Top 5 Tactics of Successful Forex Traders

　　What exactly separates successful forex traders from the rest of the group？ For all forex traders, climbing the top of the ladder and joining the elite group of successful traders is a key ambition. But it is a well-known fact that very few manage to achieve those high ambitions.

　　The forex market is a frontier where a trader with little to no capital stands a chance to make it big, owing to the many inherent advantages in the market. However, successful trading is a combination of several factors- elements that successful traders capitalize on to make the most out of every trading day.

　　Let's discuss the top tactics that will make all the difference in your trading journey as a beginner or as a professional that wants to take your trading to the next level.

1. Effective execution of trading strategy

　　The forex market isn't the place for random strategies. Instead, successful traders spend their time honing their trading strategy as their profitability highly depends on how the strategy is maintained and executed.

　　When formulating and executing your strategy, you should take note of these three elements in addition to other factors:

Risk control

　　This seems obvious, but several traders do not account for the money at risk in their strategy. At most, stop-loss orders will be placed close to the entry point of their trade without highlighting other risk factors that could potentially affect their trade. This is not to say using stop-loss orders is unnecessary, but rather to highlight that risk control goes beyond that.

　　The first is to understand forex risk and what risk management entails and continuously build on this knowledge as an active trader. A strong foundation will influence how you use tools like stop-loss orders, leverage, and take profit orders to manage risks and improve profit potential.

　　This is important because it is still possible to experience massive losses when using risk control tools if you dont know what to do with them.

　　Perhaps the most important risk control rule is to never trade with money you can't afford to risk. The forex market is volatile and unpredictable, and risking more than you can take puts you in an extremely vulnerable position.

　　Although it is not possible to have profitable trades all the time, it is necessary for forex traders to actively implement changes no matter how little to their strategies. Over time, this will result in a more balanced strategy that pushes you along the line of success.

Using price action

　　Price action gives key insight into the psychology of other forex traders, and it plays a major role in any winning strategy. One advantage of price action is that it lets you know where buy and sell orders are located, which helps in making trading decisions.

　　When trading with price action, it is better to wait to see how the market acts so that you can react appropriately. If you attempt to predict where the market might go before any signs appear, you could lose the trading opportunities at your disposal.

　　In addition, it is advisable not to rely on price action alone when trading because no method is fully reliable. Instead, it should be used to strengthen your strategy and increase your chance of making accurate trades.

Choosing the appropriate timeframe

　　Time frame analysis is a skill successful forex traders use to develop strategies that take advantage of market movements. But before you choose a timeframe, you need to decide on your trading style.

　　For instance, scalpers work with very short timeframes (usually between 1-15 minutes), while swing traders work with longer timeframes (it could span days or weeks).

　　Traders are not restricted to one timeframe despite their trading style, and it is common to see successful traders using multiple timeframes. The major benefit of utilizing multiple timeframes is seeing the overall trend and identifying the most profitable entry points.

2. Using a funded forex account

　　A funded forex account allows serious traders to expand their trading ability and make profits without using their own capital. It provides them with great flexibility and makes it easier to execute larger successful trades. But what is a funded forex account？

　　This is a trading account handled by a qualified trader on behalf of a company. It is a program that helps trading companies source the best traders for a percentage of their profit or subscription fee.

　　In return, traders are armed with sufficient purchasing power and leverage to profitably engage in the forex market.

　　The profit advantage it gives makes funded forex accounts a unique asset, but it is not available to just anyone. According to the experts at HowtoTrade.com, interested traders will have to pass an evaluation test to show that they are profitable and reach a predetermined profit level within a certain period.

　　After the challenge has been completed successfully, the trader will be given an account. However, it is possible for the company to conduct another test just to have an extra layer of protection.

　　From there, the trader and company will split the profits depending on the agreements made.

　　As with any business, it is crucial to exercise due diligence when selecting a trading company. You want to make sure that the company is trustworthy, has sufficient tools for trading, and its structure fits your financial goals.

3. Simplified Technical Analysis

　　Without a doubt, technical analysis is one of the most fundamental tactics for successful traders. It is also one of the key skills traders learn as soon as they enter the forex market. Technical analysis aims to identify future trends by using chart patterns and indicators to analyze historical data.

　　It is essential in forex trading because it can be used with any timeframe and provides further verification of trends. Plus, it offers a variety of tools that give different perspectives but sometimes, these indicators can be a problem.

　　There is technically no limit to the number of indicators you can apply when trading; however, this doesn't mean that your trades are going to get any better. Instead of giving you concise information, these indicators add to your confusion, muddy your strategy, and make it difficult to make effective trading decisions.

　　Overcomplicating your trading process makes your trading efforts dead on arrival because you are processing more information than you are actually working with. Instead, select the tools that are most useful to you in order to get more reliable information.

4. Have a trading edge

　　A trading edge is an approach that gives you an advantage over other traders. It encompasses everything from your risk-to-reward ratio, the timeframe you use, currency pairs you trade with, price action techniques, trading strategies, and more.

　　In essence, it is what makes your trading process unique or something that you are very good at.

　　If you want to know whether you have a trading edge, take a look at your strategy. Examine the techniques you frequently use to manage risk, identify new opportunities, and plot your entry and exit positions.

　　Then try to determine whether other traders are using the same methods the exact way you use them. This will let you know if you are part of the crowd or doing something different.

　　Your trading edge doesnt have to be anything complicated. A simple way to find your edge is to find a method or specific rules that work with the technical skills you already have to give you that advantage.

　　The next step is to back-test this new idea and see how well it works for you. Your trading edge may not work all the time, but it should be something that increases your profit potential.

5. Have a winning mindset/attitude

　　Successful forex traders dont allow losses to cloud their judgment, even though it can be frustrating, and they try to be objective about their trades. They are patient enough to wait for the right opportunity to arise rather than reacting to every price fluctuation.

　　The best traders are those who set realistic expectations for trades while maximizing their wins and minimizing their losses. Above all, serious traders know when to walk away from a trade and are disciplined enough not to second-guess their strategy when they know it works.

Conclusion

　　Bill Lipschutz is one of those names people think about when discussing successful traders. While many praise his skills as a forex trader, many forget that the reason he is well-known today is his perseverance.

　　He famously lost his entire capital of $250,000 due to one wrong decision- a situation that would scare some traders away from the market completely. But he decided to get back into it, took his time to learn, and became one of the top names in the forex market.

　　Like any other financial market, there is no defined formula for success in the forex market. What matters most is your willingness and ability to navigate this highly volatile market. Being a forex trader is challenging as well as rewarding, and you need to have the desire to succeed in the market. It is when you look past the losses that you can learn from your mistakes, improve on your strategies, and continue to climb the ladder.