The Intermediate Trader’s Guide to Forex Success

When I first started trading, I was overwhelmed by the strategies, charts, indicators, and conflicting opinions in the market. In Your Guide to Forex Trading A Beginner’s Roadmap, I shared the steps that helped me establish a foundation. But now, as an intermediate trader, I want to diver deeper into the lessons and strategies I’ve learned on my trading journey.

Advanced Core Concepts in Forex Trading

Currency Correlations

Early on, I learned that certain currency pairs move together due to their economic relationships. For instance, EUR/USD and GBP/USD often rise and fall together, while USD/JPY tends to move in the opposite direction of USD/CHF. Gold (XAU/USD) typically follows the movements of AUD/USD, which can be an excellent indicator for trades in both markets. 

In my own trades, I’ve used these understanding of correlations to avoid overexposure. Currently, I focus on one or two FX or commodity pairs at a time. It’s like building a career – instead of trying to master everything at once, you focus on sharpening a few key skills and becoming really good at them. 

Trading Sessions and Their Impact

The forex market operates 24 hours a day, divided into several key trading sessions: Sydney, Tokyo (Asian), London (European), and New York (North American). Each session has its own characteristics – London and New York sessions are the most liquid, while Tokyo and Sydney sessions experience lower volatility. The overlap between the London and New York sessions is especially active, offering traders a unique opportunity for stronger price movements and greater market activity. 

Your time zone plays a big role in deciding which session you’ll focus on. Since I’m based in Sydney (AEST), the London session starts in the evening for me, and the early part of the New York session rolls into my late night. That timing works well with my schedule, so I plan my trades around those windows when the market is more alive. 

It’s always important to figure out which sessions line up best with your own time zone and daily routine.

Liquidity and Volatility

Liquidity is all about how easily you can get in and out of trades – the more liquid a pair is, the smoother your trades will be. Volatility, on the other hand, is about how much and how fast prices move. Major pairs like EUR/USD are known for their liquidity and tend to have lower volatility, while exotic pairs are more volatile. 

Over time, I’ve noticed that this plays a big role in trading success. I usually stick to trading between Tuesday and Thursday, when the market is most active. Most major news events – especially from the US – also tend to drop during those days, which can create good opportunities. Mondays can be slow and unpredictable, while Fridays are often volatile, with traders closing their positions before the weekend. 

Refining Your Forex Trading Strategies

My Personal Trading Plan – Price Action Focus

I’ve found that simplicity works best in forex. My trading style revolves around price action, focusing on reading the markets raw movements and timing the market.

I have found that indicators are not necessarily a good indication when trading real-time and could be noticed better after the trade has formed and in higher time frames.

By studying candlestick patterns, support and resistance levels, and formations like head and shoulders or double tops/bottoms, I can make informed decisions based on pure price movement.

Enhancing Risk Management

Position Sizing

Proper position sizing is key to managing risk. A good rule of thumb is to risk no more than 1-2% of your capital on any single trade. Remember, you only need one good trade to be profitable while the goal is to stay disciplined and avoid significant losses. I find that moving stop losses to breakeven after 20 pips profit or extended winning trades to be good practice. 

Trading Psychology

If there’s one thing I’ve learned in trading, it’s that your mindset can make or break your performance. The charts and fundamentals are only part of the game – the real challenge is staying calm, disciplined, emotionally grounded when real money is on the line.

It’s easy to stay confident when trades go your way, but the real challenge is handling losses. There are always trades where you will be stopped out before becoming a winning trade, but remember the market will always present new opportunities with patience.

Keeping a trading journal has been instrumental in my growth, helping me review past trades and improve my strategy. Much like athletes who review their performances to improve, a journal helps me stay disciplined and stay focused on the process.

In the end, trading success isn’t just about having the perfect strategy. It’s about knowing yourself, managing your emotions, and being consistent with the process.

News and Event Trading

Major economic events, such as central bank decisions, employment reports, or geopolitical developments, can cause large price movements which present profitable opportunities – but also come with risk. I usually stay out of the market 30 minutes to 1 hour before high-impact news releases to avoid the uncertainty and volatility that often precedes major announcements.

After the news hits, I look for confirmation of the price movement. For example, if a rate hike announcement from the US Federal Reserve causes a spike in USD strength, I wait for a retest of key support or resistance levels before entering a trade. This helps me avoid the extreme volatility and ensures I’m trading with the market’s direction.

Final Thoughts on Advancing as a Trader

As an intermediate trader, it is essential to continuously refine your strategies, test new approaches, and stay informed about global financial trends. Success in forex trading requires adaptability, sound risk management, and a commitment to continual learning. With discipline and a solid trading plan, you’ll be better positioned to enhance your profitability and achieve long-term success in the forex market.

 

Note: The information provided in this guide reflects the personal experiences and opinions of the author and does not necessarily represent the views of FXCOINZ, its owners, or affiliates. It should not be construed as financial or investment advice. Always conduct your own research.