Let’s cut straight to the chase; if you do not have a consistent forex trading plan, you will lose money and eventually fail as a forex trader.
You will not make your millions on one single trade. In reality, you will only be successful with a long series of profitable and consistent trades.
So, quit thinking you’re going to get lucky.
In this article, we’re going to look at why forex traders need to be consistent and how they can achieve this.
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How learning to trade forex consistently can make you more successful
“It’s not what we do once in a while that shapes our lives. It’s what we do consistently.”
That’s a quote from Tony Robbins and it holds a lot of truth when it comes to forex trading. Winning a trade every so often will not shape you as a forex trader, trading consistently will.
Being a successful forex trader takes dedication and consistently sticking to a trading plan that works for you.
Don’t expect to follow someone else’s rules or strategy and hope it will work. Every trader is different.
By developing a consistent trading plan, forex traders can learn to avoid overtrading and under trading.
Overtrading is a big problem among traders and often leads them to make big losses. Professional traders trade less, not more.
Surviving the forex market is more important than making more money.
Under trading is also a problem because if you trade too little or not at all, you will not make anything either and you’ll just be wasting your time.
Consistent trading can also help you trade only when you are uncertain of market conditions. It can help you avoid trading when the market is too volatile for your trading plan to be implemented.
Plus, things get easier when you’re consistent which decreases stress levels. This then has a knock-on effect on your trades because you’ll be less likely to open and close trades at the wrong moment.
But to become a consistent forex trader, you need to learn to be strict with yourself. It’s not easy to accomplish.
If you have a trading plan, you must ruthlessly follow it. Do not get excited when the market starts moving unexpectedly in your favour. This can be risky as you are in uncharted territory.
You should also keep your trading plan simple. The easier it is to repeat the better. The more elements to your plan, the more likely there will be errors which can become losses.
If you find trading boring, that means you’re doing it right! It most likely means you’re nice and consistent.
If you want some excitement in your life, go bungee jumping! You don’t need to take risks with your income to feel alive!
Learning to be a consistent trader takes time
As a beginner, you need to learn what will work for you. Once you have found what works for you, you can begin trading consistently.
This is true for both swing traders and day traders. If you do not have a trading strategy or defined trading style yet, you are putting your capital at risk.
The first thing you need to ask yourself is: Are you someone who always needs to feel like they are making a profit or someone willing to wait for a big pay off?
If you need to see the money coming in, you may want to try day trading. If you're more patient, swing trading may be for you.
Whatever trader you are, analysis of the markets always comes first. Trade only after you have some kind of understanding of what way the market is likely to move.
Do not perform a trading plan based on how you feel. You need the analysis to back up what you are about to do.
Timing your trades
Consistent trading also means trading at the right time. For some, this may mean trading at certain points in the day when certain events are taking place or have already passed.
One key event many forex traders look to take advantage of is the London-Tokyo market overlap and the New York-London overlap.
This is when markets are open in London and Tokyo at the same time and then later in the day New York and London are open at the same time.
These are great moments to trade because the market is more active, which gives traders more moments to enter and exit a trade.
You also have to find the analytical style that suits you; are you a fundamental trader or a technical trader?
But, perhaps the most important thing in regards to timings, no matter when you are actually trading, is to consistently open and close a trade at the right moment.
If you can enter and exit a trade at the right moment, you’ll be able to survive any market situation.
Understand the concept of probability
Consistent trading is all about estimating the probability of the success of your trades and striving to keep the result as similar as possible.
You’ll never be 100% consistent though, it’s just not possible, not even the best trading systems out there today are totally consistent because there are so many factors affecting the market at one time.
But you can aim to achieve consistent trading by taking probability into consideration. Probability involves working out your chances of success and your chances of failure.
By doing this, you can reduce the variations of your trading results; so the gap between a good trade and a bad trade gets smaller.
For many forex traders, this means working out your risk/reward ratio. Some of the top forex traders only trade in situations where their risk/reward is 1:2.
That means they’re looking to double their initial trade at the minimum. Other forex traders see anything less than 1:2 as not worth trading and too risky.
It should also be mentioned that Forex trading is not like gambling; the aspect of probability separates the two.
With gambling, you do not know what the outcome will be, positive or negative. With forex trading, you can work out the probability of the outcomes of your trades.
Understanding probability is highly useful to forex traders. After all, all trades can fail and all trades can win, but when you have a better idea of what those are, you know when to get involved and when not to.
How to become a consistent forex trader
The first thing a consistent trading plan needs is a good risk management plan. Many amateur traders miss out on this and it costs them dearly.
Only when you have a risk management plan in place can you trade consistently.
For every trade, you should know how much you are willing to lose. Many of the top traders advocate not risking more than 1% to 2% of your trading account on any trade.
For example, if you have $100, don’t risk more than $1 or $2 on any trade. This would be your maximum position size.
As a golden rule, you should never trade more than the maximum position you have set yourself, and if you feel like trading less, you should have a good reason to do so.
Not only will this make your trades more consistent, but your trading account will last a lot longer and you will be able to test out more strategies and potentially make more money.
A vital thing to remember about consistent trading is that it is largely about surviving.
Making the change
Going from an inconsistent trader to a consistent trader is a lot of work. You might need to change a lot of things about yourself and that can be a challenge for some as we get used to doing things in a certain way.
This can make it difficult to stick to a new routine because you may initially reject parts of it, particular parts that are new to you or against what you are used to doing.
It’s like taking up running. The first few attempts you might hate it. You may even give up a few times or simply skip it because you don’t feel like running that day.
But over time, it does get easier, you just need to get past that first hurdle of change.
It’s funny, but to truly become a consistent trader, you need to live a consistent life first (more on that in a bit!).
Have a growth plan
As you become more successful and your profits start piling up, you need to find a way to keep it coming.
You would have compounded your trading account and have more money to risk. That 1% or 2% you risked before would be larger and perhaps would be more valuable to you.
You need to be careful when scaling up your trading plan to ensure that it remains largely consistent. A bit of success can sometimes lead traders to forget that caution helped them rise to where they are now.
To keep your trading consistent, you need to set yourself goals and targets that are achievable. They need to be goals that are based on your real trading potential and you know you can definitely accomplish.
Take a look at your past trades and see what the most realistic target you can aim for. You can’t aim for consistency when your target is too high. Likewise, aiming too low will also not help you.
Keep a trading journal
The best way to become a consistent forex trader is by keeping a trading journal.
In your trading journal, you should be doing the following:
- When you entered a trade? Time and price down to the pips.
- Why you entered a trade? Did you see a particular pattern or conduct analysis?
- Where did you place your stop loss? Was it required? If so, how accurate was it?
- How long you stayed in the trade? Did you stay as long as intended?
- Why you exited the trade? Did you reach your target?
- Was the trade successful? What was the result? How could you improve the strategy?
But keeping a journal is not enough, you also need to review what you have noted and look for areas of improvement.
When reviewing your trades, look to cut areas that are causing bad trades and look to strengthen areas that work. This way you can find your trading edge.
Over time, you will be able to put together a consistent trading strategy.
Depending on how frequently you trade and how effectively you review your trades, the time it takes you to become a consistent trader will differ.
Repeat this cycle
Follow this simple routine when perfecting your trading strategy:
- Put together a trading plan;
- Test your trading plan;
- Record the result;
- Review the result;
Don’t change your strategy too often!
You need to have a period of finding what kind of trader you are before you can be consistent. A period of experimenting.
But you should be careful of changing strategies all the time when they don’t work out for you. You might just need to stick with them a little longer to see if they fit your style.
It is very possible that you are not properly recording if you are successful or not.
Sometimes becoming consistent doesn’t mean making changes to your trades, but just enhancing them.
By attempting to become more consistent and find that winning trading strategy, you can end up losing a lot because by constantly changing you are doing the very opposite of being consistent!
This is one of the top reasons forex traders lose money! They don’t settle on a strategy. If you keep having to learn to trade a new strategy, you will lose out!
Having a trading strategy that you rely on can also remove FOMO (Fear Of Missing Out) from your trades.
That’s because those supposedly missed opportunities aren’t missed opportunities anymore because you recognise that that’s not part of your trading style! You can remove them from your mind.
Lifestyle and mental state
Consistency comes in many forms in forex trading, it’s not just about your trading, it’s about how you live your life, research trades, educate yourself, your goals.
It is a term that can be used in many different aspects of forex trading.
Trading psychology is one of the most significant factors. Having a consistent mentality towards trading is highly important.
If you do not have a clear and focused mindset when trading forex, it will be hard to be a consistent trader.
You can do this by keeping track of your mood and learning to observe it. Work out what affects your mood, especially before you start trading.
If you sense that you are not focused or with a mindset for trading, it may be best to skip trading altogether.
A negative mood can harm your trading consistency. Similarly, being too positive can make you make bad trades too.
If you are too successful, this can be when you are at your most dangerous. Too much success can lead you to make bad trading decisions or skipping vital components to your plan.
Your lifestyle also matters. If you do not have a set routine before you trade, it can negatively affect how successful you are.
Traders such as Andrew Aziz suggest waking up early, going for a run, having breakfast, a shower and being ready before the market opens. Other traders also advise things such as meditation.
If, for example, you were up late the night before, didn’t get much sleep and skipped breakfast before trading forex, you need to accept that you might not be in the best shape to implement your trading strategy and trade consistently.
Your personal life should also be in order.
Stress from your personal life can directly harm how you trade too. Not only can it drag your mood down, but it can also be a major distraction.
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If you remember anything from this article, make it these key points.
- If you do not learn to be consistent, you will not succeed as a trader. Consistency is the key to success in forex trading.
- Risk only 1% to 2% of your trading account on every trade. This way your trading account will last a lot longer.
- Keep track of all your trades. This is the only way you can see what works and what doesn’t.
- Your personal life and daily routine affect how you trade. Getting them in order will put you in the right mindset to trade consistently.
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