Forex trading is always accommodated with the sense of mystery around it. It is because there is no perfect formula that can help you make the winning trades each time.
In a way, trading can be compared to surfing. You will need talent, balance, proper equipment, and patience. Also, you will need to be alert of external factors and movements. With proper tools and experience, you will recognize the right tides that can be ridden successfully, and the dangerous waves that you need to leave alone.
You may have your accounts with the best binary options brokers, but you can not overlook the importance of market analysis, aptitude, and hard work. Below are the main pillows that can be included in your trading strategy for success.
New traders must first recognize the importance of proper preparation. Firstly, you will need to identify your personal goals and temperament regarding the trade market. Understand your limitations, and your strengths.
Assess the three components –
Timeframe – Timeframe specifies the kind of trading that suits your temperament. If you prefer using the 5 minute chart, it indicates that you are not comfortable with being exposed to overnight trading risk. Choosing the weekly chart means that you are willing to risk overnight trading.
Determine whether you have time and certainty to sit all day in front of the screen, or if you prefer to research over weekends and make trades next week on the basis of your weekend analysis.
Methodology – After selecting a timeframe, you will need to search for a reliable methodology. For example some traders use pivot point, while other prefer using RSI or MACD.
After choosing a methodology, test it out consistently. If the signals given by your system includes more profit than losses, then you have an edge. Blend strategies and test them till it delivers consistently positive results, stick to it.
Develop an outlook that reflects the following four practices.
1. Patience – Trust your system and wait patiently for the price to attain the level that your system indicated for entry or exit. In case, the market never attains the certain level indicated, then move to the next trade.
2. Discipline – Discipline is the ability to act, when your system indicates, and there is no place for second guesses. This step is vital for positioning the stop losses.
3. Emotional detachment – Never allow your emotions to influence your system's decisions.
4. Realistic expectations – Be realistic in your anticipation. For example, investing $ 300 in a trade and expecting to make $ 900 with each trade is impractical.
There are always going to be some percentage of losses. No system's calculation is 100% accurate. The art of gaining profit lies in management and implementation of trades. Successful trading secrets lie in risk control.
Always trade in the planned direction, but if it backfires, cut out and attempt again. You will certainly get the right direction in 2nd or 3rd attempt.
The bottom-line is that there are just two sides of trade – profit making or loss making.