Max Your Profit Potential: How To Rocket Your Trading Skills

Forex trading with a prop firm offers excellent opportunities for solo traders to boost their income or even take up a full time career, with low personal financial risk. However, you’ll need to prove that you’ve got what it takes to be given access to a funded account.
Having said that, everyone has to start somewhere and inexperience isn’t necessarily a complete barrier to entry. Here’s a look at how to rocket your trading skills and maximise your chances of being successful.
Grasp the key principles
Forex trading can be complicated, but it’s not too difficult to get a handle on the basics with some research and learning. There are plenty of resources available on and offline, including books, webinars, podcasts and forums. Understand the basic principles of foreign exchange and buying and selling currency pairs with the aim of making a profit.
The bare bones of forex trading boil down to deciding whether to buy or sell the base currency (the first-named currency in a pair, such as USD/GBP). If you believe it will strengthen (rise in value), then you would buy. If you think it will weaken based on your research, then you would sell (known as short).
Familiarize yourself with the different categories of currency pairs and how they function in the global market. Spend some time learning about the key forex terminology, such as leverage, spread, pip, and lot. This will give you an insight into how the trading world works and you will be able to put together a well-informed trading strategy.
Study different trading strategies
There are various types of trading strategies, such as scalping, day trading, and swing trading. Scalping involves making very short term trades, sometimes in under a minute. Day trading involves making a trade within a window of a few hours, and swing trading is a more long term strategy where trades can be left open for days, weeks, or even months.
The style of trading you adopt may depend on your personality type, the amount of time you have to devote to trading, and any rules or guidelines stipulated by the prop firm.
Develop a trading plan
The next step is to put together your trading plan. This will help you to make consistent decisions to anticipate price movements, rather than reacting blindly to every fluctuation in the market. The forex markets can be volatile, and this can provoke inexperienced traders into making poor decisions. A solid trading plan will help to keep you on track.
Your trading plan should include a risk management strategy, such as setting stop-loss levels to prevent heavy losses, and limits on position size. The prop firm you work with is likely to have its own risk management rules that you must operate within, or your account may be at risk of being closed.
Start with a demo account
One of the best ways to gain confidence and experience as a forex trader is to make use of a demo account. This will allow you to trade in simulated conditions without the pressure of trading the live market or risking any of your own money.
Prop firms such as FTUK offer a 14-day free trial, so you can have access to a world-leading trading platform and road test your strategy. It’s a prime opportunity to get a taste of what live trading is really like, and find your way around the interface so that you are familiar with it and ready to take the next step.
You won’t be able to make payment requests on any profits you make, but if all goes well and you hit your profit targets, you can progress to the two-step evaluation program. In return for a fee, you’ll be given another 14-day trial during which you take two tests. If you pass the tests, you will then be eligible for a fully funded account with scaling profit share.
Even if your free trial doesn’t go quite to plan, it’s still an invaluable learning opportunity. Review all the trades you made, and try to work out the reasons they didn’t (or did) go as well as you hoped. This will help you to refine your strategy and iron out any weak points.
Remember that the prop firm needs the profits generated from its traders to stay afloat, and they also need to cover any losses made by traders. This model works well for skilled traders, but obviously they need to prove their abilities and show that they are not reckless or undisciplined operators. This is the reason for the evaluation program.
How to take your trading skills to the next level
So, you’ve got your feet wet with a free trial, and now you are keen to take on the two-step challenge. Here’s a look at how you can max out your chance of success.
Learn the psychological game
Effective forex trading requires more than just technical knowledge: your mindset is equally as important. Understanding the psychology of trading is a powerful tool that will underpin your strategy and risk management abilities.
The popular image of a financial trader might be a whizz kid who thrives on intuition and adrenaline, but the reality is quite different. Successful traders are highly disciplined and risk-averse, and every decision they make is objectively weighed and measured.
This is not a skill most of us naturally possess, because we are all prone to emotion-led decisions and mental biasses. This can be especially true when money is at stake, because it’s so fundamental to our comfort and survival. Even in the most well-balanced of individuals, the prospect of making profits can soon turn to greed.
Greed is not good
Despite the well-known mantra, greed is not good in forex. The instinct is to push for more, and this can cause inexperienced traders to hang on to a profitable trade past its peak, only to see the value tumble. It requires mental discipline to stick to your trading strategy and exit the trade based on your research and market analysis, not untrustworthy ‘gut instinct.’
Fear is the enemy
The flip side of greed is fear of making losses. Nobody wants to be a loser, but losses are all part of the game in forex trading. Experienced traders learn to take them in their stride, much like business expenses, and don’t dwell on them as long as they are making consistent profits over the long term. Expect to make losses on around 50 per cent of your trades.
If you are overly afraid of losses, your approach to trading will be too cautious and you won’t make profitable decisions. As with greed, you need to develop the ability to put your emotions to one side, and make purely logical decisions that are evidence-based.
Steer clear of revenge trading
Another pitfall to be avoided is revenge trading. This is when you are provoked into trading to make up for a painful loss, because you feel cheated out of a reward, or because your pride is injured. However, you are unlikely to make well-researched trades and will probably just end up compounding your losses.
Forex traders need to learn resilience and accept that they cannot control the markets: you can only ever operate as an intelligent speculator. This means having the emotional maturity to accept your losses and step away, rather than trying to ‘fix’ the situation.
Track and review your performance
Don’t just rely on your trading account to record the dates and outcomes of your trades: from day one, keep an independent journal. This might seem like an unnecessary piece of admin, but it is not: it’s an essential tool that will allow you to analyse your trading decisions and outcomes.
Over time, you will be able to review your trading performance and identify the patterns in your least and most successful trades. This will help you pinpoint any weaknesses in your strategy and make improvements, and strengthen the areas where you are already doing well.
Stay up to date with global economic events
Currency values are influenced by macroeconomic factors such as interest rates, inflation, employment rates, consumer price indexes, and so on. Follow data releases that are relevant to your currency pairs to inform your trading strategy. There are online economic calendars available that you can customise to highlight the most relevant data.
Geopolitical events such as elections, wars, natural disasters, and pandemics also affect currency values, so keep up to date by following reliable news outlets. Social media can be a useful way of picking up early information to help you stay ahead of the game. However, be careful who you follow and check the authenticity of their credentials.
So, there you have it: inexperience is not an insurmountable barrier to accessing a funded trading account, particularly if you take advantage of a free trial with no personal financial risk. Build on the opportunity by developing your trading mindset, staying ahead of current affairs, and regularly reviewing your performance.