Learning something new from scratch is a very challenging task. Those who are new to the trading profession often think this market is manipulated. The Forex market is the largest financial market in the world and no one has the potential to manipulate the price feed. Even the mighty President of the United States can’t alter the price of certain assets. By now it should be clear to you, that the Forex market is a very transparent market which is free from external manipulations.
So, how do you become better at trading? You need to follow five simple steps to become better at trading.
Learn to trade the demo market
Demo trading accounts offers the perfect environment to learn new things without risking any real money. You might be a new trader but this doesn’t mean you can’t learn new things without losing any money. The rookie traders often think demo trading doesn’t offer a valid platform to learn the details of this market. This is wrong. The majority of the professional traders in Singapore have mastered the art of trading by using the demo account. Learn to take advantage of a demo account and you will succeed in real life.
Avoid using the indicators
Indicators act as trade filter tools. Instead of relying on the indicators reading you have to use other technical parameters to become better at trading. There are two basic types of indicator. The leading indicators always generate early signals and the lagging indicator generates late signals. Though new traders often use both types of indicators in one chart and lose a big portion of their investment. You need to use one specific type of indicator to filter out the best trades. Though indicators can help you to find good trades the pro traders in the exchange traded funds industry prefers to avoid the indicators. They rely on simple support and resistance level trading strategy.
Use of multiple time frame analysis
Some of you might be wondering, how to find the best possible trade setups without using the indicators. This is where the term multiple time frames come into action. Analyze three different time frame so that you can assess the quality of the trade setups. Valid trade setups will generate the same signal in the three or more different time frame. If you find any deviations, the chances are very high that you will lose money on that particular trade setups. Learning multiple time frame analysis might seem a little complex but if you give priority to the higher time frame data it won’t take much time to develop these skills.
Limit your risk exposure
Never think you can win big trades by taking a huge risk in each trade. Trading is all about finding the perfect trades with managed risk. You might make some huge profit from this market based on high-risk trading but in the long run, this will ruin your trading career. Try to limit your risk exposure by following the 1% rule of risk management. Even after following the 1% rule of money management, some people manage to blow up the trading account. You have to understand the simple fact, you can’t lose than 1% in one day. Never open more than 1 trade since it increases the cumulative risk exposure in trading. If you lose a trade, take the day off.
Develop your mentality
Managing human emotions in the trading profession is a very complex task. The new traders are always making mistakes and trying to recover the loss with a big risk. This is one of the key reasons for why the novice traders are losing money. If you intend to make a profit, you must embrace the losing trades. Find 1:3+ risk-reward ratio trade setups so that you can easily cover up the loss.