A popular statement claims that 95% of forex traders fail, and only 5% achieve forex success. Conquering forex is no easy feat, if it was we would all be rich, but creating a strategy that follows four simple steps can set you on the right path of success.
The daily transaction volume in the forex market is a staggering $5 trillion, and it is believed to be the most liquid market in the world. Traders are up against titans such as global central banks, investment banks, hedge funds and market makers as they bid to take their share of the forex market riches.
The odds of success are low, and many traders have been chewed up and spat out by the forex world. However, investors and traders with enough savvy, perseverance and grit to overcome the statistics can see themselves well rewarded.
Before we get into the steps for forex trading success, let’s first have a quick recap of the forex world for those who aren’t familiar with it or simply want some more information.
Why Trade Forex?
We know the chances of success are low - but when you get your trades right, the profits can be substantial. The aim of forex trading is simple, you buy one currency at one price and sell it at a higher price, easy right?
Here at Scandinavian Capital Markets we believe to increase your chances of success we need to make sure you are prepared and have a simple strategy in place.
We’ve created a list of four steps that will help set you up for forex trading success:
1 - Research the market
Researching the ins-and-outs of the market, having a good grasp of the world economic and political news, what makes currencies move, and all the associated the trading techniques available - is essential. There are plenty of free learning tools and resources that will help you to learn about trading currencies.
Research is a key as you should be able to justify each of your trades through research. Make sure you are knowledgeable in technical analysis as the FX market is primarily a technically-driven market. Newspapers for international news and FX-specific research websites are also useful places for more in-depth information.
2 - Find a good broker
Finding a good broker is key to ensuring that the cash you are trading is safe and secure. On top of that, you should also ensure you have access to competitive pricing, low latency and rapid execution to enhance your trading performance.
A good broker (such as Scandinavian Capital Markets), will also be regulated in at least one country, offering you access to a safe and secure trading environment that offers further protection of your investments. Your money must be held in world-class and highly-protected banks.
3 - Try out the trading platform
Now that you’ve found your broker, it’s time to take its trading platform for a test drive. Demo and virtual trading accounts are a good way to check out the broker, their service and support levels and forex market trading speeds, so you’ll definitely want to open a demo account before you go live.
Take your time to learn how the trading platform works, and find the one that works best for your needs. For example, here at Scandinavian Capital Markets we have developed our own Scandex trading platform that has many additional benefits that you don’t usually see with other brokers forex platforms.
4 - Know your self
Now you are ready to start trading, it’s important you not only know the market - but also yourself. Be self-disciplined, professional, rational and determine your exit strategy before you enter the market. What are your short and long-term goals? How do you intend to reach those goals? What is your preferred trading method?
Also, you should determine whether you are a short-term trader, a medium-term trader or a long-term trader. Simply put, prepare your trading strategy of how you want to trade and what you are willing to invest and stick to it. Traders often lose money, so self doubt can set in - but sticking to the strategy will help you recover and make money.
Want to talk to us about your professional trading requirements? Contact us now.