Today I am going to outline some trading tricks or trading tips to help you navigate the currency market with ease. Being conversant with the tricks of trading will come in handy anytime you are approaching the market.
Sometimes you might be having the trading knowledge and a sufficient trading strategy, but still end up making losses due to some minor or major mistakes.
The trading tricks that I am going to outline can be applied in both the forex and stock market.
The forex market is the most liquid financial market in the world as it has more than $5 trillion trading volume every day.
This market definitely gives many opportunities and new prospects not only for forex traders and businessmen but also for other people with little to no knowledge of how it works.
The main aim for all forex traders is earning money, being successful, and making the very best from this lucrative financial market.
This write-up is for all forex traders, whether you’re an experienced or a newbie trader.
So as to be a profitable trader, there are various trading tricks that can help you move ahead of the curve.
I know there is a lot of information out there, and this can easily result in information overload, which will leave you feeling overwhelmed.
Try to practice the tricks for trading that I will outline, and you will see significant improvements in your trading endeavors.
Adhering to these trading tricks is more of a how to make money on trading.
1. Take one Step at a Time When Learning
This means that you should take a step by step approach. This is among the best trading tips for any trader.
Forex trading is a learning process, and the more you learn and practice, the better you become at it.
Start from the basics and then move to more advanced areas when you have a good grasp of the playing field.
Education is fundamental in any career. You cannot just wake up one day without the needed academic qualifications and start attending to patients.
You have to invest time and money (school fees) so that you can learn the anatomy of the human body before you can qualify to become a doctor.
This is the same thing with trading. There is no short cut. You must be willing to invest your time in learning. Start with basics like familiarizing with the terms before you even think of a trading strategy.
Being systematic will make the learning process easier for you. Don’t come with the get rich quick mentality; it will f*** you up. You have to treat trading as a business where you get to learn the ins and outs of the market.
In terms of investments, begin by investing small amounts of money.
Don’t come and deposit let’s say $10,000 or $20,000 as you start. This will really mess up with your emotions since you will be risking a significant amount in every trade that you enter, yet you’re not used this type of pressure.
I normally say that if you cannot trade with $1,000 then you can’t trade with $10,000 too.
The trading strategy that you are going to use is the same, and the market conditions are also similar. The only difference is the position sizing, whereby what you stand to gain or lose is more when you are trading with a bigger account.
2. Practice More
This is among the trading tricks that I would like to emphasize.
When I was a beginner in forex trading, I had joined several trading groups online. The things that I saw there were not quite pleasant.
You could see someone post a chat and ask a question like, “is this going to be a sell or a buy.”
How the heck are you trading in a live account if you cannot tell if a trade is a sell or a buy.
One thing that I noted is that most of these people are conversant with relevant forex terms and how they are used.
However, there was a disjoint in applying this to the market.
It is because they have not taken their time to practice what they have been learning.
Forex trading is best learned through practice, making this the best trading trick, especially for first-time traders.
It is not a guarantee that you will instantly succeed upon your first try, but with constant practice, you can succeed and constantly get good results.
You may also want to save money during your learning process, and the good thing is that you can use a demo account that is free to set up and use. This is something that you will get with every trading broker out there.
Trading charts should be your best friend. You should purpose to do your analysis on historical data on a daily basis.
This will really shorten your curve to becoming a profitable trader.
3. Be Careful when Choosing Your Broker
Definitely, you have heard all sorts of things about brokers out there.
This might sound like an obvious trading tip, but many beginner traders fall into the trap of being involved with unscrupulous brokers.
Unscrupulous brokers will lure you with all sorts of offers, where most are too good to be true.
The broker you choose highly determines your trading as well as the trade outcome, and it is therefore very important to make a good selection.
Fake and inefficient trading brokers will undo all your trading efforts and investments.
As you choose a broker, they should match your goals and purpose of being efficient in your trading endeavors.
Also, consider the type of clientele that the broker targets, whether the broker’s trading software fits your expectations as well as whether the broker offers good customer service.
Poor customer service is one of the red flags when you are looking out for a good broker.
There are brokers out there that will make it hard for you to withdraw your profits. This is why I consider this among the helpful tricks of trading.
Always ensure that your broker is regulated by a recognized body. This will ensure that they operate within the confines of the law.
Many people might not consider this among the important trading tricks and tips, but the moment you go in blindly, that is when it will dawn upon you.
4. Start Small
I cannot emphasize enough on this. This trading trick will go a long way into helping your trading psychology.
When you increase the capital in your trading account gradually, you get accustomed to the emotions that come with trading.
When you are risking a little amount, you can be more objective compared to when you are risking a lot, yet your trading abilities are not yet proficient.
As I have outlined earlier, if you cannot trade profitably(regardless of the amount of profits involved) with a small account, then you will still not make money when trading with a big account.
Starting small comes even with the number of trades that you are taking.
You can start by having only one open position at any given time. This will help you to do proper analysis and trade management as the trade continues.
When it comes to stock, start with one to two stocks per season.
It will be easier for you to track and discover more opportunities with a few stocks.
Nowadays, it is easy and common to trade fractional shares, meaning you can specify actual minimal dollar amounts that you intend to invest in the trade.
In case Apple shares are trading at $245, and you intend to only purchase shares worth $60, many trade brokers would now allow you to buy a fraction of a share.
5. Let Your View on Profits be Realistic
This is among the trading tricks that should be supplied even to those traders that have been in the market for some time.
You do not need to have an all-time winning strategy so as to make profits.
The majority of the profitable traders win only 50% to 60% of their trades.
They, however, generate more rewards compared to what they lose. This is enabled by the ability to exercise proper risk management.
For someone going with a risk to reward ratio of 1:3 for every trade they take, they will remain profitable even with a 40% win rate.
Focus on reducing the trading risk by ensuring that you only risk a certain percentage of your trading account for every trade that you take. I would recommend not risking more than 1% of your account balance when you are starting out.
Practicing proper trade management will also serve you when it comes to profit retention.
Another thing is to be realistic with the amount of money that you can make based on your trading account balance.
There is no way someone trading with $1,000 aims at making the same profits as someone trading with $10,000.
You will end up overleveraging hence blow up your account with ease in periods when a trade does not go in your favor.
So far, are these tricks of trading informative?
Let’s proceed and assess other relevant trading tips.
6. Stick to Your Trading Plan
Your trading plan is the roadmap towards your desired destination when it comes to trading.
A trading plan makes things easier for you. It stipulates all the things that you are looking for in a market before you can decide to open a position.
As a result, when you are using your trading plan, you don’t even have to think since it outlines everything you need to look out for. It is more of a trading checklist.
You need to move fast so as to be a successful trader, but that is not to mean that you must be a fast thinker.
This is so because successful traders develop a trading plan prior to entering the trade, and they are loyal to that plan.
As a trader, you should be committed to your strategy instead of always eyeing the profit. It is good to lose when following your trading plan than gain when you are not following your plan.
That sounds absurd, right?
But look at it this way, when you lose a trade when following your trading plan, you will easily identify where you made a mistake when conducting your post-analysis.
However, in the other scenario, you will not even have the ability to replicate what you did in order to gain in that trade.
What will happen is that this will encourage you to be deviating from your trading plan most of the time, and maybe the win that you actualized was just a fluke.
This is something that will mess with your trading psychology in the long run due to uncertainty and confusion.
Avoid making decisions based on emotions, as you will end up not sticking to your strategy.
You should always “plan your trade and trade your plan.”
7. Never Stop Learning
Learning in the forex market never stops.
This is the only way to ensure that you develop an edge in the market.
Through continuous learning, you will be able to figure out what is working and what is not working.
You will also have the knowledge on how to approach different market dynamics.
So that you become a successful trader, do not ever try to be comfortable.
Keep researching on issues to do with trading as you learn new tricks.
This helps you to remain focused in the markets as you discover better ways to grow as a trader.
You need to move and advance with the market and current events. Some of the things affecting a given currency pair or stock at the moment might not be that relevant with time.
That is why it is important to stay updated.
8. Have a Trading Journal
Having kept records of preceding trades is a very useful trading trick.
The availability of desired software nowadays makes it possible to easily keep your entire trade history, including entry, exit, and trade volume.
Using this content, you are able to easily note the problems associated with your trade, and it helps you to make good decisions later.
This is the information that you use when conducting your post-analysis.
When you don’t journal trades, you will never know what you are doing wrong.
You will never regret keeping a trading journal.
This may sound like a simple trading tip, but it is very powerful.
9. Familiarize with Money Management
If money management was not an important aspect when it comes to financial matters, you would not be hearing of stories where someone was once a millionaire, and they are now living hand to mouth.
Many earn money and end up very broke after some time.
Upon making profits in the market, you need to ensure that you guard them appropriately.
Don’t bring greediness in the market. Always know when to exit the market even when you are in profit to avoid losing what you have already gained as you anticipate to gain even more.
Trade management will help you with this.
Learning how to manage money helps you reduce your losses and to ascertain that your returns are safe from misuse.
I usually encourage my students to withdraw some of their profits every now and then. This helps you to get the feeling that this is actual money, and hence it will give you the ability to exercise caution.
The feeling you get when you have the money in your hands and when it is in your trading account is very different.
10. Always Use a Stop-Loss
When it comes to tricks of trading, this is something I can’t leave out.
A stop loss is a very important tool for a forex trader as it helps to ease your trading endeavors.
The moment you fail to put a stop loss, this will encourage you to leave a losing position open for a long time. You might end up blowing an account with this approach since you are only banking on hope.
As a result, there will also be a temptation to add to a losing position.
One thing you should know about profitable traders is that they are quick at cutting losing trades, and this is among the things that make them successful.
They end up losing less when they are wrong and gain more when they are right.
You should set your stop at a level where if it is hit, it is an indication that you were wrong on that trade so that you can move on to the next one.
When you properly position your stop-loss, you lower the risk of losing all the money you have invested in just one trade.
You also don’t have to spend all the time on the charts so that you can close the trade manually.
11. Your Focus Should Not be on Money
I know this trading trick might sound counter-intuitive.
It is true that making money is the main reason to indulge in trading, but it helps not to focus your mind on making money.
When you mainly think about making money, this becomes the basis of all your decisions; leading to careless, emotional decisions, and actions.
Let your key focus be to stick to your trading strategy, and in return, a good strategy will earn you good profits.
The moment you focus on the process, the results will follow you.
12. Psychology is Key
Trading psychology is very paramount if you want to succeed in the markets.
When you are a trader, you are a psychologist at heart.
You must review the movements of the markets as well as your mental condition as you plan out your next move.
These are some of the questions to ask before making any trading moves.
- Could I have made a trade from frustration?
- Why did I go for that specific currency pair?
- Have I shown signs of confirmation bias?
When you have mastered your psychology, you are able to avoid many losses as you trade.
You might have a good trading strategy, but your emotions get in your way of making profits.
13. Always do a Post-Analysis During the Weekend
Are you looking for trading tricks or trading tips that will improve your trading outcomes drastically, this is one of them.
Forex markets close during the weekend, and you could use this time to review your weekly trading charts and gather information on what might have resulted in the losing trades given that you had followed your trading plan.
This way you will learn your mistakes early and adopt strategies that will counter these mistakes hence increase your profit prospects.
Maybe sometimes your losses might even be attributed to the occurrence of a news release that you had not anticipated.
This will teach you to avoid trading a certain currency pair if it has an upcoming news event.
14. Know When to Quit a Trading Strategy
In as much as I will tell you not to jump from one trading strategy to the next so as to develop an edge, you should be able to identify when it is not working.
Do not force things; don’t keep investing and losing money if the trading strategy is not working after you have executed a handful of trades.
A hundred trades would be a good benchmark to judge whether a trading strategy is working or not.
Don’t just take several trades and decide that a strategy is not working.
Or even better, you can first backtest your trading strategy before you can implement it on a live account. Here, you will have eliminated any doubts and also discovered whether the trading strategy will work or not.
In conclusion, I hope this information on trading tricks or trading tips has been helpful. It is now your turn to employ these tricks of trading in your trading endeavors.
Some of the points outlined above might not make the list of your best trading tricks, but I can assure they will be of help in one way or another.