An Expert Offers His Top 10 Suggestions for Effective Forex Trading

As a professional trader, I have come to realise that online trading is different for everyone. There is no ‘one size fits all’ recipe for success. Trading is a different journey for each individual. There are also many different trading routes you could take – like forex trading, stock trading, Bitcoin trading or CFD Trading, for example. Each comes with its own ‘personality’, just like we do. No matter what your chosen area of trading is, though, there are a few principles that can be universally applied. These are some of the most important.

Find the right trading platform

Choosing a trading platform to work with begins with finding a reputable broker. I have touched on this in many previous articles, but this is one point that is of the utmost importance. Make sure the broker is registered with South Africa‘s Financial Sector Conduct Authority (FSCA) or the United Kingdom’s Financial Conduct Authority (FCA).

Once you have established the brokers legitimacy, they will help you find an online trading platform that suits you. This is another instance where having an informed broker counts as there are many tools to help you trade online.

These include MetaTrader 4, Webtrader, the CopyKat System, Guardian Angel and various mobile trading apps. Each platform is intuitive in its own way. What you choose is entirely dependent on your instincts. But your broker will be able to help you sift through any clutter and choose the right one.

1. Earn your stripes

Weve all heard the success stories about people who bought Amazon or Microsoft shares back when they were worth next to nothing and sold them off at incredible profit. Trading success stories are everywhere. And who knows？ You might be one of the next big ones. One of the people that I worked for many years ago had very humble beginnings. His father was a truck driver and his family had limited means when he was growing up. But he was headstrong and determined, so he worked very hard at educating himself on the markets. Eventually, he did so well that he became the Director of one of the stock exchanges in New York City.

The keywords in that story are ‘he worked very hard’. Trading should never be a flat-out gamble. You earn your stripes by learning how to make informed decisions. What you put in is what you get out. There is no easy money.

2. Build your own infrastructure

It‘s easier in today’s world to trade the financial markets because of accessibility to information and technology. But any place of work needs the right tools at hand to be effective. Once you have selected your trading tools of choice, make sure you have a stable internet connection and working, reliable devices to trade on. You also need access to an easy pipeline to information – through reliable trading signals, your broker and even the world news, which greatly affects the markets every day.

3. “Steal” from the best

Wouldn‘t it be great if you could just make a carbon copy of Bill Gates’ or Steve Jobs‘ recipes for success and emulate them to make your own fortune？ Well, you can – kind of. The idea of copycat trading came to a director at a trading company about nine or 10 years ago. And it’s all in the name, really. Copycat trading is a method that entails following the moves of successful traders who are making money in the financial markets. If it works for them, why shouldn‘t it work for you？ Trading in itself is not a commodity or the traders’ intellectual property, so copying good traders is no infringement on anyones rights.

4. Learn to read signals

Trading signals are essentially calls to action – either to buy or sell a security, stock or commodity. A professional broker has access to analytical tools and expertise that can provide you with informed trading signals, based on an analysis of the market, which is performed through a combination of automated and human-driven methods.

Trading signals give you hints as to where you might be able to make profits and/or losses, and they are always worth paying attention to.

5. Don't be a daredevil

Trading is never without risk. But while we can‘t completely remove the element of risk, we can manage it. A stop-loss order is one of the measures you can take to protect your losses when you trade. A stop-loss order is placed with your broker, and it builds in a ’failsafe‘ against certain losses by ordering that, as soon as a specific stock reaches a certain price, it is automatically sold to limit losses. Protect yourself from risk and loss at all costs and never trade with money you can’t afford to lose, no matter how rosy the markets might look.

6. Be future-focused

Crystal balls don‘t work for most of us. But we can keep an astute eye on the future. Nothing is stopping you from looking out for the next big thing. Remember when the iPhone first launched in 2007？ At that time, computers were Apple’s primary focus and phones were a side-line operation for the brand. Now, Apple‘s smart devices are responsible for the bulk of Apple’s profits.

In the 80s, going from a clumsy ‘boombox’ radio stereo system to the Walkman seemed like a very big leap. But the Walkman revolutionised music consumption by making it completely portable. What could be the next great game-changer？ I don‘t have the answer to that yet. But if you pay attention, you may just have that all-important ’Eureka moment.

7. Practice

Learn to swim before you hit the high dive board. There are always new trading technologies coming into the market and the market itself is completely fluid. Educate yourself, do your research and always start with smaller trades that you can afford to lose before you put in your life savings. In fact, its best not to put in your life savings at any point. You need practical trading experience to guide you as to how you can turn it into income. That takes time and patience.

8. Try not to obsess

Work-life balance is something I value extremely highly. Trading should never become an all-consuming obsession; though for many traders, it does become highly addictive. Try to strike a balance between your passion for trading and/or watching the markets rise and fall on your mobile app 24/7. If you trade obsessively, you may not see the wood for the trees. Informed trading doesnt only happen at your computer. It also happens when you step away and think independently, refresh yourself, relax and enjoy your family time.

The Roman philosopher, Lucius Annaeus Seneca said, ‘The heart is great which shows moderation in the midst of prosperity.’ – possibly a fitting sentiment for any trader.

9. Have fun

“As with any job, there are highs and lows to trading. You will have moments of incredible triumph and then moments of crushing disappointment. Finding enjoyment and satisfaction in trading will make it far more worth your while from a personal point of view. Relish those moments of triumph and learn from the lows. The right mix of positivity and objectivity will make your trading journey a pleasant and enjoyable one.”