6 essential skills needed to become a profitable Forex trader

People are always trying their best to make their life better. They work all day long just to earn a decent amount of money. Even if you have multiple jobs it‘s really hard to secure a decent income. The ongoing economic crisis has led to the belief that business is the best way to secure financial freedom. However, starting a new business and competing against the major players in the industry and market requires hard cash and expertise. Unless you have a very smart idea, chances are high that you won’t be able to succeed in that particular business. So, what about the Forex trading profession？ This is something that you can rely on. If you want to make a big profit from this market, you must focus on the trading business. Trading can show you the path to financial freedom.

Becoming a profitable trader is not as easy as it seems. It requires hard work, patience, and diligence to master the art of trading. In this article, we will discuss the top 6 skills a trader must possess in order to become a profitable trader. Lets start exploring the details.

1. Ability to endure the loss

The trader must have a unique ability to endure loss. You might think the Forex market is one of the easiest ways to earn money. But do you think you can avoid losing trades and earn a huge profit？ No trader in the world can say they are winning all the trades without facing losing trades. If you look at a skilled traders portfolio, you can expect to make a big profit without having any issues. Think about your long term goals, so that you can easily develop your skills. When you start dealing with the long term trading method, you will slowly learn to endure the loss. Enduring loss is not too hard once you accept the fact that losing trades are just a part of this profession. You have to admit the losses regularly without getting emotionally frustrated. If you can do so, you can succeed in the long run.

Losing trades should be considered as a part of the trading business. You should never feel frustrated after losing a few trades. Stick to your trading strategy and try to recover the loss by executing quality trades. At times, traders might become emotional after having such losses but this is when they should take a small break. You need to understand the nature of human beings before starting to trade the real market. Naïve traders dont think about the losing trades. They are so biased in favor of the profit factors that they become restless after closing a trade with a small loss. So, make sure you learn to control your emotions or else it will be tough to develop your skills as a currency trader.

2. Trading with a balanced strategy

Executing random trades in the Forex market is not going to work. If you look at the skilled traders at Saxo, you will realize why they can make such a big profit even after closing the trades with a big loss. Try to develop a unique strategy so that you can easily find the trades in any market condition. The trading strategy should be based on a conservative method or else it will be tough to make a profit. An aggressive trading strategy always results in a big loss and it becomes nearly impossible for retail traders to accept the loss. Trading with aggression is one of the most common reasons for blowing up the trading account. Learn to play it safe so that you dont have to think about the aggressive method to recover a big portion of your trading capital.

So, how do we create a balanced trading strategy？ To create a balanced trading strategy, you have to focus on your trading education. Try to explore the details of technical and fundamental analysis. Technical analysis will help you to find the perfect entry and exit points. But this is not enough because you need to analyze the news factors. The market tends to favor high impact news. So, if you can assess the fundamental factors and use them in your trading method you can easily trade with the trend. Before you start trading the real market, start using a demo account. The demo account should be considered as your learning curve.

Try to create a unique method so that you can make a big profit without having any trouble. Unless you can make a regular profit in the demo environment, your trading strategy is not perfect. The strategy should have a decent win rate or else it will be tough to make a profit in the real market. Think about the long term goals so that you dont have to worry about your financial condition. Be smart and take logical steps so that you can deal with the losing trades. Always have faith in your trading strategy. However, if you lose more than 10 trades, you need to revise your trading strategy to improve your win rate.

3. Learn to use the price action signals

Naïve traders in the CFD trading industry often develop a super complicated trading method. They think by using the complicated structure, they can easily make a big profit from this market. But if this was so easy, no one in the Forex market would have lost money. Trading should be done in a hassle freeway and the charts should be clean. For that, you need to learn about the Japanese candlestick. The Japanese candlestick conveys critical information about the buyers and sellers. When the closing of the candle is higher than the opening price, you can assume the bulls have won the battle for that particular period. On the other hand, when the closing price is lower than the opening price, you can expect the sellers have won the battle. This was just an example of how the candlestick can change your view and make you a better trader.

So, how can we master the art of price action trading strategy？ To learn the price action trading strategy, the traders need to focus on some basic techniques. For instance, they should start using the demo account and see how the price reacts after forming a specific pattern at the critical support and resistance level. Think about your long term goals so that you dont have to become frustrated at the learning stage. Instead of trying to learn about the complicated candlestick pattern, try to find the best signals based on simple logic. Take your time and try to improve your skills over some time. Know how the price reacts after forming a specific candlestick at the important zone. If possible, use the price action signals to trade the demo account.

4. Use Fibonacci trading strategy

The elite traders always use the Fibonacci trading strategy to earn a big profit. The Fibonacci trading method allows retail traders to earn huge profits without losing too much money. Being a fulltime trader, you should think about the trend trading method only. For instance, you need to think about the endpoint of the retracement as it will give you a better opportunity to decide to trade. Trading should be done in a hassle-free manner and in the best way to reduce hassle is to use a trend trading strategy. Sadly, naive traders dont know the perfect way to find the endpoint of the retracement. They are always biased with the complicated trading method and they try to earn more money by taking some aggressive steps.

Learn to draw the bullish bearish retracement levels in the price charts so that you can easily make a big profit. Trading the market with the help of important Fibonacci retracement level is by far the most effective way to earn money. Think about your trend trading technique and if possible incorporate price action trading skills. Instead of trading all the important levels, try to trade the 50% and 61.8% retracement level. Though the Fibonacci trading strategy is very profitable, you must be prepared to lose trades. If for any reason the price manages to break below the 61.8% retracement level, you can expect a trend reversal.

Never feel afraid to trade the major reversal since it gives a big profit-taking opportunity. However, those who are completely new to the trading industry should never try to trade the major reversal as it can greatly impact the performance of retail traders. Always analyze your past trading results so that you can bring positive changes to your trading system. Forget the fact, trading is a complicated task. Keep things simple and try to earn money using valid logic.

5. Learn to trade the news

You must learn to trade the news to become a profitable trader. By following the technical analysis you can only earn a certain portion of the profit. But when you start to trade the major news, you can easily make a big profit from this market. Things are not as hard as they seems. To become skilled at news trading, you need to focus on the bigger picture of the market. Try to understand how the market reacts to different news. At the intimal stage, you should never try to trade the major news by using real money. Open the demo trading account and try to develop your skills by trading the major news. The chances are that you wont be able to trade the major news during the volatile market, but slowly you will learn the nature of news trading.

To trade the major news, you also need access to a professional trading account. Without having access to the best trading account, it will be really hard to deal with the dynamic spread and volatile market conditions. For instance, you might experience heavy slippage due to the faulty trading environment. The high-end brokers are now offering an excellent trading environment for retail traders so that they can earn a huge amount of money without having any issues. You are not interested in news trading still you must learn to trade the market with the well-reputed broker. Unless you do so, your funds will not be in safe hands. Think rationally and always stay in touch with high-end brokers so that you dont have to lose money due to technical glitches.

6. Managing the risk exposure

Managing risk exposure is the most complicated task in trading. If you look at the experienced traders in the Forex market, you will notice that all of them have the unique ability to deal with the losing trades. They never trade the market with aggression even though are very good at trading. The first thing that you need to follow is the 2% risk management policy. No matter what, you should never risk more than 2% of your account balance in any single trade. If you lose 2% of your account balance on a certain trade, you should take the day off. Forget the fact that you have incurred a loss in your trading account. Take your time and try to improve your skills in risk management.

Being a naïve trader, you might want to reduce the risk to 1% for the first few months. It will help you to trade in a relaxed environment. Managing the risk factor is crucial for your success. Unless you learn from scratch, it will be hard to deal with losing trades. Trading is more like learning to trade the market with managed risk. Once you know the art of losing, no one can stop you from making big profits. For that, you must learn to trade this market without having any emotional attachments. Look at the bigger picture and try to find a unique way by which you can reduce the risk involved in trading. Be brave and admit the fact that you have to learn regularly. Never feel irritated by losing trades, just accept them. Instead, keep yourself calm and wait for the next trading opportunity to recover the loss.

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