Need A Performance Boost In Your Forex Trading – Try These 4 Tips!

Every person who steps into the forex market wants to become profitable and successful as a trader. If you are also one of these people, then you will be working towards your personal trading goals with a plan for the future. All traders are doing their best to get the desired results in the end but just having a solid strategy does not guarantee profits. The success rate of a strategy heavily depends on your skills and performance as an independent trader.  Mastering market analysis and being able to make informed trading decisions increases your chances of success. Today, I will be sharing the top 4 tips that all traders can follow to improve their performance in the global currency market. 

1. Choosing a Trading Style that Aligns with Your Goals

Before choosing a forex strategy, you need to be sure about your trading goals and set realistic expectations with attainable targets in mind. The forex market treats all traders equally but the trading experience is different for everyone and it generates different results. You don’t really have any kind of control over the market or price movements but the trading approach that you follow will decide the outcome or end results. This approach is what we refer to as trading style and you need to ensure that you select the most suitable trading style for yourself. 

One thing that you need to consider while choosing your trading style is the goals that you want to achieve as a trader. If you want to make quick profits on a regular basis, you might find scalping or day trading to be the most rewarding trading styles. But if you are not in a hurry to make profits, then swing trading would be a better option as you get greater profit potential by holding the trade for a longer duration. Trading with longer timeframes is easier for a beginner and it can surely enhance your performance as a trader. 

The timeframe you select for trading actually decides the maximum number of pips that you can gain from a single trade as the price only moves by a few pips on a minute chart and hourly chart. The currency price movements are measured in pips and the number of pips by which the price of a currency pair moves, is used to calculate the risk as well as potential rewards for the trade. A pip value calculator can convert the price change of the currency pair from pips to the base currency of your trading account and this information can be used for planning the trades with precision. 

If a trader is not really interested in making small profits and wants to make a significant amount of money by holding a position for a longer duration, then position trading would be an ideal trading style as you won’t be bothered by the short-term volatility while trading with longer timeframes. Basically, picking a suitable trading style is similar to selecting a business strategy. You will have to consider your goals as well as the time period for which you can keep a position open while deciding the trading style so that it complements your trading personality.     

2. Selecting a Reliable Broker and Trading Platform 

Did you know that the performance of your trading system or strategy also depends on the trading conditions and technological infrastructure that your broker is providing? Hence, you need to choose a reliable broker offering favourable trading conditions and a fully functional trading platform. The most preferred trading platforms among forex traders are MT4 and MT5 as they are loaded with all the tools and features that you would need for carrying out the trading process with ease. 

The profit potential of your strategy is impacted by the speed with which your orders are executed as any kind of slippage or price re-quote can make the trade go wrong even if your analysis was right. The trading environment that you get with the broker should be secure as you will be trusting them with your hard-earned money. When it comes to trading conditions, the cost of trading and available leverage are the most important aspects along with liquidity. 

The broker or trading platform should also be providing useful trading tools like currency calculators as such tools are important for avoiding manual errors in calculations. A currency calculator can provide you with real-time exchange rates of any currency. For example, if you are trading USD/JPY and you want to know the price of 100 Yen in USD, then you can use this calculator to find the exchange rate to plan your trades better. 

I will suggest you trade with regulated brokers as they are constantly monitored by the regulatory authorities and thus they are more transparent in pricing. The payment processing systems and customer support teams of regulated brokers and trading platforms are always up to the standard. This makes the trading process easier and you get a hassle-free trading experience.   

3. Be Consistent and Stick to your Strategy 

One major mistake that many traders make in the forex market is that they are unable to stick with their strategy and because of this they fail to become consistent. Consistency comes when you follow a professional and disciplined trading approach without breaking any rules that you have set for yourself. Prioritising risk management is very important for becoming consistently profitable. Because wins and losses are part of the trading process but being able to limit the losses makes you a successful trader in the long run. 

Your trading plan or strategy needs to be clear enough as a vague strategy can stop you from becoming consistent as a trader. Most of the traders who deviate from their strategy don’t even realise it as they are not thinking rationally while making trading decisions. They just want to catch all the opportunities that they come across and don’t even take the time to check if it goes in line with their trading plan or not. They may not have many rules to keep them on track or just break the rules due to greed or fear of losing an opportunity. 

But such an approach will never bring good results as emotional trading is the worst thing a trader can do in the forex market. The key trait of a successful trader is the ability to apply logic in any situation and make calculated moves. The amount of risk you can take for a trade needs to be decided in advance and you should be able to calculate the end result of the trade prior to entering it. Trading platforms and forex brokers are providing many tools like online trading calculators for free so that we get instant results for all trade-related calculations and that helps us to make quick trading decisions. 

4. Find Optimal Entry and Exit Points

The fourth and last tip that I want to give for improving your trading performance is pretty basic but very essential. The trading results you get in the end are based on the prices at which you open and close a trade. The price movements that happen while the trade is running are what allow you to make a profit in the end. If these price fluctuations are not in your favour, then you will be encountering a loss. In any situation, you must be able to find optimal entry and exit points for the trade. 

If you are winning a trade, then your exit price must be good enough to maximise the gains and if you end up losing the trade, the exit price should be close to the entry price for minimising the loss. In other words, you should have an exit strategy ready for any trade scenario. In order to find the most favourable points for entering a trade, you need to keep monitoring the price charts and interpret the market situation based on the patterns that you see there. 

The same has to be done to find the best prices for exit. You need to place a stop loss and take a profit order for each trade as that can make the trading process less stressful. Because you won’t have to monitor your positions all along and can take breaks without worrying about not being able to exit the trade at the right time. You can also place a trailing stop loss if you want to follow a flexible approach instead of a stagnant stop loss. 

Wrap Up

So, these are the top 4 tips that all traders should follow for enhancing their performance in the forex market. Besides these tips, I will also encourage you to keep exploring and experimenting with various techniques as you may never know which method can turn out to be a turning point in your trading career. You need to keep learning and practising to polish your skills and boost your confidence as a trader. Trading psychology is also an essential component for profitability and traders should take their time to study every topic that is connected with the forex market and trading success.