As with any endeavor, trying to find success without a proper game plan is a recipe for disaster. This is even more true when it comes to online Forex trading in India, which is why it is so important for you to understand how to trade in Forex, and formulate a proper Forex trading strategy to maximize your gains and minimize your losses.
Having a strategy can help to define your goals and desired outcomes, and ensure that you are moving in the right direction. There are many trading strategies available, but there’s simply no “one-size-fits-all” method for everyone. But if you want to learn how to trade Forex successfully and with greater consistency, then the following rules are essential.
Optimize Your Time
Currency trading in India is all about optimizing your time spent trading. Thus, when deciding how to trade in Forex, you should consider how much time you have first. For those who can spare the time to watch charts all day long, you'll be able to choose a variety of Forex trading strategies from day trading to scalping.
On the other hand, those who have limited time each day to trade should focus on longer timeframes which lets you set alerts at key entry points beforehand. This allows you to trade based on a preset plan, and you only need to analyze the markets occasionally instead of incessantly staring at your screen.
However, you must be realistic if you decide to proceed with this route. The markets will continue to rise and fall with or without you being engaged with it, and you might experience disappointing results if you spend too much time away from it. Thus, it is important to find a strategy that fits your schedule to avoid potential disappointments in the long run.
Find Your Ideal Trading Personality
Always find a Forex trading strategy that suits your personal strengths. If you do otherwise, you’ll find it difficult to adjust and keep up with everything.
For example, if you are someone who likes to play it safe in everyday life, then choosing a high-risk, high-reward strategy might backfire as you’ll experience unnecessary stress and make poor decisions that could be extremely costly. Instead, try exploring strategies that are focused on swing trading or positional trading.
Likewise, if you are a quick decision-maker but not great at long-term planning, then strategies with shorter timeframes like those for day trading or scalping would be better suited for you.
Whichever it is, just remember, you shouldn’t change your personality to suit a trading strategy for Forex trading in India, but rather, try to find that perfect strategy that fits your personal strengths. Once you find a trading strategy that fits your personality, Forex trading will become a much easier process for you.
Match Your Appetite for Risk
Forex trading strategies that offer higher potential returns are often riskier than those that are more conservative. Your risk tolerance level should determine your trading strategy, otherwise, you might be in for a challenging time.
With a clear understanding of your personal psychological traits and financial situation, you can choose to adopt a more conservative approach, or aim for a bigger profit potential (if you are certain that you’ll be able to absorb big potential losses).
For those who are trading to supplement a current income (like those with a full-time job), you might want to stick to more conservative strategies. However, if you have other sources of income that comfortably sustain your lifestyle, you could try strategies that involve bigger drawdowns to aggressively grow your account.
Simply put, the risks involved in your Forex trading strategy should not exceed your risk tolerance. Otherwise, it would be difficult to execute your strategy properly, leading to unsatisfactory results. Thus, it is important to align your trading strategy with your financial goals for successful online Forex trading in India.
Where is the Market Headed?
A trending market and a ranging market are the two core types of market behavior. With this in mind, you should take stock of the current market trend and do proper evaluation before selecting your trading strategy.
For example, if you choose strategies that tend to perform in a trending market during a ranging market, it could end in disaster for you. That’s because strategies based on breakouts are highly likely to fail in a true-ranging market as there will be several false breakouts.
Similarly, adopting strategies for the ranging market at a time when the market is moving in a strong trend could prove to be disastrous. That’s because, in a trending market, any attempt to buy at support levels or sell at resistance levels will fail as these levels are prone to being breached.
To summarize, being able to distinguish between a trending market and a ranging market should guide you on how to do Forex trading successfully.
Take Note of Recent Performances
Another commonly known trading rule is that past performance is no guarantee of future results. This statement is extremely important as trading strategies which have worked in the past may not be relevant to the current market environment.
But this doesn’t mean that you shouldn’t backtest your Forex trading strategy at all. Once you have correctly identified the current type of the market (trending or ranging) and selected the appropriate Forex trading strategy, finding out how it would have performed in recent weeks or months is a good idea.
If you find that the strategy would have delivered positive results, you should try it in real trading. But if your analysis demonstrates that the strategy wasn’t effective in recent weeks, you should readjust your Forex trading strategy to get better results.
How it All Comes Together
All the rules we’ve highlighted today might seem simple, but when you put them all together, you’ll have a powerful recipe for how to trade Forex successfully.
First and foremost, always remain realistic when deciding on how to do Forex trading. Carefully evaluate your personal financial goals, how much time can you spend trading, your current preferences in trading, as well as the current market state.
Next, always be prepared to adapt to changing market conditions when you are currency trading in India. You should at least have a plan prepared for a trending market, and one for a ranging market. Better yet, you should prepare various strategies for each market type which will allow you to quickly switch between them if the current one isn’t performing up to expectations.
Finally, it’s important to understand that any strategy needs time to show its true potential, so be patient, and don’t jump to conclusions too quickly when online forex trading in India or you may miss out!
Once you’ve mastered these simple rules, you'll be armed with a set of solid trading strategies for Forex trading in India that you can easily tweak over time to perfectly fit changing needs.
Forex Trading involves significant risk to your invested capital. Please read and ensure you fully understand our Risk Disclosure.