Here’s a list with some useful steps you can follow to become a profitable Forex trader:
1 – Start by learning the basics
Take some time to read some Forex books or to visit forums and all the Forex websites you know of. Get used to the Forex terms and economic releases.
Read financial newspapers, blogs and articles to get familiar with the Forex basics.
2 – Learn to read a chart
If you want to make money in this market, you need to read charts. Visit free technical analysis websites like Stockcharts, and understand how candlesticks work.
Don’t stop there. Learn the concepts of support and resistance and technical indicators and oscillators like RSI, Moving averages, MACD and stochastics.
Watch charts and try to understand why a currency pair went up or down.
3 – Understand economic indicators
Visit your favorite forex calendar and make sure you know which economic indicators will be released. Take some time to read all the descriptions about all the economic indicators to know which ones are important for the currency you trade.
Pay special attention to the Nonfarm Payrolls which usually bring huge volatility once it’s released.
You can buy a system or strategy from someone else, but it’s better if you build your own. Use your technical analysis skills to develop simple but profitable systems. Don’t try to use all the indicators you know at once.
Develop solid buy and sell signals so that you don’t have to fight your emotions when you need to place an order.
5 – Become an expert in Risk management
Study risk management rules and be sure you cut your losses early. Avoid taking much risks by using small margin from your broker, and diversify your investments across different currency pairs.
Make sure your money management rules allow you to lose 10 trades in a row and still have the money to keep trading. This way you’ll be in this market for the long term.
6 – Know when to stop
If you’re in a losing strike, stop trading and find out what you’re doing wrong. Never ever invest money you can’t afford to lose. Don’t act like a gambler.
When you’re stressed out or tired, don’t trade. Take some days off so that you recover your energies.
7 – Keep learning
No matter how profitable you become, keep informed and learn everything you can about the Forex market. Try to keep your system updated, and add some new rules if you believe they will improve your performance.