Forex stars follow different trading strategies — sadly, there are no universal recipes for success. Some experts swear by technical analysis, while others prefer fundamentals. Should you use leverage or stick to your own capital? Here, opinions also vary. Yet, some things are universal as they refer to psychology and objective market phenomena.
Discover forex trading secrets to achieve more in the largest financial market. It does not mean you should follow every single tip. Use forex trade secrets to create an ideal strategy. This analysis will guide planning in the right direction. First, did you know you could trade on Sundays, too?
1. Trade Forex on Sundays
The forex trading market is open five full days a week. It officially closes on Friday and reopens on Sunday evening. Some experts do not recommend you trade forex on weekends due to frequent gaps for currency pairs. Others find gap trading appealing. Here is how it works.
Discover the key trading secrets for Sunday sessions. The approach is based on the premise that Sunday’s opening price should return to Friday’s closing price (at 5 p.m. EST). First, as the market is less liquid, you would choose the most traded pairs (e.g., EUR/USD, GBP/USD, or USD/JPY).
Suppose you want to trade the US dollar against the Japanese yen, and the pair closed on Friday at 81.00. You can do forex trading on Sunday once the Tokyo session opens at 7 p.m. EST. Determine the acceptable gap based on your risk tolerance. A 1-% gap amounts to .80, so you can expect the price to gap down to 80.20 or up to 81.80. These are your entry points. One of the secrets of forex is that 81.00 is the profit target.
If the market gaps up upon opening, open a short position and close it once the target is hit. If it gaps down, open a long position, and close it at 81.00. These are some of the essential trading secrets. Your trade must be open until either condition is met:
- the gap is filled or
- the chart shows that the gap will continue widening.
2. Know Thyself to Achieve Profit
Self-awareness is one of the biggest secrets of forex. It means understanding your personality, strengths, weaknesses, and goals. This knowledge will help you make objective forex trading decisions and pick the most appropriate course of action.
No single method has guaranteed efficiency, so do not look for universal trading secrets in this regard. Each roadmap has its own benefits and drawbacks. Risk profiles also vary, so make sure the style fits your personality and targets.
There is a wide range of methodologies. For example, many traders swear by popular momentum strategies. Psychology is also essential, although its value may not be obvious.
Day traders and scalpers play it safe by finalizing all of their trades by the end of the day. Swing traders, on the other hand, may keep a position open for days or even weeks, as they are focused on long-term movements. As you can see, different forex trading styles include different approaches to overnight positions.
Thus, if you know you cannot sleep with open trades, the swing style is unsuitable. It will just cause anxiety and financial loss. Discover 7 more tips and trading secrets to hone your trading strategies.
3. Finding a Reliable Broker is Half the Battle
It could be one of the most significant decisions in your forex trading career. One can find dozens of companies that render similar services. There are no trading secrets here, just common sense.
It is crucial to find a broker that is licensed and authorized following the applicable laws. If you were searching for a car, would you just pop into the first dealership you see and pay for the first model that catches your eye? Do some research and compare different brokers to find the best options.
Once your shortlist is ready, focus on the platforms. For instance, scalpers and day traders should look for comprehensive tools facilitating their hectic analysis. Generally, the intermediary should suit your every need: from support to education to a physical location, if it matters.
Reputable brokers may also allow trading on forex without deposits. Read our article on zero-deposit offers. Trusted forex trading companies will also offer free and unlimited demo currency trading, so you can practice applying strategies in a simulator.
4. Choose a Method and Apply It
There are two ways to look at price dynamics. Nothing prevents you from using both methodologies for higher accuracy of prediction. However, you will have to choose either as your primary one anyway. Consistency is king and one of the vital forex trading secrets:
- In technical analysis, nothing is random. Its followers base their trading strategies on the premise that the market sees recurring patterns. A trend is viewed as a friend. If the market moves in one direction today, it is likely to continue moving in the same direction tomorrow. Traders who follow trends use different types of charts and time frames to zoom in on specific trajectories. They need dozens of indicators and levels to achieve their goal.
- Fundamental traders have their own forex tricks. They believe that market movements are connected to financial news coming from a particular country. They do not consider trends on price charts as a sign of likely move. Instead, their priority in forex trading is media information.
- Confidence and mental resilience are part of the forex secret strategy, too. They underlie lasting success, as confident traders stick to their strategies despite minor losses. They can keep their emotions under control. Insecurity is bound to cause failure.
5. Keep Charts in Sync
Both technical and fundamental traders spend considerable amounts of time examining charts. Despite their diversity, most of these visuals depict the same thing with different visual effects. On the other hand, some forex trading charts are very specific.
One of the biggest forex trading secrets is related to the available time frames. For instance, if you spot what you think is a buying opportunity on a weekly chart, you should look for confirmation on another chart with a shorter time frame — hourly or daily:
- Both should be pointing in the same direction.
- If these are in disagreement, delay forex trading until they are in sync.
- The longer time frame provides direction analysis, while the shorter one shows whether to enter or exit the market.
6. Learn to Calculate Expectancy
Forex trade secrets will also help you review performance. Look at how much you gained and lost over a certain period regularly. Refer back to your history and see how many winning trades versus losing trades you have had. Once this is done, identify the amount of the former versus the latter. It is a good idea to evaluate the last 10 trades. This advice is also suitable for those without currency trading history:
- Consider all the instances in which their trading system indicated a good time for a short or a long position.
- See if you would have profited if you had followed the cue.
- Repeat this 10 times and do this in writing. This will show whether you are on the right track.
7. Manage Money Properly
The right mindset is one of the primary trading secrets. Individual investors need to learn to accept small losses, as these are inevitable. In this regard, forex may be viewed as your vacation money. When it is gone, you gain some useful experience.
Do not assume forex trading experts never fail — the risk of losing money is always present. No matter how polished your skills are, prices may always move against you. Mistakes should help you learn and improve your trading strategies to achieve better results.
Leverage is also crucial. Many professionals agree it is best to use up to 2% leverage. Thus, if you make a trade worth $10,000, use just $200 from your broker. Leverage is double-edged. It maximizes losses as well as profits.
8. Build Your Confidence
Confidence and mental resilience are trading secrets, too. They underlie lasting success, as confident traders stick to their strategies despite minor losses. They can keep their emotions under control. Insecurity is bound to cause failure.
9. Record Everything
Writing everything down is the best way to stay objective about your decision making. Yes, keeping a diary is also one of the most powerful secrets of forex trading. When considering a position, create a chart, listing reasons for opening it, both technical and fundamental.
Why do you think it will be a good trade? Then, list any reasons against the same move. Note down your entry and exit points, emotional state, and level of optimism. These forex trading secrets will help you work mindfully.
The Bottom Line
Forex is an art that requires discipline, practice, and talent. There are quite a few trading secrets helping beginners shape consistent and viable strategies. Of course, you can never eliminate risk. Learn to calculate it. Apply our forex trading secrets to become a more objective trader. Improve your performance in the largest financial market worldwide. The more of these tips you follow, the faster you will achieve success.