Being profitable in FX trading on the forex market is harder than you may think. There are many ways that you could be limiting your profitability and many secrets that you should know about. It is important that you know what separates the traders who make a profit from the ones that do not. You should also look at the secrets to profitable FX trading.
Why Some Traders Make a Profit
Many unprofitable traders feel that only traders with a lot of experience or knowledge about the workings of the forex market profit. This is not actually true as many of these people are only breaking even. The true secret to profitability on the forex market is a combination of points from consistency to having the right tools. However, this all needs to be combined with a knowledge of who you are and how your personality can affect your trading.
Your Personality and FX Trading
Your personality can have a greater impact on your trading than you think. If you have a personality that is more do than think you will open bad traders because you are not taking the time to consider everything. Of course, great thinkers tend to spend more time thinking than doing and that is incorrect as well.
The key to limiting your personality’s impact on your trading is identifying what your personality it. Once you have done this you should consider what your personality weak points are and compensate for them in your trading system.
Understanding When to Trade
One of the points that separate the profitable traders from everyone else is that they know when to trade. There are 4 market sessions in a typical forex day and three overlapping times. You need to know when the currency pairs you are trading will be most liquid and work with your trading system. This takes some time to identify and you need to consider whether the market is right for trading every day before you start. If the market does not meet the conditions you need then you should hold off on trading.
Using the Right System
All profitable traders will use a trading system that they have tested extensively. Many traders feel that testing a system for a week is enough, but this is not true. To properly test the system you should trade with it for a month. This allows you to go through all the ups and downs of the market that you will face. If the system works for the month on a demo account it is likely to work on the live account.
Of course, when you are testing your system you have to keep to it. If you divert from the system you should consider why this was done. If there is a problem in the system the month should start again. Any time you have to make a change to your system that affects our trading you need to start the test month again. Once you have traded using the system to the letter for a full month you can try it on a live account. It is important to note that there are certain differences between a demo account and a live account that you also have to take into account. The most important is order execution times which are longer on the live account.