Though good, dedicated trading mentors are hard to come by these days, there are plenty of other forex traders out there who are willing to share tips that could help improve your trading performance.
Let’s take a look at four classic nuggets that are easily taken for granted and why we should pay closer attention to them.
1. Adjust your expectations.
Some newbies have unrealistic expectations due to “get rich quick” schemes that brought their attention to forex trading in the first place.
They usually expect to get the same returns as the systems/methods have promised, sometimes without even knowing exactly how they’re supposed get those profits.
Consistently profitable traders know that making pips is more than just signing up for the newest EA or following the most profitable trader on mirror-trading websites.
It takes time, patience, and effort to develop a trading system that fits your personality and then develop the ability to adapt it to different trading environment.
2. Keep it simple.
With plenty of beginner-friendly forex education sites (none better than BabyPips.com’s School of Pipsology, of course), it’s easy to get excited over the myriad of indicators and trading systems that are presented to you.
For trading noobs, there’s comfort in knowing that fancy systems and indicators, the ones the “pros” seem to be using, are validating their first trade biases.
But unless you have had enough practice and/or have taken the time to test them, technical indicators can give you mixed signals and complicate your trading decisions. It’s a good idea to stick to price action first and then add indicators as you see fit.
3. Manage your risk.
It’s easy for trading noobs and pros alike be envious of those who gain 500+ pips per month, not caring that they probably got them by maximizing leverage, not putting stop losses, or not calculating position sizes.
But while these techniques could get you tons of pips, it could also blow a trading account in a heartbeat.
Remember that even a good trade idea could go south with poor risk or trade management. Managing risk is essential if you want to stay in the game long enough to acquire skills that would make you consistently profitable.
Let me repeat: MANAGING RISK IS IMPORTANT if you want to stay in the game long enough to be consistently profitable.
4. Stick to the plan.
Trading newbies are more prone to psychological stress of trading. Without trading confidence, it’s easier to deviate from a trading plan even if they promise good trading odds.
Consistency is key in this case. After all, what isn’t measured can’t be managed or improved on. Without consistency, several things can happen:
1. The trader won’t learn how to adapt the system to changing conditions.
2. The trader won’t develop the proper mindset (to handle losses, stay focused, prevent emotional reactions).
3. Without consistent execution, the trader skews the system/trading method’s expectancy, most likely for the worse.
Forex trading is no walk in the park but it also doesn’t have to be too complicated. Don’t hesitate to ask for help and learn from a community of traders so you won’t have to commit the mistakes of those who have been in your shoes before.