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It is possible to make a healthy profit, and even a substantial living, by trading foreign currencies, but it is important that you develop a trading strategy and that you have the right mind-set. Always ensure that you invest, rather than bet, and that you are prepared for short term loss in the pursuit of long term profits.

Although there are many skills that the successful Forex trader will display, below are three that you will need to master or must have in order to be able to successfully make a go of Forex trading as a career, or as a long-term venture.

1 –Money Management

Money management is a core trading concept, and is commonly also referred to as risk management. Rather than a single skill, it requires that you learn everything you can about things like stop losses, which you should always use, and additional skills such as calculating risk to reward for each trade.

These skills will enable you to determine not only whether a trade has the potential to make profit, but whether it is worth the risk. It will also enable you to protect your investment bank, for example by only allowing you to invest between 1% and 2% of your total bank in a single investment. This can stop you from losing too much of your money in a single go and ensure that you have enough bank to turn a long-term profit.

2 – Technical Analysis

You don’t have to be a maths genius to be a Forex trader, but you will need to know your way around a calculator, a spreadsheet, or your trading platform. Use a platform like ETX Capital, access the charts that are available and utilise these charts. Add your own moving averages, learn how to use Japanese candlestick charts and other forms of analytical tool, and then decide which methods you prefer best. Some traders may use a single type of chart, while others will use several, but technical analysis can help you identify potential trades, while protecting you from those that do not offer the potential movement that you need.

3 – Patience

Patience is really only one part of trading psychology, but it is arguably one of the most important and especially for the developing trader. Be prepared for short term losses, and be prepared for periods of time when there are very few trades available to you.

Have the patience to trust in your system, and only invest when potential trades meet all of the necessary criteria. Don’t invest more than your strategy demands and, whatever you do, do not start trying to chase or recover losses. This is the quickest way to lose your investment bank and, if you aren’t strict about sticking to your strategy, it can make even the most successful long-term strategy look like a poor gamble.

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