2021

Today in this article we explain how to go about being a forex trader and engage in live market trades. Besides, You will learn efficient training hacks, tips, technical analysis, and useful pieces of advice that help to you become a successful forex trader in the upcoming year 2021.

Who are a Forex Trader and forex investor?

Basically, a forex trader and forex investor can be described as an individual who places orders on the financial market. A trader could function either as an independent trader or as a representative of financial entities like hedge funds, large banks, and investment funds. The buying and selling of stocks, also referred to as exchange orders, are done either in the trader’s name or in the name of their client or whichever institution they work for. These can be further broken down into categories depending on the kinds of assets being traded: Forex, equities, commodities, bonds, futures, etc.

Traders who are employees or representatives of brokers or financial institutions buy and sell shares on behalf of their employer’s clients but not with their own money. Thus, whatever gains or losses accrued from trading goes to the institution and not the trader. The trader’s remuneration instead comes in the form of an agreed salary. Essentially, the trader trades without any personalized risk attached; the customer covers it all. Clients could include individuals or companies who don’t have a trading room of their own.

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On the other hand, forex traders who trade with their accounts use their own funds to attempt making substantial gains for themselves. They fund these accounts personally, and the trades are executed through online trading platforms. Even though leverages offered by online brokers are quite fair, home traders arguably trade much smaller than professional traders. With online trading being executed via the OTC (Over The Counter) market, the success made by traders using their own accounts only estimates.

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Defining Success in Forex trading 2021

You now have a good knowledge of who a trader is and what they do, but how can you become one? And not just becoming one, how do you excel at it?

As a trader starting in the financial market, it is very imperative to know beforehand what you want to achieve and what you think successful trading is.

Bernd Skorupinski, a well-known forex trader and mentor at Online Trading Campus, explains it in detail, as you’ll find below:

The first step is to set for yourself goals that are clear, realistic, and measurable. You can say you want to make a 30% ROI every year, earn $5000 of profit, or accumulate a total of 1000 pips every month. Whichever goal you choose, ensure measuring it is not impossible. Another quite important thing is putting in place a goal that gives you sufficient time to achieve — a long-term goal. For instance, a goal set with a twelve-month timeframe is way more achievable than monthly goals.

As soon as you have your annual goal in place, you can begin learning ways to achieve it. Identifying the number of resources you have available is the best way to start. For a starting deposit, how much can you really spare? Are you looking to go in full-time, or you want to be a weekend forex trader. There are several questions you should ask yourself, and those two are part of them.

When you answer the question, then you can begin to formulate your plan. Your plan has to include the number of daily trades you intend to commit to and the currency pairs you plan to trade.

For new entrants in the industry, this can sometimes feel overwhelming. But to help squash that feeling, we’ll share in this article 10 actionable tips to help you reach the pinnacle of your trading career.

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Top Ten Trading Tips to become successful forex trading in 2021

1) Manage Your Expectations

A newbie in the game would find it too easy to become enmeshed in going after profits. This is often the beginning of problems for most traders. Relentlessly going after profits come with an unhealthy level of anxiety, and this is almost guaranteed to cloud your sense of judgment and lead to mistakes that will turn into losses.

Thus, the first actionable tip we’ll give to you as you begin your Forex journey is to rid yourself of objectives that aren’t realistic. As a Forex trader, the prospect of becoming rich in just a few trading sessions is extremely unlikely. To put it plainly, if you go out there with a contrary mindset, you’re putting your capital at risk.

2) Define Your Trading Risk Profile

A proper understanding of the basic aspects of the market is quite necessary before rushing into commitments. Analyze the capital you have, check out testimonials by existing traders to have substantial knowledge of what to expect. Also, research the currency pairs and markets that currently hold your interest. If it doesn’t feel comfortable, take your money elsewhere. This is the same for any other market.

On the other hand, if you’re convinced your investment plan would do well in the Forex market, you’re all clear to go ahead. Just be sure to keep the following in mind:

  • Only invest what you can afford to lose.
  • Don’t put all your eggs in one basket. Make diversification your watchword. Ideally, you should not invest anything more than 20% of your total investment capital in any single market, no matter what.
  • Evaluate your risk profile: Is it moderate, aggressive, or conservative?

3) Select a Trading Strategy

The moment you decided to become a Forex trader, the next item on your list should be to develop a working strategy for your trades. This is not to say there are right and wrong ways to trade, no. But it is important to define a strategy and stick to it.

You will sometimes discover that a particular market strategy works well for a particular currency pair in a given market. Yet, the same strategy won’t work out well for the same currency pair in a different market.

To succeed as a Forex trader, you should make concrete attempts to align your trade strategy with your individual risk profile. Research trading tools and techniques and see how you can incorporate them into your strategy. Do a comprehensive study of market behavior and know how the trading industry operates.

Once a strategy has been put in place, don’t forget to carry out extensive tests to see how the market reacts to your strategy until you feel secure with that strategy. In our online trading academy, we teach several strategies to engage in the financial market, but the primary strategy is always supply and demand.

4) Keep Your Emotions In Check

As a trader in the financial market, especially Forex traders, emotions are the worst enemy you can have. To achieve your goals, you must not only know the nitty-gritty of the market, but you must also have sufficient trust in your strategy and follow it to the letter.

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A trader must have a clear head always, to make the right decisions. When trading, make sure you have a clear head and are making informed and rational decisions. You should also put measures in place to help keep your stress levels in check. We know full well this is easier said than done, but it is very important and could just be the thin line between a successful trader and an unsuccessful one.

If you are running low on capital, don’t attempt even to trade. The same goes for when you’re feeling overconfident and exuberant after a great streak of wins — restraining yourself from trading and ensure you’re aware and in control of your current mental state. Overconfidence is one of the leading causes of loss in the Forex market.

5) Use Stop Losses and Take Profits

Regardless of which trading strategy you choose to implement in your trade, always have a set stop loss in place when you trade. Both a stop loss and take profit allow you to set a pre-determined closing price of your trade. Even if you’re not currently monitoring your trading platform, your trade will immediately come to a close once it reaches the set price.

Among other benefits, a stop loss brings you a sense of peace and security, knowing that even if the market turns against you, you won’t lose any more than the limit you have set. As for the take profit, it makes sure that quit a trade as soon as the desired profit level is reached.

Having said that, it is essential to point out that a stop loss isn’t an infallible system. There are times when the market could act erratically, and price gaps would appear. When this occurs, the stop loss you set won’t be activated until the next time the price comes around the level once more. We, in our online trading academy, refer to this trading phenomenon as “slippage.”

6) Keep Up With the Markets

Being current and updated with the market’s happenings is another essential tip to becoming a successful market trader. Basically, the financial market is determined by mostly current events, political happenings, or impending news of all these things. We normally refer to this as fundamental trading. Even as traders who make their trade using chart analysis of a market instrument, paying attention to the news is still very important. 

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To put this in perspective, when utilizing your supply and demand trading strategy and seasonality indicate that you should execute a long trade, check the Forex calendar to ensure there are no upcoming events that could harm your trade. Even if your supply and demand trading strategy works perfectly, pay attention to the economic calendar, especially interest rate announcements.

7) Overtrading Is Not An Advantage

Overtrading begins to set in when the trader begins to see the money-making opportunities where no such opportunity exists. Traders who go into the Forex market looking to make it big within a short time can be tempted into seeking too many opportunities to achieve their aims, thereby putting their capital at great risk.

Two common types of overtrading exist in the financial market:

  • Trading too frequently
  • Trading with a very high volume.

When your trade is too frequent, outside of scalping strategies, you’ll inevitably lose more money than you make.

Warren Buffet once delivered a speech titled “How To Stay Out Of Debt”. He emphasized the need to maintain strict discipline while investing in a market: “In investments, you have to wait until the opportunity is clear because the markets are not a game. In baseball, sometimes you have to swing at many balls that you don’t expect to hit, but this is not necessary in the financial markets.

There is no harm in waiting for more than a day for an opportunity to arise. You can simply wait until favorable price action arrives, and this shows that you really know what you are doing, and that is when you enter the game. You just need a couple of trades.”

A Forex trader would do well to apply this same principle into their Forex and CDF trading. The point here is clear: as a trader, you don’t necessarily need to make several trades to be successful.; you just need to make the right trades.

Traders trading on live accounts must put in place a well-researched and tested strategy with particular emphasis on trade entry and exit. This will help you stay on track and avoid impulse trades.

On the other hand, overtrading that is a consequence of trading with excessive volume is often blamed on leverage.

But how true is this?

As we stated earlier, Forex brokers and CFDs offer significant leverage in their trading accounts which gives traders the opportunity of earning higher profits from smaller investments. This opens up the market to more people, resulting in a multiplying effect on the number of traders trading on their platforms.

While this is what is obtainable on paper, the reality remains that high leverage is constantly abused by amateur traders who are often found trying to milk all potential profits from their Forex trade. In trying to do this, they mostly end up multiplying their losses.

To set things straight, high leverage in itself isn’t the prime tool for failure. It’s just a tool that allows the trader to operate with larger trading volumes, which often results in the trades ending up with bigger margins. This is potentially a double-edged sword. Your profits will be amplified if the market moves to your advantage. If the opposite is the case, your losses are amplified.

When you trade in an excessively high volume, your account becomes more exposed to margin calls. To avoid overtrading in its entirety, you must completely understand the concept of leverage.

8) Losses Are Inevitable

Some traders, especially newbies, equate being a success in trading to winning every single trade you engage in. That’s not even remotely possible; you won’t close all your trades with profits. Some professional traders may have consistent wins but none can produce a trading statement without a single loss in it. Proof of success for any Forex trader should be measured ultimately by how much your wins outnumber your losses.

That’s why you should not lose hope when you lose out on a trade. Even the most accomplished traders who have spent decades in the industry will confess to having as low as 40% or less profit in all their trades, and some even report to have lower.

The simple trick to becoming successful is to make winning trades that are substantial enough to cover for any losses you accrue and maintain a net positive. It requires a lot of mental strength to admit mistakes in decision making and close a trade with a minor early loss. Likewise, it also takes much strength to trust in oneself and not close a trade with profits too soon.

9) Formulate A Trading Plan

You need to have a strict trading plan that caters to most of your trading activity. This will help lower the possibility of being severely hit by unpredictable market movements.

Most traders develop bad trading habits too early into their journey. A prime example is the aforementioned overtrading in which a trader gets lucky and keep trading until their account is overdrawn.

On other occasions, sheer luck or chance can help draw some excellent trades. The unsuspecting trader does not know it is luck and continues in his habit until it becomes too late.

For traders who rely on luck, it will benefit them to know that luck always runs out; and when it does, losses arise. Therefore positive trading habits are quite essential to continued success as a trader in the financial market.

10) Choosing the Right Broker

The part of making the right choice of brokerage might have come last in this article, but it is simply one of the most essential tips. You need a clear head to trade. This can prove difficult if you’re bothered by or having doubts about the trustworthiness of your broker. If you can get this out of the way, you’ll be able to focus your attention on analyzing trades and developing excellent trading strategies.

Doing your research before committing yourself to a specific broker can go a long way and can help improve your odds of becoming a successful trader.

Before you commit your funds to any broker, do the needful. Researching the history of the said broker will greatly increase your chances of becoming successful in the industry.

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