Of course, there are many things that you will learn and be taught in forex colleges, but then there are some essential lessons or skills that you may not get (or learn) from forex schools.
This is not to downgrade the quality of learning ‘’forex‘’ through formal education, but rather, to lay emphasis on their limits on training.
As a trader, you have to understand that you don’t just need a skill, but effective skills that will yield you positive result (profit), which is the major reason why you entered into the forex business.
Here are Top 5 Effective Trading skills that you have to take very serious.
#1Growing the right trading mindset.
Building the right trading mindset is one of the most important factors you have to consider. If you dwell in the wrong mindset, for instance; thinking that forex -trading skills are inborn, or thinking of making a million dollar from a trade by letting your trade to run even when the market is against you, then you are preparing to embrace loss.
For you to become profitable trader, you have to recognize the fact that whenever the trade is against you, you have to close it and understand that the trade was unsuccessful; but traders with the mindset of a gambler will keep the trade running against them and at the same time hoping that the market will change.
If you really want to make a living out of trading you have to understand the fact that your mindset plays an important role when it comes to this business.
#2Understading the importance of patience.
In forex business, patience is an important virtue that you must possess as a trader. Apparently the word ‘’patience’’ is not new to us anymore but yet, we ignore its important.
Professional traders from study have made it clear, that this virtue induces endurance and thorough calculations of price movement before taking action.
Recently, studies has recorded that most traders are victims of losing while trading because they lack the virtue of patience. You just have to get the fact that patience is an important factor, when it comes to trading.
An analysis was carried out by a group of market expert. The experiment was to understand the effect of patience in currency trading.
They selected two day-traders, A and B and kept them in different trading rooms with their trading instruments.
They funded a fresh account with $200 each; in other word they made provisions of everything equally for them.
They were left for five hours, and then the result was taken. Trader A made a loss of $180; balance $20 while trader B made a gain of $100, balance $300.
According to the analysis of the result, it reported that trader A ‘’was very Hasty in making decision’’ while trader B ‘’was patience enough to understand the language of the market before making his moves’’.
‘’Sometimes things aren’t clear right away, that’s where you need to be patience and persevere and see where things lead’’- Mary Pierce.
#3 Understanding the importance of risk management.
Forex trading is a very volatile and risky business, which is why you need to adopt an effective risk management technique.
You must have noticed that every time you decide to trade, there are always chances that the market will go against you.
How do you go about it? — Develop a Risk management technique.
Risk management technique is a skill that will help you resolve or solve issues related to risks.
For example, you can manage your money by defining the amount of money you want to lose per trade i.e. if you have $200, you might decide to close your trade when you lose up to 5% of your equity (or when you lose up $10).
‘’Opportunity and risk comes in pair’’— Bangambiky Habyyarimana.
#4 Adopt the long term expectation.
Are you among those who believe In the hype that forex trading is a business that can make you a millionaire overnight?
Please erase such hype away from your head and wake up.
It take time to build your experience and money in forex trading , which is why you don’t have to rush when making your moves.
You have to plant the sense of long term expectation into your conscious mind; it’ll surely guide you in developing a good mindset towards expectations.
Also remember this, only if you are lucky will you be able to make big amount at once ; don’t fool yourself, such luck is very rear and does not apply to everybody.
N.B: Always follow the market rule. ’’it’s not about luck, it’s about knowing how it works’’
#5 Constructing an effective trading plan.
Most traders sees this as a big challenge to develop, but the simple truth is that It’s something you can develop by yourself.(Read more: How to effectively construct your own Trading plan).
An effective trading plan is just like a map guiding you as you trade; It brings to your awareness when and where to apply caution and also to take necessary actions.
Conclusion: As a trader, you just have to put in your best in following the forex rules. My advice is that you do your very best to Top-up your trading skill.
Trade with care!