If you want to learn, learn from the best. That’s a philosophy that you should adopt for everything in your life, especially forex trading. Some of the best traders out there have wisdom they’re just giving away for free.
So, if you want to make money trading forex for a living, you should listen to them. Here are just a few pieces of advice from the best in the forex game:
Manage Risk
As you may have heard before, managing risk and minimizing losses is half the game in forex. If you want to make a career out of forex trading, you’re going to have to do that. Vladimir Ribakov, owner and chief trader at Traders Academy, has this to say about it: “Never trade money that you can’t afford to lose because then the pressure of losing it won’t allow you to have the patience to profit.” I couldn’t have put it better myself.
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Follow a Trading Strategy
Mario Singh is known as one of the best forex traders in Asia. He has authored three books on the subject and is very well respected. So when he says that following a strategy is part of how to make money day trading, you should listen.
He recommends looking at the basic ones floating around and picking one. Then, he recommends testing it through and through and adding your own flair to it. Soon enough, you’ll be able to formulate a strategy that is truly your own. It’ll make trading a lot easier and you’ll learn a lot through the process of trading forex for a living.
Your Forex Trading Plan TrainingDiscipline is the Key
Jamie Saettele is a seasoned trader with over 14 years of experience under his belt. His advice is to exercise discipline. That’s how to make money day trading in his book. His advice is pretty simple, but pretty useful too. Many of us don’t put in the work required. That is the basis of what’s needed to win the forex game. If you can’t do that, you might as well hang it up.
Keep a Trading Journal
It’s important to keep track of your mistakes. That’s why Yohay Elam, Chief Editor and Founder of Forex Crunch, recommends keeping a trade journal. This allows every trader to see if the trades worked out as planned or if luck interfered. He recommends that you log in all of the significant developments that took place during your trades. With that recorded, you’ll learn to look at similar scenarios in the future and avoid or double down on them.
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Study Price Action
This advice comes to you from the forex discussion forum, 50Pips. It says that studying price action is necessary. It entails studying the characteristics of a symbol and its price movements. This allows traders to assess the market’s trajectory and make more intuitive decisions than if they didn’t study price action. Hence, when traders don’t rely on just technical factors, they need to have studied price action. This is pretty common advice, but it’s also pretty useful.
Accept Losses and Be Patient
Joel Kruger has about 15 years of experience trading forex for a living under his belt. His invaluable advice is to play the long game and learn to accept losses. According to him, taking losses is part of the game, so accept that you can be wrong. Being a successful trader is more about minimizing losses and learning from your mistakes than anything else. According to Joel, if you don’t embrace that, “you will never be a successful trader.”
Find a Trading Buddy
Kathy Lien has been trading forex for over 13 years and has written many books on currency trading. She recommends getting a forex trading buddy to help you on the way to financial greatness. She says that trading with her own business partner helps her bounce ideas off them. It also helps to swap ideas every once in a while to see what sticks. Your partner can help poke holes in your theory and also identify which trades are the best from their perspective. Also, the finance game is lonely and cold, sometimes you need someone else’s company.
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Keep an Eye on Experienced Traders
You have to learn from the best if you want to be the best. Navin Prithyani has been trading forex for a living for over a decade and believes that the big players are your teachers. Veteran traders don’t make the traditional plays all the time. They know how to wait, be patient and go in for the kill. If the market is buying up a lot of shares of one stock and your forex guru isn’t, hold that trade. Find out why they could possibly not be buying up those shares. Perhaps there’s something everyone else isn’t seeing, but they are.
Economic Indicators that Commonly Affect Forex Trading
What is forex trading all about? Is it about the stability of different currencies or the relationship between currency pairs? Is it about picking up every single morsel of news to see how it affects the markets? Well, that may be up for debate, but the bottom line is that there are many different factors that affect forex trading. In fact, many of them may not be taught to you when you’re studying forex trading basics. In this blog, we uncover seven economic indicators that can impact the forex market:
1. GDP
It is obvious that the bedrock of every economy is its Gross Domestic Product (GDP). In layman’s terms, GDP identifies how much a country produces in all its sectors. This also measures how healthy an economy is.
However, since it takes into account so many different factors, the report almost always comes out as expected. However, if the quarterly GDP report differs from expectations, the forex market may witness some change. In fact, GDP reports can often very deeply affect forex markets. When you’re asked “what is forex trading all about?”, the GDP is not an incorrect response.
2. Non-farm Payrolls
The release of non-farm payrolls can have a sharp effect on the forex markets. It’s almost instant in some respects. It moves so far in one minute that you’d be surprised it was because of one report. The reason for this huge effect is that the business cycle and unemployment cycle are connected. Trading forex for a living is better than non-farm payrolls!
A close correlation between the two can be used as an indicator of the GDP. However, GDP reports are quarterly, and non-farm payrolls are monthly. Hence, the forex market takes the latter as its indicator for where the GDP is headed.
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3. Unemployment
Unemployment rates are tied to the GDP, consumer sentiment and the overall state of the economy. Hence, instability in the employment rate can deeply affect the state of forex markets.
High unemployment means a weak labor force, which, in turn, means weak stock markets and weak forex markets. If someone asks “what is forex trading all about”, you can point to the unemployment rate as a universal indicator.
4. Federal Funds Rate
Federal interest rates are determined by the Federal Open Markets Committee, which meets eight times a year. The outcomes of these meetings can affect the forex market deeply. Any alterations can make a difference to the US dollar.
5. Consumer Confidence Index + the University of Michigan Index of Consumer Sentiment
The two most well-known and followed consumer confidence indexes play a crucial part in the forex market. They’re followed by economics and forex traders. While they may not teach you about these in forex trading basics, you should have these in your radar.
The two indexes take into account consumers’ feelings about the economy based on factors like employment, etc. The UoM Consumer Sentiment Report comes out twice a month with the CCI comes out once. It measures how inclined consumers are toward spending on the economy. Hence, market sentiment here decides how much consumers will spend, indirectly influencing currencies. Forex traders can use this to their advantage.
6. Consumer Price Index
The Consumer Price Index (CPI) measures the stability of different prices for goods and services. Hence, it also tracks the effect of inflation. When within target levels, currencies tend to be stable.
Anything outside those limits tends to impact currency value. Since inflation directly impacts monetary policy, CPI reports have a direct effect on the prices in the stock, forex and bond markets.
7. Industrial Production Index
The index measures the level of output in the US. This is in terms of material produced rather than the amount of dollars it is worth. The index takes into account three broad areas: manufacturing, gas and electric utilities and mining. The report, combined by the Federal Reserve, is published in the middle of each month. It is partly based on surveys and partly on hard production data from trade organizations.
The industrial sector plays a significant role in the value of a currency. Along with the construction sector, it holds the majority of changes in the US output in the business cycle. Hence, any major changes here can affect the forex market. When you ask “what is forex trading all about?”, this is what it’s all about.
Looking at these indicators, you’ll be able to guess or infer where the forex market is heading.