Author: Chris Miles

8 KEY FOREX TRADING TERMS TO FAMILIARISE YOURSELF WITH

Posted on by Chris Miles

8 Key Forex Trading Terms To Familiarise Yourself With

Starting out with forex trading can be a little overwhelming. There’s a huge amount of information to take on board and a lot of industry terms and jargon to get to grips with – which is why so many people fail at the first hurdle.

 

But if you persevere, put the hard work in and really dedicate yourself to the fine art of trading, within a few months you’ll find that it all starts to click and you start seeing more consistent wins.

 

To help you pursue your ambitions as a top forex trader, here are some of the key trading terms you’re sure to encounter on your first foray into forex. 

 

Hopefully, this glossary should help you gain a clearer picture of what’s involved and what you need to do in order to enjoy a lucrative career as a professional trading expert.

 

Currency Pairs

 

There are around 200 different currencies in circulation around the world and traders work to speculate on how each of these will perform in the marketplace using their own analysis and research. Trading is based on how one currency performs in relation to another.

 

When you first start trading, you’ll see that these currencies come in pairs, all of which are categorised into three main groups. 

 

Major pairs are those that contain USD as either the base or counter currency and either EUR, GPB, CAD, CHF, AUD, JPY and NZD.

 

Cross pairs are classified as any two major currencies that don’t have USD as the base or counter currency. These are viewed as being more volatile in nature than major pairs.

 

And exotic pairs are simply those lesser known currencies in the world – and these have the potential to be extremely volatile, so should perhaps be approached with caution, particularly when you’re first starting out.

 

It can be helpful to think of the currency pair as a single unit, even though your trade will involve the simultaneous purchase of one and the sale of another. When you buy, you purchase the base currency and you sell the quote currency. When you sell, you sell the base currency and get the quote currency in return. 

 

When trading currency pairs, you’re selling one to buy another, with prices affected by economic factors like GDP, economic growth and interest rates.

 

Leverage

 

Leverage refers to the money you borrow (known as capital) to invest in your currencies. It’s very common practice in forex trading and it allows you to trade larger positions, making it possible for you to amplify your returns if exchange rates are favourable. 

 

However, it’s important to note that leverage can also amplify your losses, so it’s vital that you gain a deep understanding of this and how it works so you can work risk management into your trading strategy and help keep losses to a minimum.

 

Stop-loss orders come into their own in this regard, allowing you to keep potential losses under control. These are trade orders with your broker that ensure you exit a position at a particular price level so you can put a cap on any losses on your trades.

 

Pip

 

The acronym ‘pip’ stands for percentage in point and it’s essentially just a unit of measurement that’s used to reflect the change in value between two currencies. It’s essential that you understand pips and how they work before you trade, as it will affect the decisions you make.

 

Exchange rate fluctuations are measured by these pips. The majority of currency pairs are quoted to four decimal points, with the smallest whole unit change set as one pip. Pip value will depend on the currency pair in question, as well as the exchange rate and the trade value.

 

Bullish & Bearish Trends

 

You’re sure to come across the terms ‘bull market’ and ‘bear market’ very early on in your trading journey and identifying these trends can help you work out what direction you want to trade in.

 

When markets are bullish, it means that prices are on the rise, whereas if a market is bearish it means the prices are starting to fall. Note, however, that upward market trends (bulls!) need to see price climb higher continuously for a long period of time to be considered bullish. 

 

You may see bearish markets register a few days of upswings, but this isn’t usually significant and won’t typically indicate a move towards a bullish market. Similarly, a few days of falling prices won’t generally signify that a market is becoming bearish… so stay the course, stick to your guns and ride it out to see what happens.

 

In terms of trading, it’s perhaps advisable to short sell in a bear market as prices start to fall. If you’re buying into a bull market, be aware of your loss risks, since short selling a bear market means that you run the risk of losing big if prices continue to move against you.

 

Day Trading

 

As you might expect, day trading in forex involves buying and selling currencies within just one trading day, closing out positions at the end of the day and starting up again the following day.

 

If you want to be a day trader, you’ll need to make sure that you’ve got the motivation and dedication required to buy and sell multiple currency pairs in a short space of time and you’ll need to be able to make decisions quickly.

 

Risk Management

 

Trading has always carried with it an element of risk, but the advent of the internet means that risk management must be a top priority for forex traders, because transactions take place at lightning quick speeds all over the world. 

 

It’s also worth noting that the adrenaline rush you get from trading when you start turning profits can feel almost addictive, which is where the trouble can start.

 

As such, it’s vital that you implement a robust risk management strategy and include it in your plans from the outset so you can protect yourself and ensure that you don’t make any risky trades based on your emotional state.

 

The first step to getting risk management right is to work out what the odds are of your trades being successful. In order to do this, you’ll need to understand how the markets work and have carried out in-depth analysis to ensure that the decisions you make are grounded in fact.

 

Another key point for risk management is to ensure that you have put measures in place that allow you to control the risk you’re taking. You need to have a cut-out point in mind where you feel happy to accept the potential losses.

 

If the loss in question would be too much for you to bear, it’s essential that you don’t trade so you can keep your stress levels in check and ensure that you’re able to be objective in your decision-making.

 

Going Long/Going Short

 

Don’t panic if you hear people using the phrases ‘going long’ or ‘going short’. All this means is that they’re about to buy (going long), or they’re about to sell (going short). 

 

If you think that the price of your asset will rise, you can go long, speculating that the base currency will strengthen against the quote currency. And you’ll go short if you expect that asset prices will drop, speculating that the base currency will weaken against the quote currency. That’s it!

 

Look out for buy signals if you want to enter long positions, such as when a currency drops to a level of support. This refers to an area on a chart that the price has dropped to but which hasn’t yet broken below. 

 

Theoretically, support is the price level at which buying power will be strong enough to stop prices from falling even more. As prices get closer to this level, they get cheaper – which encourages buyer action, with traders taking advantage of better deals. Sellers will be less likely to sell, however, which will help stop prices from falling below the level of support.

 

If you want to enter a short position, look out for sell signals, such as when the underlying currency price reaches a level of resistance. This is a price level that the underlying currency is struggling to break above. Here, selling power is strong enough to stop the price from rising above a certain point. 

 

In theory, the idea is that as the price gets closer to this level of resistance, it becomes more expensive and this means sellers will be more likely to sell. Buyers, meanwhile, will be less likely to buy, which will stop prices from rising above the level of resistance.

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HOW TO IDENTIFY STRONG CURRENCY PAIRS IN FOREX

Posted on by Chris Miles

How To Identify Strong Currency Pairs In Forex

One of the key skills in forex trading is learning how to identify strong currency pairs. To do this, you need to be able to analyse the relative strengths and weaknesses of a currency pair at any given time. This will enable you to achieve optimal results when they are traded against each other in the market. 

 

Currencies are always priced relative to another currency, with the value of most world currencies floating in response to supply and demand.  Forex trading works by making a profit or loss based on the difference in price when you use a currency to buy or sell in the forex market at a strategic price point.

 

Monitoring the relative price of currencies is an ongoing task and there are advanced technical analysis tools that allow you to track patterns and changes in detail. For new traders, understanding the basics of how currencies work is a priority.

 

The difference between strong currencies and tradable currencies

The most tradable currencies are not always the strongest. For example, the Kuwaiti dinar (KWD) is the strongest currency in the world, with one Kuwaiti dinar worth about 3.26 US dollars (USD). This is largely due to the fact that Kuwait is a leading exporter of oil, which is one of the world’s most valuable commodities. 

 

However, the KWD is not considered as a major currency pair in forex trading. This is because the KWD is not widely used and therefore has limited presence in global trade, and it has low volatility. This means that the value of the KWD does not fluctuate greatly and therefore does not present much opportunity to buy or sell at a profit. 

 

The same is largely true of the three next strongest currencies in the world, the Bahraini dinar, the Omani Rial, and the Jordanian dinar respectively. These are countries with stable and well-regulated oil-based economies, but their currencies do not have much liquidity in the forex market.

 

The USD on the other hand is only the world’s 10th strongest currency, behind the British Pound (GBP) which is the fifth strongest currency in the world. The Swiss Franc (CHF) and the Euro (EUR) are the joint eighth strongest currencies in the world. 

 

However, the US is the world’s largest economy by Gross Domestic Product (GDP), and the USD is the most traded currency in the world by a considerable margin. It’s also the largest reserve currency in the world, meaning that it is the currency held by most central banks. 

 

The US is a business friendly country that has generated some of the richest and most powerful companies of the 21st century, such as Amazon, Google, and Facebook. This makes it an attractive destination for global investors and the USD is the most widely accepted currency in the world.

 

For this reason, the major currency pairs always include the USD because it is highly liquid, which means that huge volumes are traded on a daily basis. THe USD is involved in over half of all of the turnover of US$ 7.5 trillion in daily forex trades. 

 

The major currency pairs 

Now we have established the difference between the strongest currencies and the most tradable currencies, let’s have a look at the major currency pairs. These are the Euro and the US dollar (EUR/USD) which account for 20% of all forex trades. The Euro is the common currency of 19 of the 27 EU member states that was introduced between 1999 and 2002. 

 

The Eurozone is one of the world’s strongest and most stable economies, with efficient cross-border trade and coordinated economic policies. It comprises many economically high-performing countries, including Germany, France and Spain. This makes the Euro one of the most attractive currencies for investors and traders.

 

The value of the Euro is strongly influenced by the unemployment rate, the Consumer Price Index, and the inflation rate. Therefore when you are using the Euro as one of your currency pair, you should closely follow the economic news for any imminent changes in these areas. For example inflation is particularly volatile in the Eurozone at the moment. 

 

The other factor to bear in mind when trading the Euro is that its value is tied into smaller and sometimes less stable economies, such as Greece. This means that it can be volatile and more sensitive to political changes than other currencies.

 

The USD and the Japanese Yen (JPY) are the next most traded pair. The JPY is the most traded Asian currency and the third most traded currency in the forex market. Japan’s economy is a high performer on the world stage, and its currency is stable and regarded as a safe haven due to the highly controlled interest rates.

 

However the fact that the JPY is protected from fluctuations in interest rates and inflation means that it has low volatility and therefore does not offer much opportunity to make substantial profits. It’s seen as a secure and consistent currency that is useful when the markets are going through a period of turmoil.

 

The British Pound (GBP) is popular in forex trading because of its high value relative to the other major currencies. It’s most often paired with the USD and the EUR. The UK generally has a strong and relatively stable economy, although it has been going through a tough Brexit transition with some political uncertainty. 

 

When considering trading GBP with the USD, pay attention to the time of day. 14.00 UK time is considered optimal, because this is the crossover period when both the London and New York markets are both active. When gauging the value of the GBP, look at the GDP, the Consumer Price Index, and the unemployment rate and average earnings.

 

The Swiss Franc (CHF) is something of an outlier in the major currencies, because the Swiss economy is small and it is not a member of the EU or the G-7 countries. The major draw of the CHF is that Switzerland is a gold rich nation that is regarded as a stable safe haven. 

 

Gold is one of the world’s rarest commodities and it holds its value even during financial downturns, and this tends to protect the CHF from the worst effects of inflation. The pairing of the USD/CHF is therefore especially popular in times of high market volatility.

 

When considering trading with the CHF, study the value of the EUR, because the close proximity of Switzerland to the EU means that the two currencies tend to follow the similar market pathways. 

 

The commodity currencies

THe commodity currencies refer to the currencies of economies which are rich in highly tradable commodity reserves that are usually in high demand around the world. These include oil, natural gas and other fuels, timber, dairy products, meat, precious metals, and grains.

 

A commodity is basically an essential raw ingredient, rather than a finished product or service. The major commodity currencies include the Canadian dollar (CAD), the Australian dollar (AUD) and the New Zealand dollar (NZD). 

 

As previously mentioned, the currencies of the oil-producing nations such as Kuwait are included in this category and are among the strongest currencies in the world. However, because they are not widely traded on the global stage they are much less liquid, meaning that there are far fewer opportunities to buy and sell them at a profit.

 

However, trading in the major commodity currencies paired with the USD can be highly lucrative. The value of the currency is obviously highly correlated with the price of the commodities that they trade in, so a forex trader must keep a close watch on supply and demand in the market. 

 

How to identify a strong currency pair

Forex traders aim to buy currencies that they expect to rise in value, by studying the market conditions that are most relevant to that currency, or to sell currencies that have risen in value since they bought them. They may also sell off currencies which they expect to fall in value in order to protect themselves from making a loss.

 

The market conditions that most strongly affect major currencies include interest rates, inflation, GDP, unemployment rates, and the Consumer Price Index. Wider geopolitical factors, such as elections, changes to economic policy, wars and natural disasters, also affect the stability and value of a currency. 

 

When trading in the majors, the starting point will always be the US dollar index, or DXY. This measures the value of the USD against a basket of currencies that will include the other major currencies. 

 

This will give the trader an indication of the comparative strength or weakness of the dollar compared to the other currency, and they can decide if the time’s right to buy or sell.

 

Remember that comparative currency strength is only one aspect of making a trade, and you also need to carry out further technical analysis to determine which is the best time to enter or exit the market. 

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TRADING AND MENTAL HEALTH

Posted on by Chris Miles

Trading and mental health

Whether you’re a novice trader or have been dealing with currency pairs for years, one thing is absolutely sure and certain… you’re going to experience a level of stress at some point. 

 

Trading is full of ups and downs, and trading the markets is inherently risky, which can definitely take its toll if you’re not careful, especially if you’ve been on a losing streak or you feel as though you’re starting to lose control. 

 

Before you know it, your heart rate starts to rise, your muscles tense up, your stomach starts to cramp, your head starts to ache… and your trading starts to suffer.

 

Emotion really has no place in forex trading and being led by your heart instead of your brain can lead you down the garden path, so it’s essential that you do all you can to keep your emotions fully in check, promoting good mental health and wellbeing both on and off the trading floor to ensure that you can achieve the levels of success you’re striving for.

 

And speaking of garden paths, one of the very best ways to go about prioritising good mental health is to embrace the concept of biophilia, a move that could change your outlook, how you think, how you feel… and how you trade.

 

Literally translated to ‘love of life’, biophilia is all about being driven by the need to connect with nature and all other living things. The idea is that by embracing the power of nature, you can have a significant influence over your mental health, your home and workplace, your thoughts and views, your hobbies and your goals.

 

As traders, we spend a huge amount of time plugged into technology, as far removed from the natural world as possible. We recently blogged about the dangers of too much screen time and, although technology is essential in order for us to complete our trades and to devise a winning trading strategy, it’s important to offset this wherever you can… and biophilia is the perfect antidote to a tech overdose.

 

It’s thought that the term ‘biophilia’ was first coined by psychologist Erich Fromm, but later popularised by Edward Wilson who wrote a book called… you guessed it… Biophilia! The Harvard biologist turned author argues in this worthy tome that our attraction to nature is genetically predetermined and down to evolution. 

 

For example, the reason we appreciate flowers is that their appearance on plants is a signal that fruit would soon be arriving, a much-needed food source. And we’re drawn to cute little baby animals because enjoying close relationships with animals and protecting them gave us an evolutionary advantage and engendered a powerful nurturing instinct for our own children.

 

What’s interesting to note is that, from an evolutionary perspective, people with greater connections to the landscape and the natural world, as well as animals and water sources, were simply more likely to survive than those who were detached from these resources… and this kind of survival instinct through an attachment with nature could certainly serve you well as a trader, now and well into the future.

How can nature help mental health?

 

Nature is hugely important in keeping us in fine fettle, emotionally, psychologically and physically – and what’s particularly good about it is that, for mental health, the definition of what constitutes nature is incredibly wide, so there are many different avenues you can explore to bring more of it into your life for the benefit of your general health and wellbeing.

 

Most obviously, perhaps, is the act of getting out and about in the countryside, exploring local parks in your community or going further afield and really heading out into the wild. One key wellness trend doing the rounds right now is forest bathing, which is something you could try if you’re looking for a serious mental health boost right now.

 

A stroll on the beach, a dip in the ocean, wild swimming, a stroll along the canal, exploring local wetlands… these all represent excellent wellness opportunities as well. But what do you do if you don’t have the time to get outside as much as you’d like?

 

Well, if you are pushed for time (which many traders are), there are still ways in which you can bring the outdoors in and use biophilia to the advantage of your health and wellbeing. 

The most obvious way to do this is to fill your home with house plants, but make sure that you choose your varieties wisely so you know they’ll fit in with your lifestyle. 

 

There are plenty of plant species out there that are practically unkillable and which don’t need much maintenance or looking after in order to survive and these might be the best option if you’re new to the wonderful world of houseplants.

 

Interestingly, studies show that increased urbanisation is linked to increased levels of mental health problems like depression and anxiety. But conversely, growing up in the countryside and more rural settings are linked to less acute stress responses, while exposure to green outdoor spaces has a strong association with a positive effect on wellbeing.

 

Even sounds and images of the natural world have been found to decrease stress levels in people, so you actually don’t even need to be outside in order to take advantage of the biophilic effect. 

 

With a bit of clever design ideas and a few touches here and there, you could quite easily create a space at home that puts biophilia at its heart and helps to promote feelings of calm, serenity and peace… which will certainly help you as a trader when faced with stressful and challenging situations.

 

Biophilic interior design

 

Research in the field of environmental psychology (which looks into how our spaces – both natural and manmade – can impact our health, mental processes and the way we socialise) suggests that buildings serve us the best when they reflect the natural world, taking into account sound, lighting, pattern and dimension.

 

As such, developing a deeper understanding of biophilia can help you create spaces at home or at work that support your mental health on a more involved level, promoting positive wellbeing.

 

The principle behind biophilic design is to use as many natural materials as possible, while maximising natural light and green plans – and your limit really is your imagination in this regard!

 

Although it can be tricky to achieve and get right first time if you’re not a professional interior designer, we’re very lucky to be blessed with the internet these days and you’ll find lots of inspiration on the information superhighway. 

 

This article on the Dezeen website, for example, has an impressive array of different houses that focus on biophilia and it could give you lots of ideas for your own spaces at work and at home.

 

Check out the Jungle house in Sydney, for example, which was designed by architecture studio CplusC Architectural Workshop. The site is partly made from recycled materials and features an aquaponics system (complete with edible fish) and has its own rooftop vegetable garden so that even those who live in more urban environments can enjoy a closer relationship with nature.

 

Or what about the Wall House in Vietnam, designed by CTA? This architectural feat has been made from hole-punctured bricks and features a central atrium to create a courtyard-feel to the home. Around the periphery of the space you’ll find lots of trees and luscious leafy green plants that make it feel almost as if you’re living in a garden.

 

Furthermore, the use of the hole-punctured bricks means that the house is almost able to breathe by itself day by day, helping to improve air quality throughout the property.

 

And then there’s The Cork Studio in the UK, constructed by Studio Bark… a space that’s made almost entirely from cork! This is a great natural material to consider bringing into your home because it can be completely recycled, reused elsewhere and it can even be composted, so it’s a true powerhouse if you’re looking to embrace sustainability at home.

 

The studio was made using discarded granules from a wine cork manufacturer and it was built around an existing sycamore tree growing onsite, making the interior of the space feel very much like a grownup treehouse.

 

Of course, some of this will be practical and easy to bring into your own home, while other ideas may not be quite as achievable… but it’s certainly excellent food for thought if you’re keen to really promote good mental health and wellbeing at home with a view to boosting your performance as a trader this year.

 

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WHAT TO INCLUDE IN YOUR TRADING JOURNAL

Posted on by Chris Miles

What To Include In Your Trading Journal

When you begin to learn about forex trading, you will no doubt read many times over about the importance of keeping a trading journal. In fact, this advice is now given to new traders so often that your eyes might even glaze over and you park it somewhere in your mental ‘to do’ list, to be tackled when more important business has been dealt with.

 

After all, it is easy enough to keep track of your online trading activity on your broker’s platform, and you may assume that this is a good enough record of your progress. Keeping a separate journal on paper or a digital spreadsheet might seem like an unnecessary task that will eat into your valuable time.

 

However, there are several reasons why establishing your own separate journal can really benefit your trading and help you to step up to the next level far sooner than you would do otherwise. There’s a lot more to it than simply noting down a list of your trades and a brief comment on the outcome. Here’s what you need to know about keeping a trading journal.

 

What exactly is a trading journal for?

Don’t make the mistake of assuming that a trading journal is just a record of your trading  activity. It should contain this information of course, but it should also be viewed as a planning tool and a resource that will help you to verify your trading strategy, and quickly identify its strengths and weaknesses. 

 

Your journal will also become an important tool for helping you to get to grips with the psychology of trading. This might seem like a rather abstract concept, but in fact all successful traders are acutely aware of their emotional state while they are working. They know that succumbing to knee-jerk reactions is the road to ruin. 

 

When you inevitably meet stumbling blocks along your forex journey, you can use your trading journal to help you work out what went wrong. This is a much more constructive way of dealing with failure than floundering into revenge trading, or ploughing on in the dark. As some wise guy once said: It’s not failing that matters, it’s what you do afterwards. 

 

In other words, we all make mistakes and we all fail, but not all of us learn from those mistakes. By referring to your trading journal, you will be able to take a rational look at your performance and identify what missteps you may have taken. This mitigates against the risk of biassed thinking and helps you to see the best way forward. 

 

What should your trading journal contain?

Obviously the journal should contain a chronological log of all the trades that you have made and the returns you make on each one. Exactly how you set this up is really up to your personal preference. Some people prefer to work with traditional pen and paper, while others prefer to work entirely on screen with a digital spreadsheet. 

 

Whichever way you choose to record the information, you will probably want to set up four columns which log your trade number, your closing date, the currency pair that you traded, and your total profit or loss on the trade. This will give you raw performance statistics so that you can see your progress at a glance. 

 

As you progress in your trading career, it is helpful to add in other performance indicators such as your monthly average return percentage, your annualised return, your net gain, and your overall success rate. 

 

This might seem like straightforward information that you can view on your trading platform, but this is only one element of the journal. Your journal is an open-ended document that should also contain at least some of the following.

 

A watchlist of potential trading opportunities

Before you enter a trade, you need to have a valid reason for doing so based on market conditions and technical analysis. This process is much easier if you keep a watchlist of potential trading opportunities, rather than try to pluck them out of the ether every time. 

 

Everyone’s watchlist will be different, depending on their individual trading strategy. At the basic level, it should have a system of comparing which currencies are performing strongly and those that are weaker, within the currency pairs that you work with. It should also record any significant movements in the markets that will affect the currency value. 

 

The watchlist should be updated on a daily basis to record any changes. You may want to use a colour coded system, such as red for a trade which is no longer viable, amber for one which has neutral prospects, and green for a trade that has all your ducks in a row. 

 

A retrospective of each trade

Reflecting on each trade helps you avoid the bear traps of falling prey to your emotions and repeating the same mistakes over again. Some psychologists believe that up to 90% of our behaviour is driven by our subconscious, so no matter how level headed we consider ourselves to be, some of our decisions are likely to be subjective rather than objective.

 

By writing down your thoughts and observations about what you did right and what you did wrong, you will be able to build up a record of your trading patterns that you can refer back to and help guide your future decisions. 

 

For this to work properly you need to be precise about details, and brutally clear eyed and honest in your reflections. Don’t use it as a way to beat yourself up about your mistakes, but do record any wrong calls, such as exiting a trade too early, entering at the wrong time, or using the wrong position size.

 

If the trade went well, similarly write down your thoughts and observations about why and what you can take away from the success to apply to future trades. Every few months, you can review your records and identify any common patterns in your wins and losses and use these to tweak and improve your trading strategy. 

 

Market observations

If fundamental analysis makes up the core of your trading strategy, then it is useful to devote a section of your journal to day to day observations on market conditions. This will give you some historical perspective on future trades as well as clarify what you need to keep in mind that day. 

 

Use of expectancy formulas

If you like to get to grips with the technical nitty gritty of trading, then you may want to use mathematical formulas to help you work out the probability of a trade being a winner or a loser, based on the strategy that you have been following. 

 

There are different formulas you can use, such as the Kelly criterion, and they are all designed to help you trade in a more logical and calculated way and eliminate some of the guesswork. For them to be helpful to you, it’s necessary to have made at least 20 or 30 trades using a consistent strategy, so that you have a big enough data sample to work with. 

 

Reflections on your motivation for trading 

Forex trading takes commitment, time, patience, and a lot of hard work. At times you will probably question the logic of carrying on, especially after a run of bad trades. While it is important to keep your emotions separate from your trading decisions, there is no getting away from the fact that we are also putting our wealth and egos on the line when we trade.

 

For days when you might be questioning your reasons for trading, it is a good idea to write down your motivations for getting into the game in the first place. This can give you a new perspective on any problems that you are encountering, and help you to clarify what you are trying to achieve in the long term. 

 

There is nothing wrong with wanting to make extra income, or build up a nest egg for the future. However, vague statements about getting richer are not really helpful. Try and set down some specific and measurable goals, such as achieving a 50% success rate on your trades within a specific time frame. 

 

Conclusion 

All this seems like a lot to work with, and you don’t need to include everything straight away. Think about which elements of the journal would benefit your trading philosophy and lifestyle the most, and work on setting these up first. A journal is naturally a work in progress, and it will evolve over time into one of the most valuable resources in your trading toolkit. 

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DO YOU NEED A DIGITAL DETOX?

Posted on by Chris Miles

Do You Need A Digital Detox?

Before the advent of the internet, investing and trading was only really available to a bunchy of lucky individuals on Wall Street, but we’re now firmly entrenched in the 21st century and the digital zeitgeist is very real and certainly here to stay… which means that anyone who is so inclined can trade all sorts of commodities very easily indeed from the comfort of their own homes, thanks to all this wonderful technology we have at our veritable fingertips.

 

There’s now very big business to be done in the field of fintech – or financial technology – with all sorts of new and innovative tools constantly coming to the fore to help improve and automate the delivery of financial services of all kinds.

 

From a forex trading perspective, all these advancements in technology mean that trading is now more efficient and far more fast-paced than ever before, with traders enjoying unparalleled access to highly accurate market data visualisations, fast and secure methods of payment, demo accounts so they can hone their craft before trading for real and so on.

 

Just take a look at the rise of high-frequency trading as an example of how fintech is having an impact on the forex market. Here, trading is done using powerful computer programs that can carry out large numbers of transactional orders in fractions of a second, with algorithms analysing lots of different markets and executing orders based on various market conditions.

 

Of course, while there may be some advantages to working in this way, what is important to note in this instance is that this kind of technology won’t actually help you improve, develop and grow as a trader since it removes the human element from the process. 

 

If you do want to be a professional and lucrative forex trader – and really get to know your craft – it’s important to strike a balance between your own personal skills and aptitudes and the technology you use to help you get the job done.

 

That being said, what is certainly true for traders is that you do need to be plugged into devices of various kinds regularly in order to carry out your trades. 

 

You’ll need a computer or a laptop, a tablet most likely, you’ll definitely need your phone – and you’ll need to be switched on for hours each day so you can track the markets, see what’s happening and make decisions regarding your trades based on what you see taking place. Without technology, trading these days would be impossible.

 

However, what’s also essential for you to bear in mind is that being constantly plugged in can start to take its toll on your mental, emotional and even physical health… so don’t be afraid to ask yourself this one simple question: Do I need a digital detox?

 

What is a digital detox?

 

Being connected all the time does have its benefits, naturally – but it also has its drawbacks. A 2017 study carried out by the American Psychological Association revealed that almost one-fifth of the US population considers technology to be a source of stress, with 43 per cent admitting that they check their messages, emails and social media accounts constantly.

 

In terms of your health, constant use of technology can have some relatively serious implications, mentally, emotionally and physically. 

 

These range from feelings of isolation, depression and anxiety to eyestrain, poor posture, difficulty sleeping, reduced physical activity, low creativity, lack of attention, poor performance at work… and even technology addiction.

 

All of this probably sounds quite terrible but the good news is that there’s a lot you can do to help keep these problems at bay, while still ensuring that you’re able to trade successfully – and this is where the concept of the digital detox really comes into its own.

 

Essentially, all you need to do is set aside a certain amount of time where you avoid all exposure to digital devices. The aim here is to destress, refresh and rejuvenate, and immerse yourself in other activities so you can strike a healthier balance between the hours you spend in front of a screen and your time away from your gadgets.

 

What’s most important during your screen-free time is that you engage in lots of other activities that give you a solid break from tech, so make sure that you plan lots of leisure pursuits that don’t feature technology at all. 

 

Getting out in nature would be particularly beneficial, as would enjoying regular consistent exercise… both of which will really help you be more productive and ultimately more successful when you do return to the trading floor.

 

Giving yourself a set amount of time each day where you avoid screens of all kinds is certainly wise, but there are also lots of other little tricks you can try that will help you avoid technological intrusion, allowing you to only use your devices when you actually need them, rather than giving into a compulsion and picking them up for no reason.

 

Set to Do Not Disturb

 

If you feel as though your phone or another device is constantly pinging at you, it may well contribute to any feelings of anxiety that you might be experiencing. Putting your phone on Do Not Disturb can really help you focus on your tasks and not feel as though your attention is constantly being pulled away.

 

You can set it so that certain people can still get through, so you don’t have to worry about missing anything important – but you may be surprised at just how much more relaxed you feel when you don’t have your devices constantly clamouring for your attention.

 

No tech in the bedroom

 

One really simple rule that can help you reduce your screen time is banning technology of all kinds in the bedroom. It’s very common for people to use their phones as an alarm clock but doing so means that you’ll have the temptation right in front of you to start scrolling as soon as your day starts.

 

But by leaving your phone elsewhere overnight means you’re more likely to enjoy better quality sleep – and you also increase your chances of intimacy with your partner, so your relationship could improve… and this is sure to have a knock-on effect for trading, since a happy trader is usually a more productive one!

 

Spring clean your socials

 

Social media is a really useful resource for staying connected with friends and family, as well as keeping up to date with what’s going on in the wider world, but it can also have an impact on your mental and emotional health and wellbeing if you’re not careful.

 

The best way to make sure that your social media platforms aren’t going to be detrimental to your health is to give them a bit of a spring clean every now and again, unfollowing any accounts that could potentially lead to negative thinking.

 

A good rule of thumb to also consider adopting in this regard is to immediately unfollow anyone or any account that makes you feel bad about yourself or which leads you into a thought spiral. If you use this strategy, you’ll soon have a well-curated digital space that adds to your mental health, rather than detracts from it.

 

How to tell if you need a digital detox

 

Official stats show that, globally, people spend on average six hours and 58 minutes looking at screens each day, with daily screen time rising by almost 50 minutes a day since 2013.

 

Signs that you may need a digital detox include feeling anxious or stressed out if you can’t find your phone, the compulsion to check your devices every couple of minutes or so, feeling depressed or anxious after being on social media sites and being overly concerned with the comments, likes and reshares on the posts you make.

 

Excessive fear of missing out can also be a big indicator that you might need to switch off for a while – and it’s certainly key to remember that you aren’t going to be missing out on anything at all if you do put your devices out of reach for an hour or two.

 

You may find it hard to really commit to your detox at first and, of course, you’ll need to factor in screen time if it’s a necessary part of your job (such as if you’re a successful forex trader), so just make sure you’re realistic with your ambitions and set yourself up for a win, rather than a loss. It’s all about making sure your detox works in line with your schedule and the rest of your life.

 

If anything, it’s certainly worth giving it a go to see what kind of positive impact it could have on your general sense of wellbeing, as well as your performance on the trading floor.

Looking for a forex funded account right now? Check out our range of different programs to find one that suits you and your current skillset.

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WHY TRAVEL AND TRADING GO HAND IN HAND

Posted on by Chris Miles

Why Travel & Trading Go Hand In Hand

More often than not, the realities of working life in the 21st century mean being stuck at a desk in front of a computer for hours on end, staring at the same four walls day in, day out. 

 

As the years go on, this can very quickly become really rather soul destroying and, when dissatisfaction sets in, depression often isn’t very far behind.

 

It’s a big wide world out there and one that’s ripe for exploration, which is why it’s so important to find a job that affords you the flexibility to work, yes, but to also devote your time and energy to other pursuits… and you may well find that forex trading is the absolute perfect choice for helping you to do just that.

 

Of course, you do still need to be at a desk for a portion of the day when you’re trading so you can make your trades and keep up to date with all the latest goings-on, but what’s great about playing the markets is that you can do it absolutely anywhere you like and you can pick and choose your trading times to a certain extent, giving you the freedom to pursue other avenues of your life while also pursuing a lucrative career as a trader.

 

For those of you with itchy feet and something of a wanderlust outlook on life, forex trading represents the perfect business opportunity for you. You’re able to travel while earning income – and what could be better than that? 

 

Interestingly, ever since the pandemic saw an increase in working remotely, it seems that one of the knock-on effects of this is a lasting trend for workcations, where work and play are combined. Growing numbers of people are now opting to head off on their travels armed with a laptop so they can get the job done and still have fun at the same time.

 

You might well think that blending work and play in this way would be counterproductive, especially given how important it is to maintain a distinction between your work and home life, but this can easily be achieved while you travel as long as you put certain measures in place. 

 

For example, you could adopt a task-based approach to work rather than an hours-based approach… as long as the same amount of work gets done and you hit your deadlines, why should you be sat at your desk for the typical 9-5? Being able to set your own hours and keep to your own timetable is incredibly empowering and happy workers are productive workers, after all!

 

For traders, one of the biggest benefits when it comes to performance is that travel absolutely broadens your horizons – and very quickly indeed. 

 

Seeing the world and being a globetrotter helps you learn all sorts of new skills that you’ll be able to apply to other areas of your life, such as resilience, self-sufficiency and independent thinking… skills that will really serve you well when you’re trading currency pairs.

 

In fact, one of the most interesting aspects of forex trading as a profession is the journey of self-discovery you’ll inevitably have to go on. It’s often necessary to be introspective and build your own self-awareness in order to progress as a trader and travelling the world far and wide can really help you develop on a personal level, something that will really help with your overall trading performance.

 

Planning & forethought

 

Organisation, for example, is absolutely key for trading success and this is a skill that travel can really help you hone. Heading off on an adventure to parts unknown takes a huge amount of planning and you’ll need to make all sorts of arrangements depending on where you’re going, covering your living arrangements, vaccinations, insurance, visas, travel documents… the list is endless.

 

But over time, the more you travel, the easier you’ll find it – and you’ll also find that your newly acquired organisational skills start having an impact on how you trade. 

 

Being organised and coming up with a plan before opening any trades is the best plan of attack if you want to drive wins your way. Markets can be very unpredictable and if your emotions start to get the better of you, you’ll find that you start making mistakes or start doubting yourself, or even start letting greed take over.

 

But if you’re organised and stick to your trading plan, you’ll be able to weather the storms that gather far more successfully and you’ll see more consistent wins over time.

 

Decisions, decisions

 

Another key skill that the most lucrative traders out there will have in abundance are excellent decision-making abilities and, again, this is something that travelling and seeing the world will really help you hone to the nth degree.

 

Choosing what to see and where to go, what order to do everything in, where to eat, where to stay, what to put on the itinerary and what to leave off it, what food to eat, what food to avoid, how to stay safe… you’ll constantly be making decisions at every turn when you’re on the road and the more decisions you make, the more confident you’ll become and the more you’ll trust yourself and your instincts and intuition.

 

The same is true for trading. The more you do it, the better you’ll become at making timely and relevant decisions that are based on rational thought, rather than emotion or whim. 

 

Travel can also help you think on your feet and it helps you build resilience, which allows you to make quick decisions in the face of adversity – something else that will really work in your favour when you embark on your trading career.

 

Stress buster!

 

One universally accepted truth about forex trading is that it is inherently stressful. This is natural, of course, because the stakes can be very high when you’re risking your money. 

 

When you’re on a losing streak, you can start to lose your focus at the same time, making poor decisions based on your emotional state… which will only increase your stress levels as you continue to trade.

 

We all know that taking regular breaks can help you with stress management, but there’s a huge amount that can be said for the mental health benefits of travelling. 

 

Exploring new and exciting plays and discovering interesting new cultures is incredibly mentally stimulating and if you’re doing this regularly, you’re sure to start reaping the benefits when you are back at the trading desk.

 

Feeling the pressure at work can have a significant impact on your mind, body and soul, but you can step back, clear your mind and renew your focus when you travel. 

 

Meeting new people, learning new languages, trying different cuisines, listening to different types of music… all of this has been linked to an increase in creative thinking and can even help you develop your problem-solving skills, which will certainly help you as a trader.

 

While a logical and well-thought out approach to trading is definitely a must, there’s also a very real place for creativity, as well. 

 

Having new ideas and being able to identify potential opportunities will really help you as a trader and this is something you can foster through travel, enhancing your depth of thought and helping you to see the world through new eyes… so the next time you find yourself in foreign climes, make sure you immerse yourself in and engage with the local culture of the place you’re in. 

 

You might well be surprised at the results the next time you’re at your computer, reviewing currency pairs.

 

Productivity boost

 

Even the most seasoned of traders will find themselves losing their focus from time to time, with productivity taking a serious dip as a result. But you can help sidestep this landmine through travel and by taking regular breaks to make sure you’re not working too hard and potentially burning yourself out.

 

Recent research carried out by the University of East London revealed that the majority of business travellers believe that workcations and business-leisure travel actually makes them more productive, with 78 per cent of those surveyed saying they experienced an increase in personal wellbeing when back at their desks post-travel.

 

It was also found that 61 per cent believed they were more productive when they returned to work, while 36 per cent said they chose to extend their business trip in order to have some more leisure time while away.

 

Unfortunately, however, it seems that employers themselves may not yet fully recognise the benefits of workcations from a mental health perspective. The study also found that 71 per cent of people say that the company they work for doesn’t actively promote leisure activities either before or after business trips.

As such, now could well be the time to consider a career move, leaving the confines of your office to take up forex trading full time. Who knows how good you could feel?

Interested in securing forex funding so you can start trading immediately? Check out the programs we have available to see if any suit you and your ambitions.

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HOW LONG DOES IT REALLY TAKE TO BE A PROFITABLE TRADER?

Posted on by Chris Miles

How Long Does It Really Take To Be A Profitable Forex Trader?

If you are considering embarking on a forex trading career, at some point you are inevitably going to wonder just how long it will take to start generating steady profits. You naturally want to know when you will be able to reap the rewards of all your hard work and commitment, and it’s a perfectly valid question to ask.

 

It’s important to have realistic expectations from the outset, so that you can set yourself clear goals and avoid becoming too disheartened along the way. Anyone who thinks that forex trading is a good ‘get rich quick’ scheme will sadly soon find that they are mistaken. 

 

OK, so fluke trades or beginner’s luck might land you a decent profit once or twice early on in your career, but few inexperienced traders will be able to sustain this for any length of time. However, assuming that it takes years and years to turn a steady profit from your trades is also a rather dispiriting prospect. So how long will it really take to get good results?

 

This might seem to be a rather frustrating and evasive answer, but the truth is: it depends. Here are some of the main factors that will influence how quickly you can expect to become a successful forex trader. 

 

How much time you have to devote to trading

The first and perhaps most obvious point is to consider how much time you have to spend on your forex trading career. If you are lucky enough to be able to devote the majority of each day to learning the ropes of forex, you are going to be in a position to start making live trades much sooner than someone who is a weekend or evening trader. 

 

That said, some people are incredibly focussed and fast learners, while others are slow but steady in their progress. It is not just a question of how much time you have to give, but also how well you spend that time. You might be familiar with the saying that ‘work expands to fill the time available.’

 

It was first coined by Cyril Northcote Parkinson in 1955, and it succinctly describes the phenomenon that most of us will have noticed in our own behaviour at some point in our lives.

 

 For example, when you were at school or college and you had a whole weekend to finish an essay, you may have become sidetracked with irrelevant details, or just worked in a more leisurely and meandering way because you knew that you had two days to complete the work.

 

However, if the deadline was at 9am the following morning and it was 5pm on the night before, you probably knuckled down and nailed the key arguments of the essay much more quickly. There is even a chance that your work was punchier and more to the point as a result. 

 

The same theory can be applied to learning forex. There is no denying that it is a huge and complex topic, and even successful and experienced traders accept that they will never know everything about it. As a newcomer, it can be easy to become bogged down with learning reams of theory and technical detail.

 

While it is important to read widely and learn about the nuts and bolts of forex trading before you begin, this can expand to become a never-ending process if you let it. The best approach is to focus on which information will be most relevant to your trading strategy, and save some of the more advanced techniques for another time.

 

Your current level of knowledge and experience

Some people move into forex trading because they already have some knowledge and experience of dabbling with stocks and shares, or have even had a career in finance and are looking for a new challenge. On the other hand, anyone with a laptop and internet connection can become a forex trader if they have enough commitment.

 

However, those who are already used to the world of financial trading will have plenty of transferable skills under their belt that will give them a competitive edge. These include risk management techniques, technical analysis skills, and an awareness of how wider socio economic and geopolitical events can influence the financial markets. 

 

If you are already familiar with these concepts, then you will be well prepared to embark on a forex trading career after a relatively short research and training period. However, it’s still strongly recommended that you trade with a demo account for at least one to three months before making live trades.

 

A demo account allows you to test drive your trading strategy to highlight any weaknesses and correct mistakes without risking any damaging losses. Even successful traders use them when embarking on a new platform or strategy. 

 

If nothing else, it will ensure you are familiar with the layout of the user interface and help avoid delays when you need to find a particular feature or page in a hurry.

 

If you are a complete newbie, there is no question of skipping the demo account stage! Spending at least three months learning the ropes with a demo account is advisable if you are learning forex trading from scratch. 

 

Your natural temperament and ability

We are all individual in our talents and personalities, and this is not something you can leave at the door when you are forex trading. Some people have a good head for facts and figures and a quick and agile mind. If this is you, then you are in a fortunate position and will probably have a natural aptitude for trading.

 

However, raw ability is certainly not everything when it comes to a successful forex trading career. It also takes commitment, discipline, self-awareness and emotional maturity, and these skills can be learned and strengthened over time. 

 

Far from the image of the cut and thrust financial world that you might have gleaned from films and books, the key to making steady profits in forex trading is good risk management and the willpower to hold fast and stick to a tried and tested strategy. 

 

When faced with the prospect of losing money or making a profit, we are all subject to powerful emotions such as fear and greed that can influence our actions. Unfortunately, in forex trading, making decisions based on emotions will soon lead you on a downward spiral of failure. 

 

Successful traders often go through a period of failure first, and this might even be a necessary part of the learning process. The difference between them and the also-rans is that they didn’t give up or become angry and frustrated. Instead, they patiently went back over their trading journal to identify where they were going wrong, and made some changes.

 

This ability to remain stoical and logical no matter what is thrown your way is arguably just as important as a natural facility with charts and numbers. The most difficult part can be learning to recognise the signs that your trading is motivated by a negative emotion, rather than because you have genuinely identified a good opportunity in the markets. 

 

The best traders usually enjoy the whole process of constant learning and analysing for its own sake, rather than because they are driven purely to make money. Profits in forex trading are the side product of a solid trading strategy and a good approach to risk management. 

 

Of course, all this takes some time to achieve. The question of how long will depend on how committed you are to developing your strategy and your level of psychological resilience in the face of moments of anxiety, fear, anger, and so on. It might sound counterintuitive, but patient traders with good impulse control often succeed the soonest. 

 

How much capital you have to invest

One final point about how profitable a trader you will become is related to the amount of capital you have at your disposal. There are plenty of good trading platforms with instant forex funding available that offer high leverage. The amount that you can invest and are willing to risk in each trade will obviously influence your profits margins.

 

Trading higher amounts will give you a better return even if you make small profits, whereas you can be making impressive percentage returns but if you are trading with relatively small amounts of capital, it will take longer to build up a good income. 

 

Starting small is a good policy for new traders to limit potential losses. Once you become more confident and knowledgeable, you can invest more within the margins of your risk tolerance. 

 

Conclusion

So after all this, you probably still want an estimated timeframe to work with. Those traders who are the most committed and use their available time well can expect to see steady profits within six to 12 months. For those learning forex from scratch around a full-time job, a longer time frame of anything between one to five years is more realistic.

 

Remember that even experienced traders still have failures, and forex is a constant learning curve that should be enjoyed for its own sake, as well as a source of extra income.

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5 WAYS TO DEFEND YOURSELF AGAINST REVENGE TRADING

Posted on by Chris Miles

5 Ways To Defend Yourself Against Revenge Trading

Revenge trading is one of the easiest forex trading mistakes to fall into, even for experienced traders. It is particularly toxic because traders often don’t recognise the warning signs until it is too late and some serious damage has been done. In fact, those who think they are immune to such pitfalls can be most at risk.

 

Here’s a closer look at what revenge trading is and how you can be on your guard against it.

 

What is meant by revenge trading?

Revenge trading occurs when a trader takes on more trades to try and compensate for a substantial loss. It’s a knee jerk reaction to cover up failure and regain the lost funds. All sorts of powerful and dangerous emotions come into play at this point, which as you can probably guess is not conducive to logical and measured decision making. 

 

In fact in most scenarios, revenge trading only serves to compound the initial loss and can lead to a downward spiral that is impossible to recover from. This is because the desire to take revenge on the markets clouds rational judgement, and carefully worked out trading strategies are abandoned in the heat of the moment. 

 

What is the emotional state of a revenge trader?

The revenge trader is driven by a toxic brew of emotions that inevitably colour their actions. These are likely to include stress and anxiety at lost funds, which can be compounded by hurt pride and loss of face—after all, no one likes to be a loser. Some people may feel shame or embarrassment at having to admit the loss to colleagues or friends. 

 

The trader may feel disappointment and frustration at their own performance or at the perceived ‘unfairness’ of their loss. Sometimes in forex trading, losses occur even if all the rules have been followed, but new traders can find this a difficult lesson to learn. This can lead to anger or fear that they will never recover their losses.

 

A loss can also trigger greed to regain what the trader sees as rightfully theirs. They can feel as though the money has been stolen and the natural human instinct is to take it back as quickly as possible. These are all deep and primal instincts that have developed from the earliest days of humanity, when gains and losses were really a matter of survival. 

 

No matter how much more evolved we think we are than our ancestors, we are all to a certain extent hardwired to respond in this way to adversity. It takes self-awareness and mental discipline to overcome such powerful primal instincts, and this is why all forex traders need to be aware of the psychology of trading.

 

The most dangerous and vulnerable traders are often those who think they are too strong to fall prey to their emotions, because nobody is. Real strength comes from learning to put aside the ego and make decisions that are rational and only ever based on market research and in line with a predetermined trading plan. 

 

How to recognise the triggers of revenge trading

One of the most important steps to avoid revenge trading is to learn what triggers it in the first place. One of the most common scenarios is when a trader has been on a successful run of trades and has become overconfident in their own abilities. 

 

They may have come to assume that they can do no wrong, and when the winning streak ends the loss is particularly painful. The trader may feel hubristically cheated out of what they feel entitled to, and they redouble their efforts in an attempt to take it back. 

 

However, even the most experienced traders make losses, and simply making more trades means putting yourself at the risk of more losses. Another scenario is when a trader exits a trade early in response to a market downturn, and then tries to compensate for the loss by quickly placing a new trade.

 

Impatience, fear and anxiety then come into play as the market continues to plummet, and the trader then falls into the same panicked reaction and exits the trade, only for the markets to recover soon afterwards. This pushes the trader into placing yet another ill-thought through trade and the downward spiral becomes hard to break out of. 

 

There are just a few examples of how a trader can be pushed to abandon a trading strategy and risk management plan when events do not always turn out the way they expected. Sometimes, external factors can influence the revenge trade, such as feeling stressed or worried about a job or relationship.

 

How can you avoid revenge trading?

Once you have learnt to recognise the red flags that signal a revenge trade, the next step is to learn how to maintain your self-discipline in the face of challenging situations. Here are some tips.

 

Do nothing

The hardest thing to do is often just to learn to do nothing. We instinctively want to take immediate action to fix a problem or mistake, but this will just lead to further mistakes and losses. When things do not go to plan, step back from trading for a day or two and work out why.

 

All successful traders continue to make losses, and learning how to deal with them calmly is all part of learning how to trade. That is not to say the trader should just ignore the poor outcome and plough on robotically with the same course of action. However, any changes must be aligned with the risk management plan and trading strategy. 

 

Check in with any emotions you are experiencing, such as frustration, panic, or fear, and allow yourself to vent if you need to. However, pick a displacement activity such as going for a run or chatting with a non-trader friend—anything but placing another trade. Close that laptop and step away.

 

Some people find that meditation or breathing exercises helps them to clear their mind and reach a state of calm objectivity, where they can park their emotions and focus on the cold logic of the markets. 

 

Look at your trading strategy

When you have dealt with any negative emotions and accepted the loss, take a look at your trading strategy to see if you can identify the reasons for the poor outcome. Losses happen to the best traders and it may be that you decide to take it in your stride and carry on with your tried and tested strategy.

 

You may well find that you did not follow your entry or exit strategy closely enough, or that you were impatient in placing a trade when there was not enough evidence that the conditions were favourable. 

 

Look at the wider market conditions

We are living through some turbulent geopolitical times and this can cause unusual volatility in the forex markets. If you do not regularly read the financial press and follow the international news, then you could be missing out on warning signals of upcoming turbulence in the markets. 

 

If the markets are particularly volatile due to wider economic or geopolitical events, this could explain your losses. Step back from trading until the opportunities are more settled and favourable. New traders often overtrade out of the mistaken notion that more trades means greater profits, but in fact it is just as important to learn when not to trade. 

 

Learn from your mistakes

Be humble enough to accept your mistakes and learn from them, as this is the path to becoming a truly self-confident trader. Be honest with yourself about your own strengths and weaknesses and how these bear on your trading style. 

 

For example, if you know that you have a tendency to impulsiveness or a quickness to anger, learn how to control these instincts when you are trading. Always bring yourself back to your predetermined trading plan before acting, and never do anything to compromise your risk management strategy. 

 

On the other hand, if you are naturally cautious you are probably less prone to the pitfalls of revenge trading, but not being proactive enough can also hold you back. Learn how to identify a genuine opportunity for a good trade and act on it decisively. 

 

If you have fallen into a run of bad trades, then it’s time to sit down and review your strategy and records to try and identify a pattern. Is there a common factor that links all the trades? Can you improve your technical analysis skills or pay more attention to the economic news? 

 

If you do want to try new trading methods, start small to mitigate against any potential damaging losses.

 

Have a good work life balance

Finally, it is important to keep your mental and physical wellbeing in good shape by ensuring that you have a life outside of trading. Forex trading requires mental agility and stamina as well as good emotional discipline, and it is impossible for anyone to sustain this frame of mind by working round the clock.

If you would like some information about funded forex trading accounts, please get in touch today.

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6 LIFESTYLE SECRETS OF SUCCESSFUL FOREX TRADERS

Posted on by Chris Miles

6 Lifestyle Secrets Of Successful Forex Traders

There is a wealth of information out there about the technical analysis skills that you need in order to be a successful forex trader, and of course these are very important. However, a good trader possesses more qualities that gives them a competitive edge over others.

 

These often boil down to the right mental attitude and daily habits, which might seem trivial or abstract, but are in fact key ingredients to their success. Here are some of the best kept lifestyle secrets of the top performing forex traders.

 

They are eternal students 

A successful forex trader knows that they don’t and can’t possibly know everything. However, they are not daunted by this prospect. In fact, accepting that you don’t know everything can save you from becoming overconfident, and making poor decisions on the spur of the moment. 

 

Good traders know that there is really no such thing as a ‘magic touch’, or a genius who knows everything about the forex market. What they do understand is the importance of learning in depth about the aspects of forex trading that are most relevant to their personal trading strategy. 

 

Besides an in-depth understanding of technical trading methods, forex traders also need to have a good grasp of the wider economic factors that influence the forex markets. A successful trader will be well read on the history of the foreign exchange market, and why it is so sensitive to the ebb and flow of supply and demand. 

 

They will keep up to date and well informed about the latest financial news by following an economic calendar to ensure that they never miss key data releases. These can include factors such as interest rate changes, unemployment figures, inflation rates, GDP, and commodity prices.

 

There are a wealth of forex learning materials available, from online tutorials and seminars, to podcasts, books, and journals. Experienced traders read widely and will also follow current affairs closely.

 

This is because geopolitical events such as elections, natural disasters, national and international conflicts, and pandemics can have a direct influence on the movement of the forex market. 

 

In summary, successful forex traders know that learning is a constant and lifelong process. They are also selective in which areas of knowledge they want to learn more in depth about, so that they are acquiring the information that is most beneficial and relevant to their trading strategy. 

 

They will also keep a sharp eye on wider current affairs that can have an impact on the markets. By being well informed but not bogged down in a lot of superfluous detail, a forex trader will be in a stronger position to spot opportunities to make a good trade at the right moment. 

 

They are not motivated by money

Strange as it may sound, the best forex traders are not motivated by money. They understand that steady profits are the by-product of a good trading strategy, rather than an end goal in itself. If you are trading because you need the money to pay the bills, you are putting yourself under too much pressure and are likely to make mistakes. 

 

Of course, it is possible to make a living out of forex trading, but this is a long term goal that will be achieved when the right level of skill and experience has been built up. It is a much better strategy to only trade with what you can afford to lose, and never risk the money that you need to cover your essential expenses.

 

Good forex traders are also in the game because they enjoy the whole process of learning and the challenge of agile thinking and forward planning. If you view it solely as a means to an end, you are unlikely to thrive and become really successful. 

 

They have a daily routine

The importance of following a structured daily routine cannot be overstated. No matter how good your knowledge and technical skills are, if you don’t have the discipline to apply them to your trading in a consistent manner you will never be as successful as you could be. 

 

It goes without saying that the trader will already have a solid strategy in place before embarking on live trading. The next step is to make a checklist of each daily task that makes up this goal. By writing down each step, you will be able to focus on small details, keep accurate records of your trading, and see new opportunities more clearly.

 

Many forex traders fit their trading in around a full or part time job, plus other demands of raising a family and running a household. Even the most focused of individuals can find that this affects their concentration, and distractions and interruptions can be difficult to avoid if you are working from home. 

 

A routine that is set out in writing is a great tool for impatient personalities in particular, because it can help you avoid the temptation to rush and cut corners. Forex trading requires patience and attention to detail, so by following a checklist you can be sure that you are not overlooking anything that could lead to a costly mistake. 

 

They are emotionally intelligent

Understanding the psychological factors that influence our behaviour is fundamental to developing good trading skills. Trading brings out strong emotional responses in a person, including fear of losing and greed for bigger profits. 

 

Even the most well-balanced individuals are not exempt from this, and in fact assuming that you are too strong to fall prey to your emotions can be a dangerous strategy. We are all motivated by our instincts to a certain extent, because of thousands of years of conditioning. 

 

The key is to recognise when you might be tempted to make a decision based on your emotions rather than a detached analysis of the situation. All your trading decisions should be made in accordance with your trading strategy and your risk tolerance. 

 

In most situations, it’s best to take your money when you hit your profit target and likewise cut your losses when they hit your predetermined number. 

They know when not to trade

A common mistake that inexperienced traders make is assuming that the more trades they make, the better the chance of success. However, trading for the sake of it rarely pays off in the long run. Having the discipline to make a few well researched trades rather than a lot of guesstimates is one of the best routes to steady profits.

 

Sometimes, the fear of missing out (FOMO) can drive a trade, rather than a logical and objective strategy. Never trade to try and make up for a previous loss, as your desire to rectify your mistakes will only cloud your judgement further. If your pride has been wounded with a painful losing streak, take a step back and pause your next trade.

 

 Look objectively for the causes of your bad run. See if you can identify a pattern in your recent trades that might be responsible for the poor outcomes, and if so, adjust your trading strategy accordingly. 

 

They take care of their own wellbeing

Most successful traders also know the importance of maintaining a life outside of the intense world of forex trading. Those who treat trading as an all consuming obsession will inevitably burn out, or be forced out by a series of poor decisions made under pressure. 

 

It’s essential to schedule in recreational time away from trading and your other jobs. This helps you to clear your mind, so that you can bring a new approach and refreshed energy to your trading. 

 

Some of the most influential people in the world practise a daily meditation routine to help them mentally focus and to break through any negative bias in their thought patterns. Even the most upbeat and optimistic of personalities can be prone to negative thinking, because this is what the human mind has naturally evolved to do.

 

We need to be on our guard against danger and potential pitfalls in life of course, and this is why our minds tend to amplify problems and doubts, rather than let us enjoy our successes and dwell on happy memories. 

 

However, with practice, we can train ourselves to recognize negativity bias in our thinking, and learn to see situations in a clear and more neutral light. It is easy to see the link between this mindset and the benefits for making sound trading decisions. When we are not influenced by emotions, the more logical and effective our actions tend to be.

 

There are no right or wrong ways to meditate. Many people start by sitting quietly in a place free from distractions for 10 or 15 minutes. They try to focus on the present moment, and gently bring themselves back if their mind starts to wander. 

 

It takes some patience to master the technique, but gradually the benefits will reveal themselves.

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