Its common knowledge that trading is a numbers game. The more you are able to pull the odds to your favour the more likely you are to be successful as a retail forex trader, it is not necessarily that the more information you have the more successful you can be as a trader. Being able to maximumly utilize a piece of information can bring drastic changes to your trading. Below are a few pointers that can jump-start your trading journey, they can also reduce the learning curve drastically.
Always trade with a trading plan, now what exactly is a trading plan? in its simplest form, it is a pre-determined set of rules that dictate how you are supposed to trade. A trading plan takes the emotions out of trading it enables a more technical approach to trading. The markets will always pay you for your discipline.
Tools such as correlation are an important consideration for trading purposes, you should use the other correlations as a tool of confirmation for example if you are trading the GBPUSD, compare it with, EURUSD (positive correlation) once you are done with your analysis on the earlier pair you can confirm the general direction with the later.
The COT report means the commitment of trader report, it shows the number of buys and sells in the whole market, it is an important report that helps one to see how much a trend will go or the extremes of buys/Sells, further what traders are having a higher hand in the demand and supply of a given pair.
Risk reward ratio is an important factor that cannot be overlooked, of course, it’s notably that risk-reward is included in the trading plan and strategies. However, you should add a minimum level of risk-reward of at least 1:3 this has odds of pushing trades probabilities high for example, out of 10 trades if you win five and lose five, you would still produce a return on your trading.
Regardless of the kind of trader you are understanding fundamentals is key to improving your odds especially if you are a technical based trader, it is known that fundamentals (news) fuel the market and in this way may change the general trends or force sharp reversals, you should keep abreast with the high impact. This, of course, is out of the norm since we know the three premises of technical analysis (one of them) being, that price discounts on every factor do not always apply all the time in the market, especially with some specific, high impact news.
Journaling is an impact aspect of any serious trader looking to be invested long term in the forex trading business, ALL your trades should be recorded accurately taking into consideration the before, during and the aftermath of trades entered. Journal in the long run aids in understanding your trading personality and the pairs that work and partly deal with trading psychology, this is an important arsenal to add to your trading. It will also assist in identifying real and false signals before entering the trade.
In conclusion following the above among other pointers will be a definite plus in your trading journey.
NAIROBI SCHOOL OF FOREX