One of the keys to being profitable here is to avoid making any sort of emotionally-drive decisions. There is a strategy to Forex trading which you have put in place so it is therefore highly important to keep with the plan.
Good Planning in Forex Trading
So you have to ensure that stick to your plan and then move on from there. This is where your gut feelings might not be the best answer. While there might be some who have depended on gut feelings to make it and became rich, it is important that you first start and put a practice in place to follow the strategy.
Count your potential losses beforehand
Unless you have the money to lose and not fear of losing, emotional decisions could be equally as profitable as well as damaging. So take note, patience and perseverance will go a long way in Forex. This is also practiced by the most experienced forex traders that a system need to be in place and adhered to at all times. Once you have a system, you will know when to buy, when to sell and when to hold on. After all, systems like these are based on a lot of analyses and hence should somewhat be effective.
IF you really have to
But if you really think that gut feelings can get you far in Forex trading, then at least do that with a pinch of salt. After all, there are some of the best traders in the market who will tell you how they have been able to ‘feel’ the market because they are experienced enough. In some ways, this can be true but it should be personal to you. Every Forex trader must learn how to develop your own gut in the process of trading. That is not something you can cultivate overnight.
Learn from the experienced
It takes a lot of learning and experience to have that ‘gut feeling’ and even if you have, it does not guarantee any success. The first thing you must do really is to equip yourself with all the knowledge you can have. You need to read and learn from someone. Not get short-cuts but actual learning. Be an apprentice from a seasoned trader.
Analyze charts and graphs
After that, you need to spend a lot of time on the computer. Do all the analysis you can about prices and look at charts. You need to be fully comfortable with these numbers before you can even be associated with the market. Without being so, you are speaking an alien language.
Use case studies
If you are a beginner, you might not want to use the word gut so much. What you might be more interested to learn is about intuition and anticipation because it needs to be part of you. That must be something that you cultivate in any form of trading. When an event takes place, for example if the US goes into war with a country in the Middle East, what effect it might have on the currencies? What other economies would that effect? You won’t know this unless you find out what happened to the currencies during the Gulf War.
Practice will get you there
You won’t be able to become perfect relying on intuition and anticipation because none of these factors work in the money markets. However, you can become experts if you practice enough. When you use your anticipations often enough, you can become better at knowing what it can or cannot do. Then, it becomes a part of your trading process. You give your mind the practice it needs to work out all possibilities. That will give you an indication of how much to invest and when to pull back. Its akin to playing badminton with a sparring partner. If you play against him often enough, you pretty much can predict what his next move is going to be and how you are going to react to this next move. If he is offensive, you know which defense mechanism to use and vice versa.