Currency trade online is one way to achieve riches. But many new entrants into the currency markets fall flat on their face, only to get up and then repeat the same mistakes, again and again. Becoming a profitable and reliable trader is actually not that difficult a goal to attain but it requires good self-discipline so that you can learn from your mistakes and never repeat them again. Here are 5 tips to help you profit from currency trade online and become a full-time pro trader.
Tip 1 – Logic Versus Emotions
I mention this tip first because you will see this theme in the world of currencies often.
A few traders claim to trade on “gut” or “instinct”. What is actually happening is that they are weighing up the options in their brain before making a trading decision.
The brain is quite good at approximating and usually comes out with the right answer. It's a bit like adding up your groceries quickly – you can often get quite close but rarely will you get the total exact if you only have a few seconds.
With currency trading, the difference between making a profit and making a loss is on an extremely narrow knife edge. Gut feeling simply won't do and you will end up losing money if you follow that strategy.
Instead, you need to focus on logic. Logic is always the correct way to make any decision. Logic gives you a reason to make a trade. Never, never make a trade unless you have a valid reason. A common mistake is for traders to trade because they are bored. This usually results in quick losses.
Tip 2 – Learn As Much As Possible
The good thing about the world of currency trade online is that there are vast amounts of educational material available such as books, videos and even one to one tutoring.
You can read up on day trading, swing trading, long time horizon trading, trading the majors, trading the minors, trading on news and much more.
I advise you to learn as much as possible about the world of currency trading. The more you know then the better a trader you will become.
There is a lot of free information out there but there is also a lot of paid information too. Do not be afraid to invest in your education. What you learn you will easily earn back many times over in the form of profitable trades.
Tip 3 – Start Trading
Finally, you must start trading for real money. Of course, there is nothing to stop you using a demo account just to get comfortable with the trading software that you are using.
But the moment you start to trade with real money, the game changes. Your emotions try to go into overdrive and affect the way that you trade.
So how can you learn about what it is like to trade with your own money without actually risking any of it? Unfortunately, that is an impossibility but there is a good solution.
Most brokers allow you to start off with trading in very low size. Some even offer “micro lots”. This is where you can trade as low as a penny a pip. This means that even if the market moves against you significantly e.g. 100 pips, then the most that you can lose is a buck. That's right, one measly buck!
But the advantage of trading at even a penny a pip is that you will be trading real money. You will feel what it is like to go from fake money to real money. If you've never tried this before then it may feel quite profound.
Keep trading low until you are happy to increase your trade size. When you do increase, do it in small increments and allow yourself time to adjust.