Top ways to improve your Forex trading skills

Trading is an art, and it needs precision and sharpened analytical skills. So for all those traders out there wishing to improve their success factor, here are a couple of tips you can try out.

Get some trading education

Forex Trading education should be among the first things on your mind before making any trades. Each decision you make should eventually have a logical reason behind it. Only making trades without proper training guidance is a recipe for failure.

Understanding the basic concepts and terminologies is not enough. You also have to know when to enter a trade, what events to look for and know when to use various strategies.

There are some online forex trading classes. Just make sure they are ran by professionals who know what they’re doing. You can see customer reviews of people who’ve been through those classes to make a decision.

Stop over-trading

Another major problem most traders have is overtrading. But where’s the line? How do you know you’re overtrading?

Well, the definitions of overtrading are numerous, and they span from going way beyond your threshold to making too many trades in a short period. A rule of thumb is; if you don’t know if you’re overtrading, then you probably are.

If you’ve decided to stick to learning daily charts and then make trades using lower time frames, then you’re likely to overtrade. So how do you stop it?

Well, for starters, have a plan before you start trading. It’s hard to realise if you’re overtrading when you’re ‘in the moment.'

Also, have in mind that less is more. You’ll be much better off going for three solid trades than taking ten businesses you ‘feel’ would work. Also, avoid making simultaneous trades with similar currency pairs such as EURUSD and the GBPUSD since it’ll increase your risk due to correlation.

Dial-down your risk

Reducing your risk is another great thing to learn, and there are various ways to do this. You can start by being disciplined and only trade when your fundamental and technical signals point in the same direction. A good rule of thumb is buying long or neutral in a bull market and short or neutral in a bearish one.

Additionally, aim to take profits from trading or investing in Forex when they are twice the risk or greater risk-reward ratio. This will further reduce your exposure and boost your performance.

Learn about position sizing

Position size is a crucial aspect of learning, and not knowing about it is likely to lead to failure. Simply put, position sizing is a strategy that informs you of the amount of money to place in a trade.

To determine the best position size, avoid taking random stop levels that could be affected by normal market movements. Additionally, try using a maximum of 1% to 3% of your account size on a trade. For a trader with $1000, taking a 1% ($10) risk means you could make 100 trades as opposed to 10 trades with 10% risk.

Conclusion

Forex trading requires you to set your emotions aside and focus on the trading. Though that is easier said than done, it’s one factor that can lead you into making all the wrong decisions and cleaning your account.