7 Forex Trading Tips You Never Knew Were Important

We know the internet is filled with various forex trading tips, whether useful or unuseful. Hence, today you won’t be reading the usual forex trading tips.

You are about to read 7 forex trading tips we learned from our experience while trading the forex market. Some of them might surprise you or may seem unusual. Yet they may turn out to be just what you need to progress in your forex journey.

Forex Trading Tips
Forex Trading Tips

The 7 Forex Trading Tips to Improve Your Trading

Below are some surprising forex trading tips that helped us and could help you become a successful forex trader

  • Relearn the basics of Forex trading
  • Do not be a Jack of all trades, master one (or three)
  • Stop using the market description in textbooks or PDFs
  • Backtest your strategy intensively 
  • Ensure you make losses 
  • Have mentors and friends but trade alone
  • Learn the truth about the forex market

1. Re-learn the Basics of Forex Trading

It is very normal to feel like an advanced trader after trading for some months or years. Hence, being told to go back to the basics of forex may seem like a typical insult. “Go back to kindergarten “.

Forex Trading Tips
Re-learn the basics of Forex Trading

We’ve seen traders who learn for months and start organizing “forex tutorials”. If not for how the forex market regularly puts so-called experts in their place, we would have a lot of people with “Expert Financial Analyst” tags on their profiles.

As a forex trader, you should regularly revisit the basics of forex trading. This is important because it helps refresh your understanding of the basics which is needed to grasp advanced forex techniques.

For example, while going through the basics of forex analysis after years of trading, we saw that most “advanced forex trading tips” we got from direct experience were already written down in some of those textbooks.

These were books we had previously read. Somehow, we missed this information. Why? Because these PDFs contain lots of important information. It is almost impossible to completely grasp everything at once. Hence the need to revisit them.

As with every field of study, “Repetition breeds familiarity“. Regularly revisiting the basics of forex might be an unusual forex trading tip. But it will help you familiarize yourself more with important forex trading tips.

A popular Forex pdf you can check out is “The Candlestick Trading Bible”.

2. Don’t Be A Jack of All Trades, Master One (or Three)

There is something called specialty when it comes to most disciplines of life.

For example, have you ever heard of a professor of all sciences or arts? No, right? It’s either a professor of Physics, Mathematics, or other disciplines.

We’ll use a short story about the world’s richest trader, George Soros, and how he became a billionaire to explain better.

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In 1992, George Soros decided to bet against the GBP. This was because he believed that Great Britain’s chosen interest rate in the European ERM was unsustainable, and bound to fail.

He believed that her economic foundation for such a figure was relatively poor and was only an attempt to interrupt the natural flow of the free market. 

Convinced that an accepted interest rate by a body as big as the ERM was fake, he positioned himself against the GBP.

Well, he was right. Britain was later forced to leave the ERM because she couldn’t keep up with the body’s minimum required interest rate. And George Soros made a lot of money for himself, about $1 billion in interest!

What is the point of this story? It’s quite simple. George was able to make this prediction because he focused mainly on the GBP and the economic situation of the country as a whole.

Let us assume for a moment that he was paying attention to 5 or 7 currency pairs. This obviously, would have been a great load of work to do. He wouldn’t have been so deep in observation to make such a decision.

Hence, you should try to reduce the number of pairs on your watchlist and see if there is any improvement in your trading results.

To our next forex trading tip…

3. Stop Using Text Book Market Descriptions

It is common among traders to judiciously follow PDFs and textbook descriptions of the forex market. There are lots of these descriptions dictating exactly how the market should look or move.

For example, the basic price action patterns, harmonic patterns, Elliot Wave patterns, Smart Money Concepts, and more.

Now we aren’t saying these descriptions are wrong. We actually make use of Elliott Wave Analysis and SMC for forex analysis. What we noticed was that the market does not always follow these patterns.

Hence, when you lose a trade, it’s not always because you made a mistake. Sometimes it is just due to these inaccuracies in the trading strategies.

Traders should not forget that some of these patterns were formed by normal humans like us. They were not sent from heaven. There is no reason traders should be arguing about who has the perfect wave count.

Our advice for traders is to take these strategies to their lab. Extensively backtest them and confirm for yourself if these descriptions fit the market perfectly or if there are variations.

That takes us to the next forex trading tip

4. Backtesting Your Strategy Intensively

Backtesting in Forex trading involves going back through history to test how your trading strategy would have performed. Doing this will enable traders to see the weaknesses and strengths of their strategy.

We know of a trader who quit forex after backtesting a strategy he used for over three years. Why? Because the results showed him the realities of forex and how inefficient his strategy was.

As we said earlier, backtesting can help you to notice the strengths and weaknesses of your strategy. For example, you can notice the period in which you mostly place successful trades, the market conditions where your strategy performs best, and much more.

Another reason for backtesting is that it will help give you a sense of direction in those times of uncertainty and emotional drawbacks.

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For example, during a losing streak, some traders might quit entirely while some may develop fear and a whole range of negative emotions.

But a trader who had previously taken the time to backtest his strategy might have experienced this already. This is because he had undergone such a streak in the past, he will not be shocked by it.

Instead, he will properly try to escape the losing streak.

Now, there are lots of tools to help backtest strategies. The MetaTrader 4 software on PC comes with its backtesting tool.

With TradingView, traders can backtest automatically for free on the daily charts. To automatically backtest on lower timeframes you will have to subscribe to their premium services.

Finally, a hidden gem is the FXCM trading station software which lets you backtest for free when you switch to simulation mode. All you need to do is to open a free demo account with them.

Now the fifth unusual forex trading tip—

5. Ensure you make Losses

Our fifth surprising but important forex trading tip is for traders to ensure they make losses while backtesting or trading on a demo account.

It is very common to win all or most of your trades while using a demo account or backtesting. Only to switch to a real account and end up with huge losses.

Generally, there will be fewer new traders entering the market regularly if beginners make huge losses in demo accounts. As for the reason why traders mostly make profits in demo accounts or while backtesting.

It’s possibly because traders naturally try to avoid losses. They may end up not using stop losses because “it’s not real trading”. Well, this will not produce real results and it destroys the aim of practicing (backtesting or paper trading).

Ensure you make losses while using a practice account as it shows you are properly simulating your trading style.

That brings us to your next forex trading tip.

6. Follow Experts but Trade Alone

As a forex trader, you’ll join a community of traders sooner or later. This could be on Discord, Telegram, or even WhatsApp.

In these communities, there will always be a few “experts” who seem to have figured out the forex market. The same also happens on social media platforms like Instagram.

You will come across these experts. While it may be good to listen to what they have to say and learn their thinking pattern, it is not advisable to base your trading decisions on them.

As a forex trader, when you analyze the market, stick to your analysis. Don’t go about changing your positions because of what you see on other traders’ charts. This is what we mean by trade alone.

Now we aren’t saying that you will end up in profits if you always follow your analysis.

What this tip means is that you cannot survive in the forex market if you keep changing your positions due to other trader’s views on the market. You might as well just stick to copy trading or using EAs.

Exiting positions or modifying analysis because of other traders’ charts can be a sign of inexperience or lack of confidence in one’s trading strategy. Finally, the last surprisingly important forex trading tip:

7. Learn the Truth About The Forex Market

Most traders joined forex with very little knowledge of what it was really about. That is, they feel that once they learn the best strategy, the money will start flowing in.

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Beginners refusing to use stop-loss orders are proof of this. They think that since they’ve done their analysis based on what they learned online, the price must move according to their analysis.

Eventually, when these beginners lose a trade, and possibly their whole account, they blame the cause on a hidden resistance, trendline, or support that they didn’t see.

This is not the best approach to forex trading. Traders should understand that in forex, probability is a huge factor to consider. This means that no strategy is 100% accurate. There is always a chance that a strategy will fail.

This is why you hear experts commonly say that losses are part of forex trading. This is because forex trading is mostly about chance. Most traders try to increase their win probability by combining various tools to form a trading strategy.

So, the next time you lose a trade, don’t force a reason. Make sure you review the trade properly but also remember that no strategy is 100% correct. The reason you lost is possibly because of the inaccuracies in every strategy.

With this in mind, you will always use a stop-loss. Why? Because you understand that no matter how technical your analysis looks, there is always a chance it will fail. Even when you make no mistakes in your setup.

That brings us to the end of our unusual forex trading tips. Do you have any tips you would like to tell us about? Feel free to contact us.

Frequently Asked Questions about Forex Trading Tips

What type of trading makes the most money the fastest?

Day trading is a type of forex trading where trades are opened and closed before the end of the day. Day traders and scalpers make money faster in forex. But they also lose faster than other types of forex traders.

How many hours a day should I study forex?

You can study forex for up to 4-hours daily. With this, you should be done with the basics quickly.

Can I use my phone to do forex trading?

Yes, you can trade forex with your phone. All you need to do is to download the Forex trading app, register with a Forex broker, and start trading. Although we recommend using a PC or tablet for analysis.

Summary of the Forex Trading Tips

Now you have come to the end of this article, you should go through the summary to refresh the important forex trading tips you just learned.

  1. Revisit the basics of forex as it will help to relearn important forex trading tips and techniques you might have missed out on initially.
  2. Reduce the number of pairs on your watchlist, you might be losing because you try to focus on lots of pairs and therefore miss out on big opportunities.
  3. You can use textbooks that try to map out the market movements precisely but don’t follow them over religiously. They are not always accurate
  4. Regularly backtest your trading strategy to help you discover all its strengths and weaknesses
  5. Ensure you make losses while practice trading before you switch to real trading acccounts
  6. Follow up with your friends and mentors online and on social media but your real trading starts when you stop allowing their decisions influence your trading.
  7. Finally, learn the truth about the Forex market.

Conclusion

Forex Trading is a journey where traders must constantly strive to become better and develop themselves. With these important forex trading tips such as relearning the basics and backtesting, traders will further increase their knowledge and experience in the forex market.

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