Trading forex provides an excellent opportunity to earn additional income or even as a full time career, but too many traders set out without arming themselves with some basic rules and guidelines to follow. Determining precisely when to initiate a trade may be one of the most difficult decisions forex investors face. It is what is referred to as the entry signal and figuring out a consistent way of entering and exiting a position is an extremely important trait for all traders to have.
One of the main reasons many traders are not making money consistently in the markets is because they are too focused on money. Most people come into the markets chasing freedom from their job or a quick road to riches. The more focused you are on making money really fast the more the money will elude you. Focusing your mind on the money creates emotional tension and the more emotional you are the more likely you are to commit the account-destroying mistakes.
The first thing you need to understand is that trading requires discipline. It is a long-term game of probabilities; you will have some positive trades and you will have some negative trades. As long as you disciplined enough to stick to your online forex trading strategy and not to be emotionally attached to your losses or even worse to your earnings you will tend to make more earning trades than losing trades and net a profit.
As a forex trader you need to be very organized and have a forex trading plan. No matter how much you don’t want to make one or think that you don’t need to make one you should know that you absolutely need to make one. It should include what your trading edge is, how and when you will trade it, and risk management plans. Basically it needs to cover everything you will do in the markets as concisely as possible yet still be comprehensive.
Professional traders focus only on taking trades that meet their pre-trade checklist based on strong money management rules and indicators they are comfortable reading. Amateurs hold on to every trade without the mental fortitude to accept a loss. Which forex strategy is best for you will depend greatly on your personal investment and risk management style, how much time you can give during the day in order to follow the market trends and spot the right entry points for a profitable trade.