Author: Chris Miles

10 FOREX TERMS EVERY TRADER SHOULD KNOW

Posted on by Chris Miles

10 Forex Terms Every Trader Should Know

If you are new to the world of forex trading, you might have noticed some terminology which you don’t quite understand, or would like a better definition of. There’s a lot to learn, and it would be impossible to cover everything in one article, but these are some of the most important and frequently used terms to know.

 

Leverage

 This refers to the borrowing of money from a broker in order to invest in trades. The high leverage ratios available to forex traders allows for even a small initial investment to make significant profits. Of course, this comes with the risk of losing large sums too, which is why all traders must work out a robust risk management strategy before they begin.

 

Many brokers offer instant forex funding with leverage ratios as high as 100:1, allowing a trader to work with far higher amounts of money than their trading account holds.

 

Margin

When you are trading on leverage, ‘margin’ refers to the amount of money your broker requires you have in your trading account when opening a position. This money serves as a deposit which can be used by the broker. The size of the margin is related to the leverage ratio you are trading with.

 

Margin is expressed as a percentage of the position size. For example, your broker requires a 1% margin, and you are trading with a 100:1 leverage. You open a position size of $100,000, so you will need to have $1000 in your account, as a deposit or margin. The margin varies between brokers, and can be anything from 10% to 0.25%.

 

Currency pairs

The forex market is a decentralised global market, where all the world’s currencies are traded against each other. Currencies are quoted against each other in value, and are always traded in pairs. The exchange rate refers to the relative price of two currencies, and is in a constant state of flux.

 

It is this fluctuation in value between currencies which forex traders aim to interpret, and base their trading decision on in order to make a profit. This can be done by selling in currencies which have risen in value, or through buying in currencies which you expect to rise in value.

 

Any type of currency can be traded, but it is advisable for beginners to stick to the currencies of the world’s major economies (referred to as ‘majors’), because they tend to be less volatile that those from emerging economies (referred to as ‘exotics’). It is much easier to find buyers and sellers for major currencies than other kinds.

 

Major currency pairs

The majors always include the US dollar, because this is the largest and most traded currency in the world. All currencies are identified in forex trading by a three letter code. For example, the Us dollar is USD, and the Euro is EUR.

 

The base currency refers to the first listed currency in the pair, and the quote currency is the second listed. This allows the trader to see how much of the quote currency is required to purchase the base currency.

 

 The other major economies include the (EUR), the Japanese Yen (JPY), the Swiss Franc (CHF), the Australian dollar (AUD), the British pound (GBP), the New Zealand dollar (NZD) and the Canadian dollar (CAD).

 

Minor currency pairs or ‘crosses’

The minor currency pairs, which are also referred to as crosses, means that the currency pair does not include the USD, but both currencies are from the other major economies. An example of a minor is GBP/EURO, or CHF/NZD.

 

They are not traded in as great volume as the majors, but they still provide good trading opportunities for the experienced trader. The most frequently traded minors include the EUR, the JPY, and the GBP.

 

Exotic currency pairs

An exotic currency refers to a currency from a developing economy, sometimes also referred to as an emerging market. An exotic currency pair means an exotic paired with a major. Two exotics can also be paired together, referred to as ‘exotic v exotic.’

 

Examples of exotic currencies include the Singapore dollar (SGD), the South African Rand (ZAR), and the Mexican dollar (MXN). There are hundreds of other examples, which are too numerous to list here!

 

Pip

Pip is short for Percentage in Point, otherwise expressed as Price Interest Point. A pip refers to the change in value between two currencies.

 

It is the smallest whole unit price move that an exchange rate can make, and it is usually the fourth (and last) decimal place of a price quote. In some cases, such as with the Japanese Yen pairs, there will only be two decimal places, so the pip will be the second and last decimal place.

 

For example, the EUR/USD currencies show a move from 1.1440 to 1.1441, then the value of the USD has risen by one pip.

 

Pipette

In some cases, forex brokers may quote currency pairs to 5 or 3 decimal places, rather than the standard 4 and 2. This is a fractional pip, or pipette, and it is equal to one tenth of a pip.

 

Learning how to read pips and pipettes, and calculate their values accurately, is an important skill in forex trading. It’s not that complicated, but it does take some practice, especially because there will be times when you need to read them swiftly and accurately to make a trading decision.

 

Tracking the changes in pip values (which can be very tiny) as the forex markets fluctuate is the essential work of the forex trader. This then needs to be back up by a sound trading strategy, in order to maximise profits and mitigate and losses.

 

There is no right or wrong way to go about trading, and even experts make errors of judgement sometimes. However, you must have a solid risk management strategy in place before you open live trading positions.

 

Lot size

This refers to the units of base currency in each trade. In forex, a standard lot size equals 100,000 units of the base currency. It is possible to take smaller lot sizes (known as mini lots) of 10,000 units of the base currency, and also micro lots, which are 1,000 units of the base currency.

 

In some cases, you may even be able to trade nano lots, which are 100 units of the base currency. This makes forex trading accessible to those with smaller amounts of capital to invest. When you place an order on a trading platform, the size will be quoted in lots.

 

The lot sizes might seem large, but in forex you often need to trade significant amounts of currency in order to turn a profit.

 

Long and short trades

The term ‘going long’ means that you are buying a currency, as opposed to ‘going short’, when you are selling a currency. Because currencies are always traded in pairs, you will always be going long on one currency and short on the other. You will make your decision to buy or sell a particular currency based on whether you expect its value to rise or fall.

 

In a forex trade, when buying, or going long, the base currency is purchased and the quote currency is sold. When selling, or going short, the base currency is sold and the quote currency is bought. (The base currency is always the first listed in a currency pair, and the quote currency is second listed.)

 

Bid price and ask price

The bid price refers to the buying price, and the ask price is the selling price of a currency. The bid price will always be lower, given that the aim is to make a profit. A transaction takes place when a buyer decides to increase their bid price, or a seller decides to lower their ask price, until a sale price is agreed.

 

Spread

The spread refers to the difference between the bid price and the ask price. You may also see it referred to as the bid/ask spread. This is also sometimes referred to as the transaction cost, because the broker takes the spread value as a client fee on the transaction.

 

Bull markets and Bear markets

The terms bull and bear are used to describe the general trending direction of the financial markets. If a market is described as bullish, it means that investor confidence is high, and the economy is performing well, with high GDP, low unemployment, and low rates of inflation.

 

A bear market refers to negative economic conditions, where the economy is performing weakly, and unemployment is high. Investors will tend to transfer to safe currencies, such as the USD, as sell off riskier investments.

 

It is possible to make good profits in both bull and bear markets, if you follow the economic news and latest data releases carefully to help predict which way the market will turn. However, it is not advisable to make reactionary decisions and follow the crowd, because this can often lead to unwise trading choices.

 

Always let any strong fluctuation in market conditions settle down before making nay major buying or selling moves in the forex market.

Recent articles


Share:

WHAT’S YOUR TRADER PERSONALITY TYPE?

Posted on by Chris Miles

What’s Your Trader Personality Type?

A certain level of self-awareness is absolutely vital for any trader worth their salt and if you want to enjoy a lucrative career trading currency pairs, then it would perhaps be advisable to turn the lens inwards from time to time, focusing on yourself, your personality, your attributes and your characteristics… all of which can help you improve as a trader – and as a person.

 

It can be a cutthroat world and not everyone is suited to life as a trader but, that being said, there are lots of lessons to be learned along the way so even if you’re not quite cutting the mustard at first, there’s absolutely no reason why you can’t evolve and become the trader you always knew you could be.

 

In terms of personality types and trading psychology profiles, it seems that there are 15 different general trader types that people typically fall into and understanding where you sit in this regard could prove particularly useful if you are trying to up your trading game but don’t know where to begin.

 

These profiles were devised by Dr Van Tharp, a professional psychologist and trader coach who has written many books on the subject… which could be useful research and reading material if you’re keen to grow and evolve as a trader.

 

If you head to the Van Tharp Institute website, there’s a test you can take that will help you determine what your trading personality is. Arming yourself with this knowledge could help you in the future, allowing you to uncover more of your strengths and work out how best to go about addressing the challenges you’ll come across that could affect trading profitability.

 

The 15 different trader personality types are:

 

  • The Accurate Trader
  • The Administrative Trader
  • The Artistic Trader
  • The Adventurous Trader
  • The Detailed Trader
  • The Facilitative Trader
  • The Fun Loving Trader
  • The Independent Trader
  • The Innovative Trader
  • The Planning Trader
  • The Socially Responsible Trader
  • The Spontaneous Trader
  • The Strategic Trader
  • The Supportive Trader
  • The Values Driven Trader

 

Over the next few blog posts, we’ll be drilling down into each of these psychological profiles to help you find out more about each one and to see where you fit.

 

It’s likely that there will be overlap between the different profiles, but it could be useful to find out which one is most applicable to you so you can see if there are any changes you could make to your trading strategy to give your career a bit of a boost.

 

There are some desirable traits that Dr Tharp did identify among all of the very best traders he worked with, which could also prove helpful where your evolution as a trader is concerned.

 

Working on your ability to look at the bigger picture and identify trading opportunities, using analysis and logic when forming trading decisions and being organised and decisive can all really help your performance, it would seem.

 

Unfortunately, there are only two identified trader personality types that have all these characteristics: the Strategic and the Planning Trader. So if you don’t fit into these categories, you may have to put some hard graft in so you can see the successes you’ve always dreamed about.

 

To help you work out where you sit among these psychological profiles, here are the first three in more depth.

 

The Accurate Trader

 

As the name might suggest, the Accurate Trader is someone who is incredibly detail-oriented, keeping in-depth records of everything related to their trading so they can conduct highly focused analysis to aid decision-making and filter good opportunities.

 

This is an incredibly useful trait to have for anyone interested in FX trading and prioritising accuracy and putting data analysis at the heart of everything you do will certainly stand you in excellent stead as a trader.

 

In fact, as an Accurate Trader you already have one of the three core qualities that top traders seem to possess – the ability to work sequentially, decisively and in an orderly fashion. So that’s a great place to start!

 

This personality type is generally very responsible and reliable in all areas of their life, knowing what needs to be done and how to go about doing it in order to achieve success.

 

However, if this sounds like you, one trap to be aware of is focusing so hard on your analysis and data that you forget to make time to actually trade. Remember to strike a balance and put all your hard work into practice. Otherwise, those wins will remain out of reach!

 

Looking at the bigger picture can be difficult if you’re an Accurate Trader and devoted to zeroing in on the finer details, so make sure that you take a step back and review the market as a whole from time to time, as well.

 

If you’re just starting out as a trader and you feel as though you sit within this psychological profile, advice from Dr Tharp is to consider learning from a mentor so you can see how to do it and gain experience through practical applications.

 

The Administrative Trader

 

Do you consider yourself to be a highly rational and practical person? Are you able to make strong, firm decisions as and when the need arises? If so, it could well be that you fit into the Administrative Trader personality type.

 

When FX trading, it’s essential that you’re able to keep your cool and follow your trading strategy to the letter when faced with potentially volatile or difficult situations and Administrative Trader types are very good at doing this.

 

The market is unpredictable and prone to fluctuations, so being able to ride the wave and keep panic at bay is an excellent trait to foster if you can, allowing you to make good decisions quickly. If you’ve already got this skill, great! You’re well on your way to seeing trading success.

 

Administrative Traders make naturally good leaders, so if you are in a position of responsibility elsewhere in your life, you may well find that you fit into this personality type.

 

Do you strive to ensure that everything runs smoothly and productively? Do you consider yourself to be highly organised and efficient? If so, it’s possible that this is where you fit in.

 

As an Administrative Trader, you will already have two of the top three core qualities typically seen in great traders – doing things sequentially and in a decisive and orderly way, and making decisions based on logic and analysis.

 

One top tip from Dr Tharp to help those who position themselves here is to ensure that you follow the right guidelines or advice. Because you love the details of trading system analysis and development so much, you can easily be led astray if you’re not careful.

 

You may also find that you’re overly critical and only pay attention to the negatives in your trading. Recognising your mistakes will be key so you can learn from them and ensure you progress as a trader.

 

Stress can also be problematic for Administrative Traders and, if things start to go wrong, you often find yourself simply working harder… which can increase your stress levels and this, in turn, will have a big impact on your trading and the decisions you make.

 

The Artistic Trader

 

If you’ve been identified as an Artistic Trader, it’s not all good news.

 

Unfortunately, your particular psychological profile isn’t particularly well suited to the world of forex trading – and Dr Tharp even goes so far as to suggest that you find a trustworthy money manager to handle your account if you discover that the trading work you have to put in doesn’t align with what you really want to create.

 

The characteristics you do have that are beneficial from a trading perspective include your ability to be open minded, adaptable and flexible when you trade. You may also find that you’re effective at identifying patterns and spotting the early signs of changes in the market, which will certainly help you see success.

 

However, you may not be as adept at finding and fixing your mistakes and you may find yourself being increasingly led by your emotions, which can spell disaster if you’re not careful.

 

Your need for excitement may also have a negative impact on your trading performance and Dr Tharp suggests that you find other ways to fulfil this need, such as poker. As he observes, good trading is boring and it requires you to follow rules and repetitive processes, with daily preparation a must… which may not appeal to you as an Artistic Trader.

 

Looking for forex funding right now? We have an instant funding program available so you can get started with a live account immediately – ideal for profitable traders who want to take their trading profits to the next level.

Recent articles


Share:

HOW MEDITATION CAN TRANSFORM YOUR FOREX TRADING

Posted on by Chris Miles

How Meditation Can Transform Your Forex Trading

Forex trading calls for a sharp mind, quick decisions, and a cool head. Some people seem to be naturally blessed with these traits, but chances are, they are doing a lot of background work to keep this mindset together. In many cases, that work involves a daily meditation routine.

 

At first glance, you may not think that the cut and thrust world of forex trading has much to do with the world of meditation. You may even feel hostile to the idea of taking part in a ‘woolly’ practice, which seems to be the antithesis to the hard facts and figures of the fast moving trading markets.

 

However, forex trading actually calls on powerful human emotions such as fear and greed, which we are all predisposed to feeling, and are especially acute when we are under pressure and faced with the prospect of gaining or losing a lot of money!

 

Successful traders understand that the best way to stop these emotions from negatively impacting their decisions is not to try and suppress them, but to learn how to manage them effectively. This is where meditation techniques come in. Here’s why it could make you a more effective and profitable trader.

 

Meditation calms the ‘monkey mind’

You may have heard of the term ‘monkey mind’ to refer to a state of poor concentration. It’s a Buddhist expression, and it is used to describe the way the mind wanders from thought to thought while we are not properly focused on a task. Psychologists sometimes call this state the ‘default mode network’ (DMN).

 

While we all need some mental space to be alone with our thoughts sometimes, the more time we spend doing this, the less helpful and productive it becomes. This is because the mind tends to have a negativity bias. That is, it naturally tends to foreground negative thoughts and past experiences rather than positive ones.

 

This was once useful from an evolutionary point of view, because it tended to stop our ancestors from being eaten by predators or starving to death in the wintertime, for example. However, now it is a much less useful trait. Of course, sometimes we still need to be alert to danger or learn from mistakes, and we shouldn’t ignore warning voices.

 

However, when negativity becomes our default mindset, it can hold us back from achieving our goals. Our wandering minds can ruminate over the mistakes we made in the past, or worry about the future, rather than recall pleasurable or positive thoughts that uplift and sustain us.

 

If you tend to have a critical inner voice, as many people do, allowing your mind to ruminate freely tends to amplify it. This can stop us moving forwards in life, or being as productive and successful as we have the potential to be. It’s a constant drain and distraction on our mental and emotional energy.

 

It’s not difficult to see how this state of mind can affect your forex trading, which calls for a laser focus, self-belief, and mental discipline. The good news is, it is possible to conquer this unsettled and restless state of mind through meditation techniques.

 

How to shut down the monkey mind

The most effective way to train a wandering mind is to learn how to focus on the present, through mindful meditation. This way, whenever you find your attention fragmenting, you can quickly collect yourself and bring your thoughts  back to the moment. It is this calm and focused mindset that often leads to successful trading decisions.

 

You will find that you are less prone to speculating about the ‘what ifs’? You will be less easily swayed by every blip in the market, and less inclined to follow the herd when a piece of economic data or geopolitical event is rocking the boat. In short, your decisions are more likely to be objective and clear sighted.

 

To get yourself in the right mindset for meditation, first find a quiet and comfortable place to sit, that is free from distractions. Many people like to meditate first thing in the morning, or before bed. You can spend as little as 10 minutes on meditation, or as long as an hour. As you notice the benefits, you may wish to increase your practice a little each day.

 

Avoid meditating in direct view of your desk or laptop, or anything that reminds you of trading, or your day job. In fact, try and avoid focusing on anything visually interesting at all, but keep your gaze soft and slightly downwards focused. Wear loose comfortable clothing, so you can breathe freely without any restrictions.

 

When you are sitting, pay attention to your posture. You should sit up straight, with relaxed shoulders, your chin should be parallel to the floor, and your feet hip width apart and resting just under your knees. Your hands should be placed palms down in your lap. Some people prefer to sit on the floor, and adopt the lotus or half lotus position.

 

The next step is to focus on your breathing. Breathe only through your nose, and notice how your belly rises and falls as you breathe in and out. At some point, a thought will pop into your mind, such as something you need to do later on that day, or a reflection on a past event.

 

Instead of dwelling on the thought, let it go. It can be helpful to visualise intrusive thoughts as clouds floating across a sky, or leaves floating by on a stream. Concentrate on the rhythm and physical sensations of your breathing, to bring yourself back to the present.

 

Eventually, you should notice that your regular breathing is having a calming effect on your central nervous system. At first, 10 minutes is probably the most you can manage. However, as your focus and concentration grows stronger, you may find that 15 or 20 minutes is the optimum time for meditation to really make a difference to your day to day mindset.

 

If you find that you become impatient or distracted, don’t dismiss the idea or become cross with yourself. Treat yourself with compassion, and just calmly centre yourself and bring your focus back to the present. Meditation isn’t a game of success or failure; it’s a gradual process of developing an objective, observer’s worldview.

 

Remember that learning mindfulness is just like any other training programme: you don’t expect to be match fit after one trip to the gym; you accept that it is a steady process that will develop over the coming weeks and months. The more you practice mindfulness on a regular basis, the better your powers of concentration will become.

 

Some people find it useful to listen to an app which talks them through the process. There are dozens of free meditation tools that can be downloaded straight to your phone, and have different daily exercises for you to try. Even just setting your timer can help too, because you are not tempted to interrupt your meditation to check your watch.

 

How to fit mindfulness into daily life

If you are constantly pushed for time, juggling a family, a full-time job, and your trading commitments, a daily meditation routine may seem like an impossible luxury. However, it is possible to incorporate mindfulness into ordinary activities. Here are a few ideas.

 

If you take exercise, even a 10-minute walk at lunchtime, this can be an opportunity to practice mindfulness. Focus on the rhythm of your feet as they carry you along, and notice the pattern of your breathing.

 

When you are in the shower or brushing your teeth, concentrate on the movements of your body, and the sensation of the warm water, the taste of the toothpaste, the scent of the shower gel, and so on.

 

How to draw on mindfulness when you are trading

Of course, eventually you will need to apply what you have learnt to your trading. When faced with a tense moment, such as when the markets begin to turn just as you were about to achieve a profit target, get yourself into that objective mind frame. This doesn’t mean you should ignore what is happening, but it can buy you a moment to consult your trading strategy, rather than make a hasty and panicked decision that you will regret later.

 

Mindfulness meditation alone isn’t enough to be a good trader of course, you need to be backed up by a well-informed trading strategy, that is aligned to your trading goals. You should work out in advance what your risk tolerance levels are, so that you are not tempted to trade with more capital than you can afford.

 

With instant forex funding available, it has never been easier to enter the world of forex trading. It’s perfectly possible to learn how to be a successful trader through mastering technical skills and knowing what your limits are. However, mastering your emotions and thought processes will really bring you up to a whole new level of the game.

 

Every decision you make matters, and in forex trading, those decisions should be clear sighted and logical. This is why learning to separate your thought processes from your emotional responses is such a powerful tool.

Recent articles


Share:

MANIFEST YOUR WAY TO TRADING SUCCESS

Posted on by Chris Miles

Manifest Your Way To Trading Success

In forex trading, as in life, it’s important to remain goal oriented and set yourself targets for what you want to achieve. It’s an excellent strategy for anyone who wants to see progress and who doesn’t want to stagnate… but, of course, it can be hard to remain focused on the task at hand and keep those goals firmly at the forefront of your mind at all times.

 

We live in a world of constant distraction and there’s always something clamouring for our attention, no matter what we’re doing. All too often, before we know it, we’ve completely lost track of what we actually had planned and suddenly our goals and targets seem even further away than they did before.

 

If this sounds like a familiar story to you, don’t despair! There’s a lot you can do to help you keep your eyes on the prize, whatever it is you’re aiming for… and the fine art of manifestation could well be a good place to begin.

 

But what exactly is manifestation?

 

One of the buzzwords of the last year or so, the idea behind manifestation is that you can bring what you want into existence by practising aspirational thinking and employing various techniques and meditations.

However, as a concept, manifestation isn’t new and its origins can be traced back to the 19th century New Thought spiritual movement, which came to the fore in the US at that time. Elements of the practice can be traced even further back than that, with links to Plato’s ideals and Greek philosophy, as well as Hinduism and Transcendentalism.

Part of the idea here is that what we think can have a direct influence on the material world and, as such, it’s possible to manifest your own reality with the power of thought.

 

For anyone interested in pursuing a lucrative career as an FX trader but who isn’t quite seeing the success they’d like to may well find that manifestation helps them get where they want to be.

 

As a trader, setting achievable goals over time will help you improve your performance, develop in your career and make positive, well thought-out changes to your trading strategy in line with how well or badly you’re doing.

 

Have you heard of SMART goals?

 

A little acronym you might want to keep in your mind when considering setting short and long-term goals is SMART… Specific Measurable Achievable Relevant Time-Bound.

 

This goal-setting strategy is a great one for traders to follow and should help you stay on track, important from a trading perspective because you’re essentially working for yourself, with no big boss to report to and no one to hold you accountable… no one except yourself, that is.

 

Broader goals may prove to be ineffective and rather intangible, so try to aim for something more specific that you can work towards, such as coming up with a minimum win rate within a set timeframe.

 

Measurable goals, meanwhile, are important because they give you a really good way of evaluating just how well or how badly you’re doing, so you can find areas ripe for improvement, all through the use of data that’s highly relevant to your daily trading.

 

However, it’s just as important to make sure that you set yourself achievable goals that you have a realistic chance of reaching. Aiming too high too soon could see you fail, so make sure that you’re giving yourself the best chance for success.

 

Relevancy is also key and focusing on this one will make sure that your broader goals become more attainable more quickly. Always make sure that your goals are in light with your personal growth and development as a trader… otherwise, you could just be wasting lots of valuable time.

 

And, finally, short-term goals can help you feel as though you’re progressing and you’ll find you meet your longer-term ambitions more effectively over time, as well.

 

Setting yourself a realistic timeframe to hit your goals can boost productivity, increase your confidence and sense of self-worth and give you the structure you need to really start seeing success as a trader.

 

So how can manifestation help you achieve your goals?

 

The art of manifestation involves practices like meditation, visualisation and mindfulness to help turn dreams into reality.

 

From the get-go, you’ll likely find that you learn an awful lot about yourself quite quickly and making the decision to try manifesting can show you immediately what you value most and what you most want to pursue in life.

 

The positive thinking aspect of manifestation can yield other benefits to you, aside from helping you visualise and attain your goals. Maintaining a positive outlook can help you ward off depression and help give you the resilience and skills you need to cope well in the face of stress… most important for forex traders!

 

An interesting study published in the Basic and Applied Social Psychology journal found that visualisation exercises were able to help tennis players perform better on the court and, by visualising winning, they consequently saw more wins than when they didn’t practise visualisation.

 

So it could certainly be worth trying your hand at manifestation if you do want to start driving more success your way.

 

Of course, it isn’t simply a matter of just sitting down to think happy thoughts and expecting good fortune to come your way… you will have to take practical and decisive steps towards achieving your goals in order for them to come to fruition, but manifestation could be one great weapon to have in your arsenal on your trading journey.

 

To help you get started with manifestation, here are a couple of techniques and exercises you could try. Who knows what the future may hold?

 

Visualisation

 

Visualisation uses all five of your senses (touch, taste, sight, smell and hearing) to help you imagine your future goals as if they were true right now.

 

It can be hard to master but it involves engaging all the senses and either envisioning the desirable future endpoint or envisioning the steps that need to be taken in order to get there.

 

To start, write down what it is you want in detail, engaging all your senses and including as much imagery and detail as possible to really bring your ambitions to life on the page. Do this once a day to really help keep your goals in mind.

 

There are lots of other ways to practise visualisation over on the Envision blog.

 

Positive affirmations

 

It’s easy to fall into the trap of negative thinking, even if you’re generally a positive and optimistic person, but you can really help yourself out if you start reciting positive affirmations to yourself on a regular basis. This can help you retrain your thought patterns and processes, helping you maintain a more positive outlook.

 

Positive affirmations that you could say to yourself include: I am successful, I am worthy of my dreams, I will succeed, I am excellent at what I do, I can do this, I am resilient, I am proud of myself… and so on!

 

You can use your affirmation statements to target a specific area, belief or personal behaviour you’d like to address, so have a think about which parts of your life you’d like to change… and take it from there.

 

Keep an intention journal

 

As traders, we’re well used to journaling and it represents an important part of the process for anyone who wants to see more wins than losses. But journaling can also help you make plans and stick to them, making it easier for you to break big jobs down and make them more achievable… which, in turn, will bring your dreams closer and closer to reality.

 

At the end of each day, write down three to five actions you want to complete the following day, whatever they may be. The key here is to make sure that your intentions are in line with what you value most, so your end goals are always in sight. Eyes on the prize, as they say!

 

Vision boarding

 

Something else you could try is vision boarding, where you sit down to create a tangible visual representation of whatever it is you’re trying to attract.

 

This really helps give us a clear direction of where we’re going and where we want to end up, so we can rid ourselves of unproductive distractions and really get down to business.

 

You can include whatever you like on these boards, but it could be helpful to start using images that inspire emotion within you and which align with your particular values.

 

Once you’ve finished the board, hang it somewhere prominent so you see it all the time, or perhaps consider making a digital board and keeping it somewhere on your phone or tablet. Before you know it, your trading career will be well on the way!

 

Looking for a new forex funding account? With us, you can trade when you like where you like… all you need is an internet connection! Get in touch with us today to find out more.

Recent articles


Share:

WHAT YOU NEED TO KNOW ABOUT FUNDAMENTAL ANALYSIS

Posted on by Chris Miles

What You Need To Know About Fundamental Analysis

You will probably be aware that you need to learn some technical analysis tools to get ahead in trading, and make the most of instant forex funding. Understanding how to interpret line charts, bar charts, and candlestick charts can help you to monitor the rhythm of price action for your currency pairs.

 

Technical analysis skills can lead to more informed and less risky trading decisions. However, some traders pay much more attention to fundamental analysis to guide their trading decisions. This involves using the economic data releases and wider current affairs to make predictions and look for patterns, rather than analysing charts and graphs.

 

Even if this is not the strategy you want to use for your core trading decisions, it’s still useful to have a basic understanding of how these factors influence the forex markets. Some traders find that paying equal attention to technical and fundamental analysis works well for them. Here is an overview of why traders use it to inform their actions.

 

What is fundamental analysis?

Fundamental analysis looks at the factors that influence the supply and demand of currencies and commodities, and consequently, the currency prices and exchange rates. This involves keeping up to date with current affairs, with an eye on political, economic and social changes and developments.

 

That all sounds like fairly basic stuff, you might be thinking. It is easy to keep up with the GDP and so on for your chosen currency nations. A politically stable nation that is doing well economically will have higher currency values than one with weak leadership and a flagging economy, which seems fairly obvious.

 

 However, the complexity lies in the sheer amount of data that is available, and understanding what is relevant, and its probable effect on the markets. Here’s a look at what forex traders keep a beady eye on.

 

Economic data releases

Governments and private organisations will release data which gives an indicator of the country’s economic performance. These are released to a schedule, and there is data relevant to most of the world’s major economies released on a daily basis. In fact, it’s pretty much impossible to keep on top of all of it.

 

This is why forex traders will often keep track of them with an economic calendar, which are freely available to download from financial websites. Some economic factors are very well known to affect the currency value, such as the interest rates and the inflation rates. Others are less known, such as the durable goods orders.

 

Some of the data is based on hard sales figures, and some of it is based on surveys and opinion polls. The data can be interpreted to show how well the economy has performed over a past period of time, how well it is doing currently, or to predict how it might perform in the future.

 

The data that is of the greatest interest to traders is that which will indicate how an economy might develop in the future. The data should then be further filtered into that which will have a low impact on the forex markets, and that which will influence price action. Here’s a look at the most important indicators.

 

Gross Domestic Product (GDP)

GDP is the most general economic weathervane of a country. It is the total market value of all the goods and services produced over a year, and it can confirm whether or not a country is in recession. Although much of the data is historical, two consecutive quarters which show a contraction of GDP are the official definition of a recession.

 

Unemployment Rate

The unemployment rate is related to GDP, as it is a good indicator of the economic health of a country. It includes figures for the percentage of a population who are actively seeking paid work, rather than those who are economically unactive and not seeking work. This is especially relevant in the US, because the dollar is the most widely used currency pair.

 

If the data is worse or better than expected, this can impact the forex markets. It’s tied to how much demand there is likely to be for goods and services, and how confident businesses and consumers are about spending and investment decisions.

 

Consumer Price Index (CPI)

The CPI is a measure of the price of consumer goods and services. Representative samples from over 200 categories are used to compile a report which shows the cost of various goods at the moment of publication. Forex traders should narrow down the focus to the cost of exports, because this is the most relevant to the exchange rates.

 

If your trading pairs include the US dollar, which the majority of currency pairs do, then you should pay particular attention to the US specific releases. These include Nonfarm Payrolls, the Federal Funds rate, the University of Michigan Index of Consumer Sentiment, and the Industrial Production Index.

 

The Central Banks

In the UK, the Central Bank is the Bank of England (BoE). It has the power to raise or lower interest rates, which can influence the inflation rate. In the US, the central bank is known as the Federal Reserve. Higher interest rates in the US will make the dollar more powerful, and lower demand for other currencies.

 

 They can also introduce economic policies, such as quantitative easing, which will strongly impact the nations’ economy. Therefore, it’s important to follow all the statements and comments made by central bank representatives.

 

Geopolitical events

The world is in a particularly turbulent phase at the moment, with the Russian invasion of Ukraine still sending shockwaves around the world, the effects of the pandemic still reverberating in the economy and the wider population, and the ongoing conflicts in the Middle East.

 

The effect of the war in Europe can be seen at the moment, with a strain on oil and gas supplies, and certain food products. Geopolitical events don’t have to be on such a big and dramatic scale, however. They can be local election results, changes in government policy, scientific developments or discoveries, and many other factors.

 

Natural disasters will also have a significant impact on the economy and therefore value of a currency. This could be through lost labour hours, decreased productivity, the cost of repairs and rescue operations, disruption to transport and supply chains, destruction of goods and service centres, increased sickness rates, and a whole host of other factors.

 

As we see the more extreme effects of climate change every year, once relatively rare events, such as hurricanes, wildfires, floods, and water shortages, occur around the world on a regular basis. Therefore, forex traders who employ fundamental analysis techniques will keep an eye on the news for climate related events.

 

Even less dramatic weather events, such as a colder summer than usual, can drive changes in the demand for consumer goods and energy prices. For example, predicted sales of barbecues and beachwear may be below par, while energy use goes up, and unseasonable goods, such as waterproof clothing, experience unexpectedly high sales.

 

The key takeaway is that unexpected, or even predictable changes, can cause turbulence in the markets. This can open up opportunities for a trader to maximise profits, or adjust stop loss margins.

 

Seasonality in forex trading

Some seasonal factors can be used to predict the way the forex markets will react. These include national holidays, especially those in countries with major economies. Christmas, Thanksgiving, Independence Day, Halloween, Easter, and so on will all have an impact on the demand for certain goods and services.

 

Seasonality refers to both calendar events and climatic conditions. For example, during the summer, many people go on vacation, causing increased demand for fuel and foreign travel. If the weather is warm, air-conditioning units and garden furniture sales may go up, and poorer than usual weather may impact on the tourism and hospitality industry.

 

The weather can also influence harvests and therefore food production, which in turn affects export and imports rates, and ultimately the balance of trade between nations. Therefore, it’s important to know which are the major commodity exports and imports of the countries whose currencies you trade with.

 

Some seasonal factors are cyclical, and predictable, such as fixed calendar holidays, which can drive demand for certain goods and services. This allows traders to identify patterns which helps them to predict the best times to make profitable trades for their chosen currency pairs.

 

Different currencies tend to ebb and flow according to the time of year, but there is not always an easily identifiable explanation as to why this is. September is generally the most volatile month on the forex markets, with lows occurring in February and August.

 

How do traders use fundamental analysis in their strategies?

By looking for the probable future direction of the markets, forex traders identify a key price level that they expect the price to break through, and use this as a guide to buy or sell for maximum profit. To learn how to make the most of this strategy, traders should make sure that they understand support and resistance levels.

Recent articles


Share:

5 CORE SKILLS TO DEVELOP AS A FOREX TRADER

Posted on by Chris Miles

5 Core Skills To Develop As A Forex Trader

While it may be true that anyone can start trading currency pairs on the FX markets, it’s important to remember that it takes time, motivation and a lot of dedication to become a truly successful trader and to start making a real career out of it.

 

Of course, it’s essential that you take the time to read up and research the markets themselves so you can gain a solid understanding of just what’s involved. This will ensure that you get off on the right foot and know what to prioritise in order to start seeing the wins start piling up.

 

While this is an excellent first step to take when considering entering the FX trading melee, it’s also essential that you work on developing a range of different skills that will stand you in good stead as a trader.

 

By prioritising the core skills that are absolutely vital for any successful trader, you’ll really be putting yourself in a strong position and you’re sure to grow in confidence quickly, as you feel increasingly capable of reacting in the appropriate way, no matter what happens with the markets.

 

But where to begin? Where best to focus your attention first?

 

To help you work out which core skills are the most relevant to you and where you are along your trading journey, here are some of the most essential of them all. Which of these resonate with you right now?

 

Maths skills


It’s the digital age, which means that we’re well blessed with all sorts of innovative technology that can do the hard sums for us, but traders will certainly find that they’re able to trade more effectively and potentially enjoy the process more if they’re comfortable and familiar with numbers and maths terminology.

 

Think of the market as a series of numbers on a graph, numbers that fluctuate in positioning over time. If you become proficient at processing and analysing these numbers quickly in relation to what’s happening on the graph, you’ll find the trading gig starts to click.

 

The key word here is ‘quickly’… you can, of course, use technology to its full advantage if you want, but you’ll likely find that it’s too late for the answers you receive to be applied, with the markets moving on quickly – which means you may miss out on some interesting trades.

 

That’s why personal maths skills are an absolute must!

 

Autonomous thinking

 

The Beatles said it best when they sang, “think for yourself ‘cause I won’t be there for you”… and this is a great little phrase to remember when you’re trading.

 

Yes, it’s important to learn all you can and absorb as much information as you can from external sources and other traders, but it’s all about how you go about applying the knowledge you acquire that will make the difference where your own individual trading is concerned.

 

Remember that what works well for one person may not prove particularly effective as a strategy for you and over time, you should start to build up your own unique trading profile and style.

 

This is where a trading journal really comes into its own. You need to take in a huge amount of info as a trader and it can be difficult to order your thoughts accordingly or to make sense of what’s happening day by day.

 

Writing everything down will help you develop as a trader and make market analysis a lot easier, so you can see where you’re going wrong and where you’re doing it right.

 

Maintaining focus

 

How quickly you progress as a trader will largely depend on how good you are at maintaining your focus on the task at hand, ignoring all other distractions… no matter how tempting they may well be.

 

If your attention wanders and you find yourself no longer truly zeroed in on what you’re doing, it’s possible that you’ll miss vital market cues that could have led you down the path to a very lucrative win indeed.

 

The good news is that there are lots of ways you can work on your focus and concentration, helping you to build the skills you need to trade.

 

Getting rid of the distractions is a good place to begin, so turn off your notifications, switch off your devices, put your phone on silent and perhaps even hide it away somewhere.

 

An interesting study recently revealed that having your phone out on the desk can actually impair cognitive capacity, affecting your ability to think and problem solve… even if you’re not using it!

 

So if you really want to start making waves as a trader, it might prove beneficial to stay well away from your phone while trading.

 

Leadership skills

 

There are all sorts of personal traits that you’ll work on if you prioritise leadership skills with a trading perspective in mind.

 

Good leaders are able to be disciplined and motivated, have the confidence to forge ahead with their plans but the humility to admit when they were wrong, have strong emotional intelligence and are able to keep their egos well in check… all of which will really serve you well when trading.

 

If you’re unable to lead yourself, you won’t be able to develop the mental and emotional skills you need to successfully take on the challenges presented by the markets… but it doesn’t have to be this way!

 

There are lots of techniques you can employ that will help you develop your leadership skills – and you’re sure to see the impact the next time you sit down to trade.

Discipline, for example, can be engendered in lots of small ways, whether that’s by waking up early every day, meeting all your deadlines, keeping all your appointments or making sure that meetings end on time.

 

Taking on more responsibility can also help hone your leadership skills, so don’t shy away from opportunities if they come your way. Always make sure that you don’t take on more than you can manage, but try to step out of your comfort zone if you can… you’ll be surprised at just how much you learn!

 

Critical thinking

 

Critical thinking is an absolute must when trading currency pairs! Emotional management is an oft-discussed topic on the blog and any trader worth their salt knows that it’s vital they keep their emotions well in check while trading so as to ensure solid decision-making at all times.

 

By developing your critical thinking skills, you’ll find yourself better able to make more rational decisions, rather than being led astray during emotionally charged sequences of events.

 

But also don’t be afraid to turn your critical thoughts inwards on a regular basis. Becoming more self-aware is essential to your trading progress and being honest with yourself will help you develop the technical skills and psychological resilience you need to have a lucrative career in forex trading.

 

There are lots of different elements involved in critical thinking, but the key concepts are open-mindedness, analysis, decision making and problem solving, good communication, self-improvement, analysis and interpretation.

 

One particularly important aspect for traders is becoming more aware of your own mental processes… how and why you make the decisions and choices you do.

 

Because we’re bombarded with such swathes of information on a daily basis, our brain has to compensate for it by using heuristics (or shortcuts) to help us make sense of everything that’s happening.

 

This is very useful, of course, but it can often get in the way when it comes to making decisions, so as a trader it’s perhaps a wise idea to try to become more aware of your cognitive biases and personal prejudices, which can actually have a big impact on your choices… even if they seem objective to you at the time of making them.

 

To help develop your critical thinking skills, why not start by questioning all your assumptions?

 

Ask yourself why you’ve done something in a certain way and see whether it was actually the best way after all. Be open-minded and accepting of all different arguments and points of view to see if you can make any positive and effective changes in how you trade.

 

And, of course, evaluation of your own work is a must if you’re to identify weak areas and those ripe for improvement. Look through your trading journal and see how what’s in it stacks up to the realities you see before you, then decide if further analysis is required so you can change your trading strategy for the better.

 

Through our instant forex funding program, you can receive instant funding on a live account, all without having to go through an evaluation.

 

If you’re a profitable trader who wants to take your profits to the next level quickly, this is the program for you. Get in touch today to find out more.

Recent articles


Share:

TOP TECHNICAL TRADING TOOLS YOU SHOULD LEARN

Posted on by Chris Miles

Top Forex Technical Analysis Tools To Learn

One of the most common pieces of advice given to beginner forex traders is to learn some technical analysis skills. This can seem like a slightly scary prospect if you are not naturally great with graphs and charts, but it’s actually more important to understand the concept behind the ideas than to grasp all of the fine detail.

 

This is because even the expert analysts make wrong decisions sometimes, and no two technical analysis traders will interpret data in the same way. As long as you are aware of the major tools and have some idea of how to use them, you will then have the freedom to decide which ones to learn about in more depth to help your trading.

 

So what is technical analysis?

Technical analysis is the study of price movements in the market, to help traders predict future trends, and therefore make the most profitable trading decisions based on their knowledge. Analysts study historic chart patterns and indicators of price action to inform their approach.

 

This is based on the theory that the rhythm and flow of price action tends to repeat itself. So, by studying how prices performed in the past, it is possible to predict future movements, on the basis of probability. The easiest way to examine and interpret the data is through charts, because they allow you to see the patterns in a visual way.

 

So, all technical analysis involves reading charts based on historical data. Indicators can then be applied to these charts, to identify the most profitable entry and exit points into the market for forex traders. It allows you to spot the best trading opportunities, and make the most of your forex funding.

 

Some traders make their decisions based solely on using technical data to read the probabilities of future price movements. Other traders rely solely on the economic data releases and wider macroeconomic events to make their predictions and decisions, which is known as fundamental analysis.

 

 There is no right or wrong way of applying analysis tools; in fact, many traders combine several methods.

 

What are the benefits of using technical analysis?

Technical analysis can be used to provide the most probable entry and exit in the market for a profitable trade. They also offer a good form of risk management, because they give you some insight into how the market is trending at a particular time or price point, thus reducing the amount of loss-making decisions that you make.

 

Once a trader has grasped the concept of technical analysis, the tools and techniques can be applied to a wide range of markets to identify trends. The majority of traders now use at least one form of technical analysis to help them identify the best potential trading setups.

 

What different types of charts are there?

So, forex technical analysis is all about the charts. They are simply the best method of visual representation of price movements over a set period of time. It probably won’t surprise you to learn that there are several different types of chart which are the tools of the trade. Here’s a look at some of the most popular price charts.

 

Line charts

Line charts show a currency pair’s movement over a set period of trading time. This could be months, weeks, days, hours, or even minutes. The construction of the chart is much like any other that you would use to see visually represented data over time: the horizontal x-axis represents the time scale, and the vertical y-axis represents the price scale.

 

The lines on the chart plot the difference between the closing price of a currency pair from one trading session to the next. It does not show the fluctuations of price within the trading period, just the overall closing trend, whether upwards, downwards, or no change.

 

Some traders prefer to use just the closing trend, which they consider more relevant to their decisions than opening prices or fluctuations within a trading period. Line charts allow the viewer to take in the big picture, which is useful for long-term trading strategies, over weeks or even months.

 

If you are a complete beginner getting to grips with technical analysis tools for the first time, then line charts are an excellent introduction. They allow for an easily digestible overview of the market, without the extra complications of a high volume of data within each movement.

 

Bar charts

Once you have got comfortable with line charts, then the next step is to get to grips with bar charts. These provide a greater level of detail than line charts. They show the high, low, open and closing prices (sometimes abbreviated to HLOC charts). This means that they can visually represent volatility within the markets, in a way which line charts cannot.

 

The chart displays vertical lines which represent the highest and lowest price points in a single trading period or segment of time, with the opening price indicated by a dash to the left, and the closing price indicated by a dash to the right. A bar that has closed up is represented in green, and a bar that has closed down is represented in red.

 

The vertical height of the bar is dictated by how much variation there is between the opening and closing price of a currency pair. This provides a good way to view the volatility in the markets, as well as giving an overall picture of whether the market is bullish (on the rise) or bearish (declining).

 

Candlestick charts

The candlestick chart is similar to a bar chart, but it has a slightly different format. Technical traders often prefer them to bar charts, because they are easy to read at a glance. Like the bar chart, they display the HLOC prices for each specified trading period. However, the data is displayed in a slightly different visual way.

 

The vertical is represented as a block, or the ‘body’ of the candlestick. This indicates the range between the opening and closing prices. The block is filled or coloured in if the closing price was lower than the opening price. The block is left unfilled if the closing price is higher than the opening price.

 

Some charts will use black and white colouring, whilst others may use red and green, or other colour combinations. This allows the viewer to see from one glance whether a currency pair has closed up or down, and if the overall market trends are bullish or bearish.

 

A black or red candle indicates a seller’s market, because the closing price was lower than the opening price, while a white or green candle indicates a buyer’s market, because the closing price was higher than the opening price for that particular currency pair.

 

More detail can then be ascertained by studying the candle ‘wicks’, or upper and lower shadows, which are vertical lines above and below the main body. These show the highest and lowest prices for each period, rather than the opening and closing prices.

 

If the lower wick is longer than the body of the candle, it is known as a ‘hanging man.’ This is indicative that the price declined somewhat, but then recovered, which can be a sign of a bullish market, and therefore a good time to close open positions.

 

The opposite occurrence is known as a ‘shooting star.’ This is when the upper wick is longer than the body of the candle. The closing price should also be near to the low of the candle, which is indicative of a bearish market, and can help to inform decisions about when to enter the market, or alter stop losses to minimise risk.

 

 

 

Interesting fact: candlestick charts have been in use since the 18th century, when they were used by Japanese rice traders. They were only widely adopted by the West when Steve Nison published Japanese Candlestick Charting Techniques, in 1991.

 

How to decide which analysis tools to use

The charts that you use will depend on how familiar and comfortable you are with reading the charts, and what trading strategies you want to adopt. If you are a beginner, you will probably want to keep things relatively simple, and not overwhelm yourself with too much information at once.

 

It will also depend on whether you want to adopt a long or a short-term trading strategy. The shorter your trades, the more detailed information you will need, so studying bar or candlestick charts will be necessary. Longer term traders may be able to rely more heavily on line charts.

 

Other technical analysis techniques

The three charts discussed above are just a few of the technical analysis techniques that forex traders use. If you are a novice, they are a great place to start, because the charts are relatively easy to understand and use to read trends and patterns in price movement.

 

Once you become more expert you can then begin to learn all about Bollinger Bands, Fibonacci retracements, and pivot point indicators to really get to grips with in depth technical analysis.

Recent articles


Share:

BEST STRATEGIES FOR PART-TIME TRADERS

Posted on by Chris Miles

Best Strategies For Part-Time Forex Traders

The majority of people trade forex markets part-time, usually as a side hustle to their main occupation. Because the forex markets trade almost 24/7, this is a perfectly achievable goal. In fact, trading part-time can be an advantage, because it calls for a more disciplined approach. Here are some tips on how to put together a strong part time trading strategy.

Know the best trading times

If you are working a 9-5, then you are probably going to be trading either before or after work, or during your lunch hour. The markets close at 5pm on Friday, and re-open at 4pm on Sunday. However, the weekends should also be used to refine your trading strategies, and carry out long term market analysis.

The major forex centres in the world are London, New York, Tokyo, and Sydney. Because these cities are in different time zones, and there is no centralised forex exchange, it is possible to find good trading conditions at most times of the day. However, the geographical trading zones are not open continuously, but overlap each other.

If you are based in the UK, the Sydney session trades from 12 midnight until 6am, the Tokyo session trades from 12 midnight until 9am. The London markets open at 8am and close at 4pm, and the New York markets open at 12 noon and close at 9pm.  These hours might vary slightly, according to the seasonal daylight-saving hour adjustments.

So, although the markets are available to trade 24/7, they are at their most active when there is a crossover session between two zones, such as 8am to 9am, when the London markets open, and the Japanese session is in its final hour. The first hour of opening for each zone is also usually one of the most active times.

Because the UD dollar (USD) is the most popular currency pair, the New York session tends to experience the highest volumes of trading on an average day. Therefore, the lunch break hours, from 12-2pm, and the period from 5pm- 9pm, when most UK workers will have finished their day job, are excellent times to trade.

Pick the currency pairs to suit your trading times

At all times, novice forex traders are advised to stick with the major currency pairs, which always include the USD. The other major currency pairs include the Euro (EUR), the Swiss Franc (CHF), the Australian dollar (AUD), the British pound (GBP), the New Zealand dollar (NZD) and the Canadian dollar (CAD).

If you are trading morning hours, you could pick the Japanese Yen (JPY) as your other major pair, because there is a crossover period with the Tokyo market between 8am and 9am. The European currencies are also good options for this time of day. Other good crosses for this time are the AUD/JPY, and the USD/JPY.

The major currency pairs have the most liquidity on the market, meaning that they almost always have readily available buyers and sellers. This reduces the risk of making losses, and maximises your opportunities for taking a profitable trade.

If you are trading evening hours when both the US and European sessions are open, then USD/EUR or USD/GBP pairs will be at the highest levels of trading volumes. Of course, time isn’t the only factor that influences the markets, but if you are a part time trader, it is one of the most important factors in your trading strategy.

Using price action strategies

If you have good technical skills, and are good at analysing charts and data, you may be able to incorporate a price action strategy into your trading. This involves dipping in and out of trading for brief frequent periods throughout the day, rather than a more prolonged session at the beginning or end of the day.

Obviously, not all full-time jobs will lend themselves to this approach, but if you have flexible working hours, then you might be able to find a way to make it work. The key is to follow your chosen technical chart closely, and make a series of trades based on the uptrend or downtrend of the price action indicators.

Often, a trade will be held for just a few minutes or even seconds, and the gains from each individual trade are usually small. However, because the process can be repeated quickly, the profits can build up in a short time frame.

This technique is sometimes referred to as scalping. It does have the potential to bring very lucrative rewards, but it is also a riskier strategy than a longer-term approach. If you are interested in short term trading, you must first be very clear about where your risk tolerance boundaries lie.

Set out from the beginning how much money you are willing to lose on each trade, and don’t be tempted to go over this, or take more leverage. You will also need to be able to control your emotions and take a tough pragmatic approach. This is important for any type of trading, but especially so when you are making a series of quick decisions under pressure.

Read up on trading psychology so that you are mentally prepared for the rough and tumble of trading. Even the most level headed of us are prone to feeling the primal human emotions of fear and greed at times, and they are amplified when we are trading.

This is because it is a natural human tendency to want to reap the biggest rewards for ourselves, and to fear making a loss. If these emotions get the better of us when we are trading, we could use too much leverage, hold on to winning positions for too long. On the other hand, we could become over-cautious, closing down trades prematurely.

The best way to avoid letting emotions interfere with your trading is to have clear exit and entry strategies, a stop-loss policy, and a good understanding of what influences the markets. Above all, you should have the discipline to stick to your strategy through thick and thin, and avoid chasing numerical goals in your trading.

Using long term strategies

Many part time traders prefer to take a more long-term approach. Forex trading is rarely a get-rich quick scheme, and it often works better when a trader pursues a steady disciplined approach, learning from mistakes and making small gains, at least for the first few months or even years.

Making longer term trades requires a good understanding of what moves the market, by analysing graphs and charts to identify trends and patterns, and also by following economic data releases relevant to your currency pairs. For example, the unemployment rates, interest rates, and inflation rates all have a strong pull on the movement of the markets.

Use an economic calendar to help you keep a track on the data releases on a daily basis. Also be aware of wider geopolitical events, such as election announcements, natural disasters, wars, pandemics, and so on, and these impact currency prices. Learn how to interpret them for each country or economy that you trade with.

Swing traders hold open positions for a few days or even weeks at a time, and then make their move off the back of market imbalances. However, be cautious of rushing with the crowd on the back of a major announcement. This is because the markets can be highly volatile at times like these, and they do not always move in predictable ways.

Beware of the whipsaw effect, when a sharp upward or downward trend is suddenly reversed, catching those who have rushed into making a move off guard. It is a much sounder strategy to let the markets settle down first, before making any decisions.

Swing trading requires good technical analysis and a sharp eye on the economic calendar. It can work very well for part time traders, because any fluctuations in price tend to have settled down by the end of the day, meaning that the opportunity for a fair gain is there.

If you don’t think that you have the time or commitment for short term or swing trading, then long term position trading may suit you best. This is where a position is held over months or even years, and relies on long term analysis of the currency fluctuations between your chosen pair.

Keep a trading journal

Good traders keep a record of all their movements, to allow them to keep track of their trades, but also to help identify which strategies and currency pairs are working best for them. This is especially important if you are a part time trader, as it will give you an insight into your performance in more detail and clarity than you would otherwise have.

If you have been trading morning hours without making much progress for example, you could change your trading hours to the evening to see if you can track any improvement.

Conclusion

Part time forex trading is accessible to everyone, with instant forex funding available at a low barrier to entry. The main factors to be aware of is how the time of day affects your currency pairs, and how your trading strategy can be shaped by your limited time frame.

Recent articles


Share: