Foreign exchange trading is already a game of squeezing out the smallest numbers for the sake of a little profit, multiplied over thousands and thousands of dollars.
These tiny fractions of a dollar that we collect and multiply over our investment are already the result of our number-crunching.
But how can we get a little more out of trading foreign exchange? What else can we do to make it just that little bit better?
Well, let’s take a look at some things we can do to optimize getting the most out of our foreign exchange trading experience.
Choosing the Right Broker For You
One of the most effective ways to get the most out of your trading experience is to make sure you’re set up with the right broker.
A broker is a firm that handles your money, leveraging, and trading, and lets us participate in the markets through their platforms. Different brokers carry with them different benefits and are known for many different aspects of Foreign Exchange Trading.
For example, if you find yourself on the Foreign Exchange Market trading the Euro and U.S. dollar every day. You want to make sure you set yourself up with a broker that offers the lowest possible spread on your trades.
Saving you the most amount of money in the long run. Spread is the commission that the broker takes for every trade that you enter. The fee is extremely small and can be as little as two to three Pips. 1 pip is the fourth zero after a decimal place in a currency quote.
For example EUR/USD 1.3584. In this instance, the number four represents the value of one pip. Another example, Let’s say you’re starting an investment firm and you’re very worried about customer service.
There are certain Brokers that are very highly reviewed for their customer service and how they handle their clients. Certain traders that participate in the Foreign Exchange Market also like to trade very exotic currencies.
These are currencies that aren’t usually available to any standard broker. Finding yourself a broker that trades these exotic currencies is going to be on your to-do list. Typically, these Brokers that offer exotic currencies also have a significantly higher spread.
It should be mentioned that some of these brokers also offer their own broker platforms in which you can view the quotes of the currencies you are trading as well as your entered trades, margin, leverage and trade history.
Remember to always do a little shopping before you settle for a broker. Never rush your decision and be sure to do your research.
Strategy and Back Testing
Your trading strategy is probably your greatest lifeline when you are trading in the foreign exchange markets.
How well you adhere to your rules will surely dictate how much profit you make from your trades. The most commonly repeated rule I hear all the time from successful traders on how to be more successful in trading is to adamantly stick to your trading strategy.
I cannot repeat that enough. Stick to your trading strategy. If it says take profit, then take the profit and run for the hills, don’t wait around for the trade to turn sour.
When finished trading for the day you should always take the time to keep yourself up-to-date, read up on the most current events that are happening and continue working on your strategy because your strategy should be adaptable to the current market conditions.
Backtesting is one of the best ways you can check how well a strategy performs in the current market.
After you come up with a trading strategy the first thing you should do is go back historically through the charts and see if your strategy can prove profitable or not. Once your strategy is profitable, go back again and start tweaking it to make sure it’s as finely-tuned as possible.
A backtested strategy is no guarantee that using that same strategy in the current trade will work in your favor. It is simply a more educated guess. Nobody can be certain what will happen with the markets and which direction they will turn, but with a properly backtested strategy, you can be sure you will end up on the winning side more often than not.
So today, as you are going to be counting how many pips you made, remember some of the ways that we can optimize and get the most out of our trading strategies.
Remember to never settle and always keep looking for what new Brokers are offering and if your strategy changes, then you should take another look at if any other brokers can give you a better offer for your choice of trade.
Remember that these individual Brokers also have their own broker platforms which can also make your trading life a little easier, allowing you better access to certain indicators, strategy, trade history, and back-testing.
Keeping your trading strategy as up-to-date as possible is always a smart idea and remember to always keep improving. Good luck and have fun traders!