Being a beginner in the forex market can be both exciting and nerve-wracking due to the volatile nature of currency pairs. The volatility is what creates profitable trading opportunities but at the same time, it makes trading risky for everyone. However, experienced traders with expertise can trade with ease as they have a mature trading strategy to follow. A matured trading strategy is nothing but a well-defined strategy that has stood the test of time and proven to be working well by generating profits for a long period of time.
But can a forex beginner create or devise a matured trading strategy without any prior experience? Keep reading to find the answer along with how you can devise a mature strategy for getting the desired results.
Can a newbie trader devise a mature strategy?
The answer to this question can be both yes and no. Those who say no will argue that a beginner will not have the edge that an experienced trader has and thus they will not be able to reach that level of success or build a perfect strategy. But my answer would be yes as I think even beginners have the potential to become successful traders in the long run if they focus on learning, practising and improving their skills over time. It does take time but even the expert traders were amateur beginners in the past and they managed to build a matured strategy by closely observing the market and its movements.
The price movements in currency pairs are expressed and measured in pips. Hence, understanding pips and pip calculations is the first thing to do while devising your strategy. You need to decide the number of pips you target to catch in a trade for making profits and for that, tools like pip calculators can provide valuable insights for making informed trading decisions. Such tools are vital for executing your strategy with precision.
Now coming back to devising a matured or sustainable strategy, this will never be an easy task for a beginner taking baby steps into the forex world. The road to success in forex can be a tough one to travel for those without a definite goal and plan. Having clear goals and a well-defined plan makes a huge difference to your trading journey and experience as you will be sure about the destination and direction which makes the market easy to navigate. But how can you do that as someone trading for the first time? Well, there are some tips that you can follow to make the process easier and improve your chances of success.
-
Engaging in Efficient Trading
One mistake that I see many traders make in the forex market is that they place trades for the sake of trading and they don’t think much about how it will turn out or whether the trade makes sense in the current market scenario. They simply trade because they feel that they can make profits and expect the prices to move in their favour. But efficient trading is not about expectations or guesswork, it is about accurate analysis and logical calculations that have a high probability of giving the desired outcome in the end.
Efficient trading is done by waiting until the right opportunity arrives, not jumping to conclusions and entering random trades out of FOMO (Fear of missing out on opportunities). Efficient trading is the result of learning, planning and finally putting your plan into action after careful consideration and analysis. You don’t need to place trades every time you spot an opportunity on the charts. You need to check if it is the best opportunity that you can get or it will be better to wait until the market moves confirming your analysis.
Once you are sure about the trade setup, you can proceed with the execution part which again takes some planning. You need to plan your exit as doing so minimises your risk while also allowing you to maximise the gains. For instance, estimating profits with a profit calculator helps you to find the best prices for entry and exit based on the expected results. There are no surprises in efficient trading as you know the outcome in any situation whether you win the trade or not.
The practice of placing a stop loss is very crucial for efficient trading as risk management is the core of trading success. You need to think about the worst-case scenario to limit your risk exposure. We have no control over the market but we can always control our own risk to safeguard our trading capital and make it grow with profits over time.
Experienced traders follow this methodology for making their strategy work and a beginner has to do the same by following a rational and cautious approach. This is the very essence of efficient trading as you will stay out of the market if you don’t see the ideal trade setup. Because the quality of your trades is more important than the number of trades you place.
-
Developing your trading skills
There is no doubt in the fact that the level of knowledge and skills you have, determines your success rate as a trader in the forex market. Those who lack knowledge and skills stand no chance in the fast-moving forex market. However, it takes time for a beginner to develop professional-level skills in trading. The learning period can be longer than what you expect but you should not stop learning until you master the art of trading. But trading is also a science with so many calculations that have to be done to get it right. In that case, trading calculators can be extremely helpful in calculating accurate trade values for smart trading.
They not only provide error-free results but also do it at a high speed which is impossible to attain when you do the calculations manually. Speed and timing are crucial for making the best use of the opportunities we get in the forex market and automated tools like trading calculators are designed to assist us in making timely decisions. Hence, using the right tools and techniques surely enhances our trading skills and beginners can rely on such tools to avoid costly mistakes.
But at the same time, making mistakes is normal when you are new to the world of trading and it is also a part of the learning process. But you don’t have to risk real funds in the initial phase while you are figuring things out by trial and error. Forex demo accounts are there to provide a risk-free environment where beginners can practise in real-time market conditions. Demo trading is one step that no beginner should skip while entering the forex market.
Indeed, demo trading experience is not a substitute for live trading experience but it is still better than having no experience at all. Demo accounts are a replica of a real or live account and the only difference is that they are not linked to actual markets and the trades are a mere simulation. Still, you will be able to learn a lot and refine your skills in a realistic setting. You should also test your strategies on a demo account first as it helps you to trade with confidence while trying it on a live account.
-
Discipline and consistent effort
If you ask an experienced trader about their secret of success, they will always tell you about the importance of being disciplined and consistent. Sticking to your plan is what makes the plan work over time. Your strategy may not yield good results from the first day itself but you will find ways to make it work by being disciplined and implementing a rule-based trading system without deviating from your core strategy. Now, imagine you finally became profitable and your strategy is working fine. This is the phase when you have to work harder.
Consistent efforts are essential to retain the success that you attained as a trader and aiming for improvement is the foundation for future growth. Expert traders always have long-term goals and objectives as they think beyond quick profits and small gains. You can celebrate the small wins but you should not stop working towards bigger gains. You need to be ambitious and strive for progress but at the same time, you should not let that become greed as that can lead to huge losses.
Conclusion
To conclude, a mature strategy cannot be built in a day or two as a beginner has to gain enough knowledge and skills to find their footing in the forex market. This is not just about theoretical knowledge but also practical know-how which is required for making sound trading decisions based on your trading goals and risk tolerance. However, it takes time to become knowledgeable and skilled as a forex trader but those who stay disciplined and put in consistent efforts can surely build a viable strategy and refine it further by gaining trading experience.
