I bet you have heard of overnight success stories in forex. About how a newbie with only $100 invested, managed to make $1000 in a single day.
Those kind of scenarios exists.
But these situations are the exception rather than the rule. Most professional forex traders that I know grow their money over time.
No, they won’t make $1000 in a single day with only $100 invested. Instead, they grow that initial capital of $100 to become $1000 within a span of say, 3 months, which is not bad actually.
To become successful in forex trading, you need to adhere to a set of guiding principles, implement a practical money management strategy, and learn how to analyze the forex market to identify high probability trade setups to determine the direction of market accurately.
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Forex Trading Guiding Principles that can Lead You To Become Successful (And Wealthy!)
1. Start small then scale.
New forex traders tend to think that to make good money in forex, they need to invest a large amount. That’s not true. You need to start small and grow your equity over time. This involves a lot of patience because small wins don’t equal big money (yet!).
The key here is to scale. Reinvest your profits into your trading equity to generate larger profits. Over time, the amount of profit that you will make per trade will be large enough for you to quit your day job 🙂
2. Keep a Trading Journal
I’ve never met a successful forex trader who doesn’t have a trading journal. Writing down your plans, ideas, strategy, etc on a journal is an extremely important activity. Keeping a journal helps you to maintain discipline while trading. It also helps you to NOT lose focus on the goals that you have set.
3. Have a Trading Plan in place.
The No #1 mistake a trader can make is to NOT have a plan on how to make money from forex. Forex trading is extremely risky and the odds are stacked up against you the moment you enter the market. So you need to have a plan on how to minimize your risk, preserve your equity and maximize profits. You need to set weekly goals in the form of amounts of pips gained and also in dollars.
Forex is just like setting up a business. 9 out 10 fail. Failure is mostly due to lack of planning and preparation. If you are prepared, properly trained, and have a well thought out plan in place, your odds to succeed in forex is much higher.
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4. Take small risk, make big money!
The problem with a lot of traders is that they take big risk while trading but expect only small returns. For example, if you only have $100 to trade, don’t risk your entire portfolio in one single trade! Bet small amounts. But make sure that you make 3 to 10 times more than the amount that you risk. Over time, your trading equity will increase and the amount of profit that you will likely generate will also be significantly higher.
5. Observe the market 90% of the time, trade only 10%
Trading involves a lot of waiting..and waiting. Until the “perfect” setup appears. Until then, don’t trade!
Forex trading involves skills, patience and some luck. So all the best and may the odds be ever in your favor!