If you want to become a profitable forex trader, then you need to make sure you have a plan in place around the following three aspects: Risk management, a trading strategy and the ability to handle your emotions.
Forex Trading Risk Management
Many new forex traders jump right into developing their strategy and coming up with market entries before they know how much they should be risking. Can you see how crazy that sounds?!
Don’t be too eager to jump into the markets when you don’t know what percentage of your account to risk per trade, or how many pips your stop loss and take profit levels should be away from your entry.
Your risk management profile is the most important and therefore the first thing you should be planning if you want to trade forex profitably.
Forex education is key!
Forex Trading Strategy
If you’re a new forex trader, then most likely you want trading to be all about action. If this sounds like you, then unfortunately you’ve probably come to the wrong place.
The best forex traders actually aren’t having a tonne of fun or doing anything exciting. They’re simply consistently making trades around the same setup.
Getting to the point where your forex trading strategy is so executed to plan that it is literally boring, is actually how you know you’ve made it as a forex trader.
Forex Trading Psychology
When you’re trading forex, ask yourself this question: Do you control your emotions, or do your emotions control you?
If your emotions are the one that are making forex trading decisions on your behalf, then you need a rethink of how you operate.
Each time you enter or exit a trade, it should have been pre-planned and the decision made for a reason that you can intelligently justify. Never trade on raw emotion!
If you can plan and master them all, then you will be well on your way to trading forex profitably.
Source: Vantage FX Blog