How did that happen? No one has comprehended the market fully. This mystery agitates many traders, and as a result, they end up making risky decisions.
However, the market is all about being realistic with your goals, planning, and strategy. Every decision you make related to trade has to be realistic so you are not empty-handed at the end of the day. This article will explain seven realistic goals that every trader should set – which can help you deal better with uncertainty and make some profits.
Have Realistic Expectations
Trading, at its core, is a balance between ambition and caution. When traders step into the market, it’s natural for them to dream big, envisioning bigger gains. But as attractive as the thought of making a 50% return every month sounds, it’s not always grounded in reality. You need to be more realistic and plan on receiving 1-5% in return.
This measured approach can act as a buffer against the trading world’s emotional turbulence. The descent from a setback can be steep and disheartening when expectations are sky-high. On the other hand, a grounded perspective can offer resilience. Traders are then less swayed by the immediate emotions of the market, making decisions that are more informed and less reactive.
However, no strategy comes without trade-offs. While this cautious stance can lead to more consistent and sustainable returns, there might be moments when traders feel they’ve missed out on a golden opportunity. But it’s essential for participants, especially those who are easily swayed by the promise of high returns, to find a strategy that balances elastic goals with practicality.
In order to set realistic goals, it is best to plan realistically. The role of trading calculators is prominent in this case. These tools will help you find out different trading values, giving you a clearer idea of how worthwhile it is to run a trade.
Returns Shouldn’t be Your First Criteria
Trading, in many ways, is a mental game. The greed for high returns can often overshadow the importance of a well-honed strategy, pushing traders toward decisions that might not be in their best interest. Let’s picture two traders: One is completely fixated on percentages, letting each change control their mindset and behaviour. The other takes a step back, investing time and energy in refining and perfecting a trading strategy.
Over time, while the former might experience sporadic wins, it’s the latter who stands a better chance of achieving consistent, long-term success. This is because placing emphasis on the journey, the learning, and the strategy rather than just the end result lays a solid foundation for enduring success in the volatile world of forex trading.
Of course, this approach might lack the adrenaline rush that comes with chasing massive returns at every turn. But prioritising strategy over short-term gains offers a more reliable and sustainable path for traders who are in it for the long haul. This methodical approach might only sometimes provide the thrill of the chase, but it’s tailor-made for those seeking a stable and lasting presence in the trading arena.
Be Careful with Leverage
Leverage in trading can be a double-edged sword. It tempts with the promise of amplified profits, allowing traders to open larger-sized trades even with a small amount of capital. Consider an example with 100:1 leverage: While a 1% market move in your favour could provide a 100% return, the same percentage move against you would result in a 100% loss. For a novice trader or someone who is risk-averse, the stakes can quickly become uncomfortably high.
Avoiding leverage—or using it very cautiously—can be a strategic safeguard. Make sure to trade with a low margin to avoid big losses caused by high leverage. You can also use a margin calculator to find the appropriate margin requirements. This way, you significantly reduce the risk of experiencing devastating losses. This strategy is particularly beneficial for those new to trading or who prefer a more conservative risk profile.
The trade-off, however, is the limitation on potential profits. By not leveraging your trades, you won’t have the same earning power per transaction. Yet, for a certain cohort of traders, this trade-off is acceptable. They may value stability and gradual growth over the roller-coaster ride that comes with the potential for huge profits but also significant losses. In trading, as in many aspects of life, understanding your comfort level with risk is crucial, and avoiding unnecessary leverage may be one effective way to align your actions with your risk tolerance.
Part-Time Trading
Forex trading doesn’t always demand an all-in, full-time commitment. In fact, diving into trading part-time can offer a balanced approach for many. This part-time foray into trading offers a breather for individuals with other professions or commitments. They can engage with the market without the constant pressure of needing to make it big. It’s a modus operandi that allows them to test the waters, learn, and even profit without letting the stress of trading consume their entire lives.
However, this approach isn’t devoid of challenges. Part-time traders have fewer hours at their disposal to keep an eye on market movements and trends. They might miss out on certain opportunities that full-time traders can leverage. Yet, for those juggling other priorities or looking for a less intensive introduction to forex, the part-time route provides a feasible and often rewarding alternative. When you trade part-time, make sure to set small and realistic goals. Also, keep track of your P&Ls so that you stay on the right track. For accurate monitoring of your P&Ls, you can also use a currency calculator, which comes in handy when you are trading different currency pairs. This tool lets you know the value of other currencies in yours to give you a clearer idea about how much you’ve made or lost.
Be a Passionate Trader
Trading isn’t just about the numbers but the spirit behind the pursuit. When traders are deeply passionate, they’re more likely to persevere through the inevitable rough patches. As billionaire forex trader Bruce Kovner rightly put it, “To succeed in trading, one needs passion.” This fervour pushes traders to continually seek knowledge, honing their skills.
This passion can be a key differentiator for those who genuinely revel in the challenges and intricacies of trading beyond just the prospect of monetary gain. However, there’s a caveat: unchecked passion can border on obsession, potentially clouding judgement.
Observe The Trade Keenly
Just as a watchful bird spots its prey from afar, a trader’s success can hinge on its ability to discern subtle nuances in market movements. Take, for example, the EUR/USD pairs. A trader with an eagle eye may spot a recurring pattern every Thursday, a seemingly minor detail that could be a gateway to consistent profits.
The capacity to detect these hidden trends and patterns can be a game-changer. Such astute observation is especially beneficial for those with a natural penchant for details, those who can sift through hours of data to find that one golden nugget.
However, this approach is not without its demands. It calls for an investment of time, a reservoir of patience, and the perseverance to look beyond the obvious. It’s not always about the big market news or groundbreaking shifts. For those willing to listen closely, the rewards can be substantial.
News Updates
The Forex market is a vast, interconnected web sensitive to the subtlest of global tremors. Geopolitical happenings, ranging from elections to diplomatic tensions, have the power to send ripples through this web, leading to tangible shifts in currency values. A classic example would be the political landscape of the UK; instability or significant policy changes can cause the GBP to swing unpredictably. These swings can become opportunities rather than uncertainties for a trader with a finger on the pulse of such news.
Being consistently informed offers the advantage of anticipation. However, the abundance of information that comes with the digital age is a double-edged sword. While being updated is vital, the challenge lies in discerning valuable news from mere noise.
With the proper filters, traders can avoid drowning in a sea of data, which could result in indecision or analysis paralysis. Because of this, the art of profitable trading in this situation involves knowing what news to pay attention to and what to ignore. On the positive side, this knowledge could help you set your trading in accordance with your goals. You can target pips, profits, or set levels that are necessary for a trade. These calculations are possible with calculators; take the pip calculator as an example, which is a smart tool that quickly finds out the pips of any currency in the one you are trading in. It makes trading easier, as you are aware of the number of pips you need to capture. There are other tools that work in the same way, and they make trading easier.
Final Remarks
While the above strategies are tried and tested, remember there’s no one-size-fits-all in forex trading. The beauty of forex is its dynamism. What works for one trader might not work for another. It’s about finding the rhythm that resonates with you. In the words of the renowned trader Alexander Elder: “The goal of a successful trader is to make the best trades. Money is secondary.” So, immerse yourself, adapt, and may the forex force be with you.
