Being a beginner in the forex market means that you have a lot to learn and understand before you are ready to risk your money to earn profits from currency price fluctuations. Once you get a grasp of the fundamental trading concepts, you can start studying the technicalities of currency trading.
Mastering technical analysis is a must to move forward in your trading journey and the MetaTrader 4 platform provides all the tools you will need to enhance your trading skills. Both novice and seasoned traders prefer this simple yet feature packed platform for its simplicity and seamless trading experience.
But just knowing what everyone knows will not be enough to gain an edge in the dynamic currency market. Hence, I am going to share 7 secret techniques that are not known to many.
- Learn to Win by Not Trading
The first thing a new trader should learn is to identify the trade triggers and then enter a trade when they find an ideal opportunity that is in line with their strategy. However, many traders tend to force trades even when they don’t find the right trade setup as they think that they need to keep trading for a win. But sometimes, you will be able to secure your trading capital by staying out of the market and this is a win that you can get by not trading.
This might sound counterintuitive as many traders have a fear of missing out on good trading opportunities. However, there is no point in entering a trade when the probability of a win is lower. Suppose the currency pair that you were planning to trade becomes extremely volatile all of a sudden and the charts are giving mixed signals. Waiting until the volatility subsides would be the best course of action in this scenario or else you will encounter unwanted losses.
- Going Back in Time with Backtesting
All traders are advised to backtest their strategies before implementing them in the live market. The purpose of backtesting is to evaluate the performance of a trading system by checking how it will work using historical price data. This allows you to fix the shortcomings in time and also choose ideal timeframes and trading techniques that will complement your trading style and trading plan. There is no risk involved and you can do the same with real-time data on a demo trading account.
But the scope of backtesting is wider as it also gives you an opportunity to gather some trading experience by becoming familiar with the market conditions in the past. This enhances your analytical and decision-making skills and you will get to see the outcome of the trade right away with a few clicks. You should not trade with real money until you are satisfied with the results of backtesting. Proper backtesting is essential to assess the viability of a strategy and optimise it further.
- Record Your Mistakes To Not Repeat Them Again
You don’t become a loser when you make a mistake during the learning process but you are destined to fail when you keep repeating the same mistakes over and over again. It is important to realise your mistakes in time and learn your lesson from them. But a vast majority of traders don’t pay much attention to where they went wrong and then they wonder why they are not making any progress. So, the 3rd secret technique is noting down all the mistakes that you spot.
This can be done by maintaining a journal to record your trades on a regular basis and reviewing it. You need to mention all the details like how you would write a diary while looking back on your day as a trader. The time at which you entered the trade, the reasoning that you applied for the trade, the calculations you did for managing the risk, the method you followed for analysis, the profit that you expected to earn and the actual result you got, in the end, should be clearly stated in the trading journal.
- Rely on Facts and not Feelings
A trader should only look at the facts and figures while making trading decisions. If you start relying on your feelings and emotions, you will not be able to stick to your original plan and will end up deviating from your strategy. This will automatically lead to disappointing results. Unfortunately, many traders fall into the trap of their emotions and become impulsive.
If you see yourself making irrational decisions, this is a red flag to watch out for as it can lead to huge losses. This can be habits like overtrading or revenge trading as you keep on entering more trades ignoring the risk. This can either happen when you become greedy for more profits or desperate for a win after a losing streak. You cannot suppress these emotions but you should avoid acting on them.
Make a trading setup and only trade when you see your setup being formed on the chart. You can use different trading calculators to find accurate margin, position size, leverage and more to trade with proper risk management. Different trading calculators provide different values, which can be used to trade smartly.
- Develop a Trading Routine and Follow it Without Fail
You will often read about the significance of discipline for succeeding in forex trading but how can you build trading discipline? Just setting some rules and showing up every day does not make you a disciplined trader. You need to create a trading routine that matches your personal schedule and preferred trading sessions by fixing your trading hours.
Once you become habitual to this routine, you will be on auto-pilot and will be able to treat trading like your job or profession. But if you don’t find an ideal opportunity, your job is to stay out of the market. Because forcing trades in an unfavourable situation will do more harm than good, even when you become disciplined, you should not be rigid with the approach as adaptability is paramount for a trader.
- Optimum Use of Your Funds
You don’t need a huge amount of money to kickstart your trading journey in the forex market. It is very much possible to start small and gradually grow your account over time. For this, you just need to focus on money management and make optimum use of your funds. You can amplify the trade size with the help of leverage but you should set a limit to the same for avoiding the excess risk. You need to consider the margin levels before placing a trade and minimise the potential losses by only risking 1% to 2% for a single trade.
- Be Realistic
Being ambitious is important to succeed in any venture but you should never set unrealistic goals that are impossible to attain as a beginner. There are a lot of myths and misconceptions about forex trading that fuel the false beliefs of traders. Hence, you need to do your own research and let go of any prejudice before you step into the realm of forex trading.
Final Thoughts
In the end, the techniques that are listed in this blog are not secrets in the sense that no one knows about them. However, many traders are struggling to succeed as they don’t apply these techniques while chasing profits. But following these simple tips can truly change the trajectory of your trading career by helping you to get better results.
