Forex trading is a fascinating industry. Unlike brick and mortar industries, you don’t need a lot of money to get started. You also don’t need an office or a team of traders. Also, unlike other industries, you can start making money on your first day as a trader. For this reason, millions of people around the world are entering the day trading industry.
Unfortunately, recent data from the European Securities and Markets Authority (ESMA) found that more than 80% of people who start trading fail. There are a few reasons for this. For example, most of the new traders don’t have the experience and the expertise to trade. Others don’t understand how the markets work. Other traders fail because they don’t have a well-tested trading strategy. This article will describe an easy way of developing and improving your trading routine.
A trading routine is a habit which you follow before opening and closing trades. It also includes the time of the day you trade and the parameters you look at.
Time to Trade
The forex market is usually open for 24 hours every day from Monday to Friday. Therefore, if you are a full-time employee, you can easily create a timeframe routine. It is recommended that your routine be at a time when you are not at work. This is because you want to give your day job your all.
If you are a full-time day trader, you too should specify the time that you will be trading. This is because there are three main timeframes. The Asia-Pacific session is usually the first to open followed by the European session and the American session. Each of these sessions have their unique characteristics, with the Asian one having little movements.
A common mistake among new traders is to trade multiple assets every day. Professional traders on the other hand specialize on a few assets. By doing this, they are able to master the securities and know how their price tends to move. For example, you can specialize in trading CFDs such as the EUR/USD currency pair, a commodity pair such as OIL/USD, or even cryptocurrency trading. If you trade them every day, within a few months you will be knowledgeable about their traits and the factors that affect their movements.
Economic Calendar and News
Every day before you start trading, you should take time to read the news from the previous day. This is because of securities tend to move according to the news. Reading the past news will help you in the fundamental analysis. Some of the most important news sources are the Financial Times, Wall Street Journal, and Bloomberg.
In addition, you should take time to look at an economic calendar. This will help you know the data that will likely move the market in that day.
A trading journal is an important document that will help you in your trading, and something that many trading professionals use. A typical journal includes columns like the name of the security, the purchase price, the reason for the purchase, expected return, the price you end the trade, and the reason behind this. Creating such a journal will help you become a better trader. Of course, this journal can be a book or a digital document.
Finally, as part of your trading, you should create time to relax and reflect, especially when you are a full-time trader. You should spend this time with your friends and family. You should also spend this time reading, reflecting, and generally unwinding.