The trading year 2012 is ending fast and pretty soon, Forex traders will be welcoming the New Year 2013.This means another set of plans and different predictions to think about in their trading activities. Considering how Forex is a billion dollar industry, it only makes sense for traders to ensure that they are getting the most accurate Forex information at the start of the year. This guide is designed to help traders gain the right mental state for a new year of trading. Whether they’ve been trading for years or just starting in the industry, this article should provide ample preparation for 12 more months of gaining through the biggest market today.
Be Concise on Your Strategy
There are several trading strategies today as well as different types of traders. It’s important that even before the new year starts, individuals already know exactly what kind of trading strategy they intend to follow and how long does it work. This is because one of the biggest downfalls traders have when switching strategies is that they’re not psychologically prepared for the changes. For example, switching from day trading to swing trading requires a very different set of mental preparedness. We’ll discuss more of this later on.
Up the Ante
Forex is a very competitive industry, making it crucial for traders to always up their ante. Remember that there are thousands, if not millions of people jumping into the game every time, upsetting the current balance. If old traders simply stuck to what they know, they’d be losing money fast. This is why individuals should start improving their strategies through evaluation. Start by taking a long good look at the strategies used for the past year and whether they can still be utilized for this year. Figure out some holes in the theory and start patching them up, perfecting the process as it goes along.
As already mentioned before, psychology is an important aspect in trading. Most individuals do not have the right mindset for Forex, causing them to lose money hand over fist. Don’t let this happen to you. A good example of the importance of trading psychology is the difference between long term and short term trading. Day traders who usually close transactions within 24 hours usually have a “safer” mindset. Since they don’t have to worry about any sudden market changes overnight, the fear of a sudden financial backlash is not there. However, individuals who switch from the “safe” day trading to the more lucrative swing trading may have a problem adjusting their mindset. This is because although swing trading is more lucrative, the risk is definitely higher. Some traders will have a hard time adjusting to this risk, forcing them to go back and forth between swing and day trading strategies. As any good Forex trader knows, this is a recipe for disaster.
So what should be done about it? Forex traders should be thoroughly aware of what strategies they intend to use and the risks that come with it. Easing into the strategy instead of jumping into the system is also a good idea, allowing individuals to slowly get used to the new method that they are using. Remember that each Forex trading strategy comes with their own risks and advantages with the two usually being indirectly proportional with each other. Hence, the more risks a trader exposes himself to, the bigger the profits in store.
Upgrade what Needs Upgrading
Are you using specific tools for Forex trading? Are these tools up to date? Although updating this software should be done throughout the year, the New Year is a great time to check on other updates. In fact, traders may also choose to change their programs for something better. Make sure to check out new releases for the year 2013 and find out if there are programs that have been improved for better results and accuracy. Review sites should also be a great place to do some market research. Of course recalibrating programs depending on the trader’s preferences should also be taken into account.
Do Some Hard Research
Don’t forget that the Forex market depends on a wide
variety of factors. Most traders like to focus on the technical aspect while others prefer the fundamental part of the process. The truth is that traders should consider BOTH and hit a balance between the two. This is especially true for the first part of the year where new information is forthcoming from different countries. Pay very close attention to these, especially the major currencies in the world. Remember that although sudden price changes may occur, the Forex market follows a pattern annually so try to anticipate those movements up and down the market. By having even a small idea of how the system will work for the next few days, weeks or months, traders can position themselves better to take a profit. This is especially true for long term traders.
Don’t quit on a strategy too soon, especially if it’s a long term type. Most people want to see results as fast as possible which are not always the case. Long term strategies which could run for weeks can cause individuals to feel jittery, making them think that they’d lose their hard-earned cash overnight. If you suddenly change your mind in the middle of a Forex strategy, nothing good will ever come out of it. It’s important that traders weather it through, unless hard evidence shows that the strategy will not work.
Most traders shift from one strategy to another or use multiple ones at the same time. This is not really wrong and in fact increases the safety threshold when it comes to Forex trading. Keep in mind though that knowing a little bit of everything is not always good. Traders need to be a “master” in at least ONE trading strategy. Think of it as a “fall back”, ensuring individuals that they will always know what to look for when trading in the market.
Get Some Help
Having a mentor is always a good thing although most
Forex traders seem to forget this. Note that even professional traders need some help every now and then so never underestimate the power of additional information. This is especially true for new traders who are still trying to figure out how the whole process works. Although eBooks and DVDs provide good insights, nothing beats one on one conversation with someone who has been in the business longer. Make sure to ask relevant questions and get prepped for the next 12 months of Forex trading.
Set Quantitative Standards
It’s always a good idea to have numerical goals when it comes to Forex. Remember how the first thing individuals should learn is about stop loss? Well, it’s important that traders should also set long term numerical limits for the next trading year. Set up how much is the acceptable loss not just per trading position but per strategy or even per month. Depending on the individual’s money capacity, they might have more or less of what was spent last year. Also try to set budgets on specific system improvements such as new programs or additional tutorial data. This might seem like an afterthought but this is important, especially if you’re a full time Forex trader. By accounting for all the investments, expenses and income related to the strategies, individuals would be more aware of whether what they’re doing is worth the trouble it is causing.
Don’t Jump In Immediately
NEVER start trading the minute the year 2013 starts. Instead, take some time off, say a week, and use this to reflect on what has happened for the past year. Individuals who start trading as soon as the New Year starts will often find themselves surprised by the results of their transactions. This is because although it might not look it, a lot has changed between trading in 2013, 2012, 2011 and the years preceding that. Allow time to evaluate and soak in all the factors that might have taken place for the past 12 months. For example, the recent problems in the Eurozone would really affect how the year 2013 starts for the Euro versus Dollar situation. The recent spending during the holidays will also have a temporary effect on the values of currencies, especially along the West.
Of course, those aren’t the only things Forex traders have to be aware of when it comes to trading for the year 2013. There are so many factors to consider but those mentioned above are the gist of it. Keep in mind that Forex patterns may change from time to time and it’s important that YOU adapt along with it. Otherwise, you’d find yourself losing money instead of earning them by the thousands. Remember: the secret to earning good money on Forex trading is having a good grasp on the future movements of the market. Think of Forex as chess – you always need to be a few steps ahead in order to get the best and most profitable results.