Any time you participate in trading any asset, you risk losing your funds. Because market movements can be unpredictable and extremely volatile, it’s important that you’re resilient.

However, this can be difficult because, naturally, your emotions can get in the way and cause you to act irrationally.
In this lesson we'll explore the qualities that may help you be successful and how you can become a disciplined trader.

Develop a strategy and stick to it

To improve your chances of success in forex trading, you’ll above all need to trade strategically. Whether you focus on a technical or fundamental approach – or a mix of the two – you might want to build a solid understanding of trading currency pairs and how you can choose which position on a market (long or short).

Below are a few tips you can consider when you’re building your strategy.

1. Find the right broker
Choosing a forex broker that best fits your needs will make all the difference when it comes to benefiting from quality user experience, reliable client support and competitive pricing

2. Know how trading capital works
Margin and leverage are the most important elements to consider when opening a trade. While your leveraged positions mean you only paid a fraction of a trade’s cost, you’ll also need to consider the margin needed to enter the market.

If you have multiple trades open, you’ll need to be aware of how each one’s margin is affecting your account equity. Remember, you’ll also need to consider the margin requirement, which changes as often as your trades move. If you don’t monitor this, you’ll risk being put on margin call and, ultimately, having your trades closed out

3. Never stop building your knowledge and strategy
Successful traders never stop learning and building their expertise. Regardless of how seasoned one is in trading, one key thing to remember is that the financial markets are unpredictable. You may have success using one strategy, but you may need to adapt it to the prevailing market conditions from time-to-time.

Choosing the right markets to trade is an important part of any strategy. Do you want to trade only the pairs with low spreads and high liquidity? Perhaps you’d like to scalp on emerging markets. Whatever you decide, make sure you record all the actions you take to better analyze your wins and losses.

You may also want to choose a currency pair and learn it inside out: which technical factors are relevant to it (eg chart patterns); what news events or economic releases affect it the most; and during what key times of the day is the market the most liquid?

4. Forex is not a get-rich-quick opportunity
Contrary to what you may have read on many websites, forex trading is not going to turn your $10,000 into $1 million. The amount you can earn can sometimes depend on how much money you put into the markets rather than how good your strategy is. As the old adage goes, ‘it takes money to make money.’

However, you can make the most of your available capital by trading strategically. It’s also crucial to be disciplined. For instance, say you wanted to exit a market when it moved 100 pips in your favor.

If it reaches that level and surpasses it, you might be tempted to keep your position open. But if you’re disciplined and did thorough research on the market, you’ll know that you should stick with it – you created it for a reason, after all

5. Research market sentiment before trading
Try to read financial news and follow market-experts to get an idea of how other traders think a market may move. In some publications, expert traders with vast amounts of experience will share their analysis on certain markets.

It’s still important that you do your own due diligence and research further before deciding to trade.

6. Start with a demo account
If you’re an absolute beginner, it’s very important that you practice with a demo account to familiarize yourself with how the markets work. From here, you can build and refine a trading strategy, get comfortable with your chosen platform and build the confidence you need to trade real money

7. Take the plunge
When you’re finally ready to trade real money, you may want to start off with smaller amounts and work your way up as you gain confidence. You can also try to incorporate some risk-management strategies, like using stop losses – an order type designed to execute a buy or sell after the market reaches a specific price.

Remember, recording your trades in a journal will help you assess your performance and be in a position to constantly review and reassess your approach

How to explore the forex market

If you’re keen to on trying to capitalize on the sheer size and volume of the forex market, you might want to consider what method, or combination of methods, suits your trading style.

At a foundational level, you can try to familiarize yourself with the following pillars:

1. Fundamental analysis
Like other markets, forex is influenced by supply and demand. Knowing which factors impact a particular currency pair is called fundamental analysis. Interest rates, economic growth, employment, inflation, and political risk are all factors that can affect supply and demand for currencies. Once you’re more comfortable with the idea of trading, and you want to develop a trading approach using this style, take out fundamental analysis course

2. Technical analysis
Price charts tell many stories, and many forex traders depend on them in making their trading decisions. A market’s trading chart can point out trends and important price points where you can enter or exit the market, if you know how to read them. You can learn more about this later on in our technical analysis course

3. Money management
An essential part of trading is knowing how to manage your funds. It’s important that you know how to measure the potential risks and rewards of any trade and use this to determine your market entries, exits as well as ideal trade sizes. Learn more about how to manage your trading and maximize potential long-term profitability in our risk and reward course

You can employ the pillars above in varying forms to craft a strategy you feel comfortable with. Once you find a balance between these central systems, you might be ready to turn your attention to specializing and honing your skills in one or the other.

Even if you choose to solely focus on technical analysis – which relies on interpreting chart patterns – keeping up-to-date with politics, monetary/fiscal policies and other market-moving events can help you make informed trading decisions.

Client sentiment can also give you an indication of potential price-level reversals, market entry points and ideal levels at which to exit a trade.