You should know the schedule of all data releases and news events most likely to occur during the anticipated time horizon of your trading strategy. Every trade strategy needs to take into account the upcoming news and data releases before the position is opened.
One important thing that you should not lose sight of is that forex markets are highly integrated with the other financial markets. You should have a good understanding of what the market is expecting in terms of event outcomes to anticipate how the market is most likely to react.
You must know how gold prices are going to affect USD. There is a negative correlation between the gold prices and USD. Gold prices are on the rise. Gold has always been considered to be the ultimate hedge against the financial turmoil. You need to develop the habit of looking at whats going on in other markets. You should try to anticipate the fall out of other markets on the forex market. Forex markets function alongside other major financial markets like stocks, futures, commodities (particularly gold and oil), bonds, options etc. There are important psychological relationships between these markets and the currency market.
Evaluate your trading results after each trade, regardless of the outcome. How did you identify the trade opportunity? Was it based on technical analysis, fundamental analysis or a combination of the two? Look back over the whole process to understand what you did right and what you did wrong.
For example, if your winning trades are more as a technical trader, you should probably devote more energy to that approach. Looking at your trade this way will help you identify your strengths and weaknesses as a fundamental trader or a technical trader.
You should also ask yourself was the position size sufficient to match the risk and reward scenario or was it too large or too small. Could you have entered at a better level? What tools you might have used to improve your entry timing? Were you patient enough in your trade or did you rush to make hasty decisions?
You should try to find out were you effectively able to monitor your trade after it was open and active? If so how and if not, why not? The answers to these questions will reveal a lot about how much time and dedication you are able to devote to your trading.
Currency trading is all about getting out of it what you put into it. Evaluating your trading results on a regular basis is an essential step in improving your trading results. This will help you in refining your trading style, maximizing your trading strengths and minimizing your trading weaknesses. These questions and the answer to them will reveal the role emotions play in trading. Controlling your emotions in trading is crucial to your long term success.
You can learn all these things on your real account by trading live. But you will have to go through the roller coaster of trying to control your emotions while blowing your account repeatedly. In my opinion, the best place to learn and experience all these things is on your demo account. I keep on repeating myself. Only trade live, when you double your demo account three times in a row.
You cannot double your demo account three times in a row without going through all the above that I have pointed out. Doubling your demo account three times in arrow will give you the level of confidence and belief in you to make it big in the forex market.
