What Is Your Currency Trading Style?
If you want to succeed in currency trading, you need to identify your
trading style and stick to it. Every trader has his own distinctive
style that determines how he conducts his trades. Once you understand
what your particular style is, you can more easily create a
risk-management strategy. Here is a short overview of some of the
different trading styles.
1. Scalping. This is one of the most basic trading
styles, in which the trader makes a series of quick trades during the
trading day in the hope of capturing gains from quick price
fluctuations. However, it is also a very risky strategy and if you make a
single losing trade you can wipe out your trading account unless you
implement strict loss limit measures.
2. Trend trading. This type of trader is more
concerned with looking for trends in price movements, which will
determine his entry and exit points. For example, the trader might
believe that price of the EUR/USD currency pair will appreciate based on
his analysis. So he will wait until the trend becomes apparent before
he opens a position. One way you can do this is by setting a Limit order
for the level that you believe indicates the start of the trend, i.e.
if the EUR/USD exchange rate is 1.563, you might set a Limit order at
1.570 since you believe it indicates that it is the start of the upward
3. Reversal trading and continuation trading.
Reversal trading is the opposite of trend trading since the trader
actually makes his trading decision based on the belief that a trend
will eventually reverse itself. A continuation trader, on the other
hand, assumes that the present trend will continue and will make trades
accordingly. For example, a continuation trader might believe that the
current upward trend will continue and buy lots at the current price and
then set a Stop order at a certain level above this, in order to
capture gains. A reversal trader would do the opposite: he would buy at
the present price and then set his stop loss at a lower level.
4. Technical trading. In this type of trading style, the trader analyzes price charts in order to identify patterns that could indicate good entry points for a trade. Trading platforms provide charting software that will allow you to create charts based on real-time and historical price data that you can use to search for trends.
Habits You Need to Develop to Be Successful in the World of Trading
Human beings are creatures of habit - foreign exchange traders are no
exception to this. Therefore, if you wish to become successful in the
world of trading, there is a need for you to learn, acquire, practice,
and stick to the habits that are associated to success.In this article, there are seven habits discussed. These are all based
on actual best practices of the best traders on the planet.
Habit #1: Maintain a sense of discipline
Once you have selected the type of trading system that you are
comfortable with, make sure to stick to it and live by its rules. After
all, you have chosen it on the basis that it fits well with your
circumstances and character. By maintaining a sense of discipline, you
are likely to deliver the results that are expected.
Habit #2: Empower yourself and never be discouraged
Win some, lose some. But whenever you lose, make sure that you don't
stop there. By facing the consequences of your actions and decisions,
you will empower yourself and you can easily vow for the empowerment of
oneself. This actually implies that you are willing to take the
necessary actions so that things can improve. Meanwhile, in order to be
truly successful, you need to accept the fact that there's no space for
blame in the world of trading.
Habit #3: Make sure to think of the probabilities
The most important things in life come in the form of probabilities, not
certainties. Among these are getting the job you applied for, getting a
good life partner, and acquiring the best place of abode. The same is
true with investment and trading. By thinking that everything is just a
mere possibility, you won't be frustrated if you find out that you got
it wrong and you won't feel very high for getting it right.
Habit #4: Keep that position for survival
A successful trader always keeps sufficient capital reserves. Without
it, you are always playing a do-or-die game. If possible, play on the
defense. You do not really have to be on a "go and get it" mode all the
Habit #5: Avoid trading emotionally
Being high on emotions can definitely hurt your chances of winning it
big. Usually, emotions pave the way for sabotage or disappointment.
Therefore, if you wish to be successful in your life as a trader, try to
be as emotionally neutral as possible.
Habit #6: Keep it as real as possible
Note that trading is a very long game that you have to keep up with. It
is a game that requires the capability to maintain a certain level of
capital reserves without being stirred and trampled emotionally. When
you are stable emotionally and financially, you can be considered to be
in a sustainable position. Also, if there are people who claim that
their system is 100 percent fail-proof, you have to question it and do
not be carried away. When tips come out, be wary and think twice before
Habit #7: Have a life outside of trading
Remember that trading is not everything. Live your life to the fullest. Enjoy trading, but make sure that you enjoy your life as well. That way, you won't get tired of trading easily.