How to become a Forex God and invest successfully in the currency market? In this guide, we’ll see 5 tips (and 3 mistakes to avoid) to become one.
Do you want to become a Forex God but don’t know how to? Do you want to start investing in Forex but are afraid of losing money on the currency market? The world of trading and investments is highly technical and can lead to massive gains as well as brutal losses. In this article, we’ll give 5 important tips (as well as 3 common mistakes to avoid) in order to reach the status of Forex God.
Before we start, there are a couple of premises we need to make. First of all, if you don’t know the basics of Forex trading or online investments in general, becoming a Forex God is extremely hard if not impossible. For this reason, you should first learn the basics of trading before facing this market.
Novice investors should also know Forex is not the only type of trading. There are many other financial instruments like ETFs, CFDs, and, of course, regular stocks that could be more suited for you.
But now, let’s look at how to become a Forex God and which mistakes to absolutely avoid.
What is Forex?
The Foreign Exchange Market (or Forex for short) is basically the global currency market. Each of the world’s currencies is represented on the Forex, and traders bet on their fluctuations up or down.
Specifically, traders bet on the fluctuation of exchange rates between currencies. Indeed, every sale on the Forex is mirrored by a counter-sale of the currency at the other end of the transaction. The difference between the “bid” (the purchase price) and the “ask” (the sale price) is the so-called “spread”, i.e. the cost of the transaction.
Forex operates through a global interbank network, connecting London, New York, Sydney, and Tokyo. This means that investors can follow the Forex market at any time of the day.
How to become a Forex God?
Trading on the Forex is a highly technical activity. In order to understand the currencies’ movements and, most importantly, try and predict where they are going next, investors use countless mathematical indicators.
These indicators, for example, can tell investors the average exchange value of two currencies in a given period of time, or how far such value is from its highest point.
A Forex God is an investor that masters all of these indicators and can predict the movements of exchange values with a high degree of accuracy. In short, a Forex God is a Forex professional.
They can adapt to every market condition, from a rally to a recession, they can find hidden opportunities in minuscule movements, and they can smell a financial bubble years before it bursts.
So, let’s discover 5 tips (and 3 things to avoid) to become a Forex God.
1. Develop a trading strategy
The main keyword for a Forex trader is strategy. Knowing how technical indicators work, understanding where the market will go next week, and finding the best time to buy and sell, are all great tactics, but don’t make a good strategy.
As Sun Tzu said in "The Art of War", “Strategy without tactics is the slowest route to victory, tactics without strategy is the noise before defeat”. A Forex God has a long-term strategy for each of their actions. Always stick to your financial plan and use tactics to enhance it.
2. Learn to manage risk
To invest is to take a risk. There is no financial investment that doesn’t involve even the slightest amount of risk. And, as in all risky activities, Forex trading also needs a risk-management plan.
Risk-management strategies include setting stop losses, diversifying trades between many exchange rates, and limiting leverages. This will not necessarily avoid losing a trade, but it will mitigate the depletion of financial resources.
3. Keep a trading journal
A crucial part of becoming a Forex God is accepting one’s mistakes and learning from them. Every trader, especially novices, will inevitably make rookie mistakes at the beginning of their activities. Even established Forex investors like George Soros made mistakes at the beginning of his career.
Keeping a trading journal is the best way to note bad (as well as good) trades. Once a month or two, traders should look back at the journal, studying what they did wrong (or right) and learning from past actions.
4. Follow market news
The Forex is a global market therefore, by definition, it spans the entire world. Currencies are closely tied to the politics of their countries. For example, if the United States were to declare default, what do you think would happen to the value of the dollar?
Of course, the US declaring default is an extreme example. A Forex God follows closely the financial and political news surrounding the currencies they’re interested in. Start to do that as well, perhaps using an RSS Feed to be notified of breaking financial news immediately.
5. Keep studying
Despite what we have described so far, a Forex God does not know everything. Indeed, a Forex God knows there is always something new to learn, and is always eager to study.
Moreover, Forex is a highly volatile market, whose laws and dynamics constantly change. There is always a new indicator to discover and a new secret to be found. In short, a Forex God is always studying to be ahead of others.
Avoid these crucial mistakes
Even if traders master all the tips we discussed in this article, they are still short of becoming a Forex God. In order to finally become one, traders need to avoid 3 crucial mistakes:
- Greed: Forex is a fast-moving market, holding a trade one second too long can result in hundreds of dollars in losses. Traders need to exit a trade at the exact time they determined, even if that means losing some profits;
- Lack of discipline: traders can incur losses, this is a simple fact of life. If novices want to become a Forex God, they need to maintain their heads over their shoulders and face losses with the right mindset. If, after a series of losses, you feel burnout or demoralization, try to analyze your trading journal to understand where it went wrong, and try again.
- Overtrading: on the other hand, a series of wins can also deceive traders. It can give a feeling of invincibility that will inevitably be broken at the first loss. Overtrading can enhance this feeling and draw investors away from this activity.
Following all these hints and avoiding these mistakes will pave your way to becoming a Forex God.
