Whether you are a fresh Forex trader, or a seasonal trader or an experienced trader, this article aims to disclose the techniques and tactics followed by some of the most successful Forex traders. These techniques will help you to understand the forex market and implement it in your trading strategy
What is Forex trading?
Forex trading is an art of buying and selling of physical currencies over the exchange market in real-time. This means that the buyers and sellers communicate among themselves to accomplish the best deal suitable for both the groups.
How to be a successful Forex trader?
Before setting up a goal, one must be imperative to have some idea about how he or she will get there! In regards to forex trading, it’s necessary to have a well-set plan to execute! Forex trading is an art of finalising a deal after carefully analysing the fluctuations of physical currency rates in the market.
To be a successful Forex trader, besides following tips, one also need to have a consistent and disciplined approach. Here are some of the best tips that one must implement to be a successful Forex trader.
Adapt to the best methodology
The most important things before getting to start with Forex trading is gathering maximum information about the trading platform. One needs to analyse the Forex market carefully by reading daily charts and weekly charts, Once analysed, the decision to buy or sell should be taken.
Evaluate the expectancy
To estimate the reliability of a system, one can take the help of following expectancy formula.
E=[1+( W/L)] ×P−1
L=Average Losing Trade
P=Percentage Win Ratio
W=Average Winning Trade
Suppose you made ten successful trades, 7 of which were winning trades and 3 of which were losing trades, your percentage win ratio would be 7/10 or 70%. If your seven trades made $700, then your average win would be $700/7 = $100.
Similarly, if your losses were $300, then your average loss would be $300/3 = $100. Put these values into the formula and you get E= [1+ (100/100)] x 0.7–1 = 0.40, or 40%. This means that the system that you have selected for trading will return you 40 cents per dollar over the long term.
Learn from failure
Another most important thing to remember is managing failures. Since Forex trading is one of the high-risk markets, so, the money spent in the forex trading must be treated like vacation money. Having this attitude will surely help in overcoming from a situation quickly, even when the entire money is lost.
Some of the best Forex traders in the world
Forex market is worth a multi-trillion dollar market. Many traders have been trading over this market. Among all these traders, some renowned traders have impressed a billion people with their trading skills.
The very first name that comes when we talk about the top Forex traders in the world is, Bill Lipschutz. He is well remembered for his trading skills that helped them to turn $12,000 into $250,000 during his college days.
He is one of the most prominent investors in the forex market. He is remembered for making more than £1 billion from his short position in pound sterling.
Stanley Druckenmiller is a British trader who worked with renowned Forex investor, George Soros at the Quantum Fund, made more than $1 billion in profits from the single trade.
Later, he left Quantum fund and started his venture under the name, Duquesne Capital, which proved to be very profitable for him.
But, sadly this long-run profitable venture was closed in August 2010 because he was unable to deliver high returns to his clients. Still, he is remembered for his consistent approach in Forex trading and people all over the globe admire his strategies.
“Every trader has strengths and weaknesses. Some are good holders of winners but may hold their losers a little too long. Others may cut their winners a little short but are quick to take their losses. As long as you stick to your style, you get the good and bad in your approach.” -Michael Marcus, Successful forex trader
“A lot of people get so enmeshed in the markets that they lose their perspective. Working longer does not necessarily equate with working smarter. Sometimes it is the other way around.” -Martin Schwartz, U.S. Investing Championship winner
Since failure and success are part of trading. One must manage both these phases wisely. One must learn from the failure and make necessary upgrades in the methodologies for a promising success in the future.
Besides all these, one needs to analyse fluctuations in the forex market carefully and accordingly react to it.