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By: How To Become A Forex Trader.
10 Things You Need to Know About Trading Forex – Forex Trading Tips
Forex trading is profitable, that is, if you know what you are doing. Forex trading is not a game or a toying thing for kids; it is a trading opportunity for matured minds. Maturity in this regard does not have to do with age; it is more a matter of the mind. Only those who have good money management skills are able to make headway in forex trading. Some newbie see forex trading as a means to get rich quick. But they have been proved wrong time and again. If you plan to trade forex for quick riches, then you are in the wrong business. Do you want to be a successful forex trader? Some of the forex trading tips you must know before you kick start will be shown below.
- Forex trading is risky
There is no point in covering up the truth. Forex trading is risky; that is the simple truth. If you must go into forex trading, you must know and accept this undeniable and irrefutable fact. The forex market moves in a rather unpredictable manner most of the time. The movement pattern you see today under certain conditions may not repeat itself tomorrow under the same circumstances. This is why you need to learn more and continue to learn in order to make headway in forex trading.
- How much risk can you bear?
Forex trading is risky. You must determine how much risk you can bear before you ever invest any amount of money into forex trading. Anyone going into forex trading must have a high threshold for risk taking. If you are not ready to take risks, then you are not ready to trade in forex. As true as there is a linking point between forex trading and risk taking, make sure you only take calculated risks. Never take any risk if you do not have a fair understanding of what you are doing and of what the possible outcome would be.
- Have a plan and follow it
This is one of the important forex trading tips you must consider. Before you ever venture into forex trading, make sure you have a plan and make sure you stick to the plan. How much do you want to make per day? What time period do you want to trade everyday? Settle these questions in your mind before you venture into forex trading.
- Which platform to register with?
This is one of the important forex trading tips you must keep at the forefront of your mind. Your broker is your life in forex trading. The trading platform you partner with goes a long way to determine how your trading experience ends up. Make sure the platform is reliable before you work with them. Register with a broker providing demo trading platform
The platform on which you trade must be ready to provide you with demo account. With the demo account, you will be able to properly test any forex trading strategy before you ever risk you real money with that trading strategy. This way, your losses can be minimized a great deal and you will be able to make headway in forex trading.
- What account type to trade
There are different account types in forex trading. Each account type has its requirements, especially regarding the minimum account opening amount for that particular account. Go for an account type you have enough money to operate.
- How to manage your account
Start forex trading with small amount of money. Grow the account using the profit you make by trading. Never make too high deposit per time, especially if you are a newbie. It is better to allow the account to grow by itself instead of funding it. Never be afraid to start small. Never be afraid also to make small profits. The small profits can add up over time to transform your account to a real big one.
- Invest only what you can afford to lose
If you cannot afford to lose any particular amount of money, do not invest it into social trading. Only invest what you can afford to lose and this will help remove emotion from trading to ensure better profitability. This will ensure you do not get emotionally attached to the money and to your trading orders. This way, you can trade with more peace of mind and concentrate on making the right trading decisions.
- Trade single currency pair
It is better to restrict yourself to single currency pair as a newbie. You can add another currency pair as you progress. This will enable you learn so much about that particular currency pair. It will also enable you perfect the art of trading on the currency pair. Each currency pair has its own specific way of behaving. Restricting your trading to a particular currency pair will enable you to understand how it moves and you will not have problem mastering the pair and making more profit from it.
- What trading strategy to use
Never use a forex trading strategy if you do not understand the strategy. First take some time to perfect the trading strategy by testing it on demo account. After you have mastered how it works, you can then use the trading strategy to trade real money. Carry out the back-testing of that particular forex trading strategy before you commit it to real money trading. This way, you will never make a wrong turn. You must know also that there is no 100% perfect forex trading strategies that will never make losses. The best you can do is to improve on the strategy to reduce its losses and increase its profitability.
- Money management will help you
This is among the most important forex trading tips you will ever learn. If you do not have money management skill yet, then make sure you learn the skill before you venture further into forex trading. You should not just adopt any money management skill, make sure the skill adopted is good and reliable, something that can serve you for years on end. Money management teaches you how to manage your profits and your losses and it ensures your trading account does not get exhausted unnecessarily.
By: How To Become A Forex Trader.
Regardless if you are a seasoned or a new trader, you are going to benefit from learning important steps that can help you to be more successful in your trading.
1 Strategizing, analyzing and diarizing
Successful professional traders normally do things that amateur may forget about. They plan a certain strategy, they follow up the market and they are able to diarize, to track and to analyze every trade. While planning for your business, you should choose the pair that it is good for you, decide on the position you wish to take and choose the target position you wish to achieve to. You should also follow up the information about the market and to keep the diary of what it is going on in your trading and the results you get from a certain trade.
2 Managing the risks
The best trader is not always the one who is able to take good positions but also the one who can manage the risks. He is not emotional about the losses and the gains and he can set the profits target or loss limits for the positions he takes. To achieve this, you should know how to limit the orders automatically and how to stop the losses when you have achieved maximum losses. This is going to help in capping the losses when you have chosen a losing position.
3 Learn how to analyze the market
There are two options when it comes to analyze the market and to win you should be aware of how to analyze them in a successful manner. The technical analysis is used to know the movement of the price by the use of the historical data in order to predict the future price. The basic for this is that when someone has information about the movement of the price, he can make an informed trading decision. The charts are the primary tools used in the technical analysis. Fundamental analysis focuses more on the political, social and economical analysis that are behind the demand and the supply. Different traders use different indicators in the fundamental analysis.
4 Chart your own course using technical analysis
A technical analysis requires the use of the charts in order to predict the future and by studying the past movements in the market. By the use of the technique, the forex trader has the ability to monitor the market. Since many people use the technical analysis, the reaction to the market is the same and the technique has been strengthened. This is a self-fulfilling prophecy and it increases reliability from the signals that are being generated from the analysis.
5 Get more information about the fundamental analysis
The traders who use the fundamental analysis want to forecast the impact that different events have on the price of the currency. The prices may be affected by different macroeconomic factors like industrial production, unemployment and inflation. According to how they analyze the data, the traders do take the position in the market after deciding on how they can make the profits.
6 Do not fail for the psychological pitfalls
There are different traders who take their trading seriously while others lack the required discipline for trading. The analysis of the market should also include the possible upside or downside. For every trade, you should make a target which is realistic. You should choose the loss limit that can accommodate the normal fluctuations of the price in the market but which does not limit your profits. You should not be emotional about the trading, do objective analysis and stop a trade when you see that your position is losing. You should avoid over trading and remember that trading on margins may not be the best option for every trader.
By: How To Become A Forex Trader.
Top 10 Ways New Forex Traders Lose Money
Forex trading is not a get rich quick means; all intending forex traders and newbie in forex trading should take good note of this. If you think you will make it big over night in forex trading, then you are making a very big mistake. There are many gurus out there today who never made anything tangible out of forex trading until several years of consistent trading. However, you may not have to wait for 5 years or ten years before you can start making something meaningful out of forex trading, provided you have access to the right kind of information. The purpose of this written piece is to get you adequately informed to ensure you do not have to wait for long before making profit and to give you all the facts you must consider when venturing into forex trading.
You can make money fast and lose it fast in forex trading and all forex traders must keep this in mind. If you do not have the right kind of trading strategy, things may go wrong with your trading plans. However, consistent success in forex trading goes beyond just having very good strategy, it bothers more on having good money management. Many newbie in forex trading lose money, not because they do not have good forex trading strategy, but because they do not have the right money management skill or lack the maturity to implement their money management skills. Some of the things newbie do that make them loose money in forex trading will be looked into below. The purpose of this write up is not to scare off intending forex traders, but to open their eyes to some of the errors that can hinder them and to make them guard against such so they can start smiling to the bank more often.
1.No adequate experience
Many newbie want to start making it big from day one. They may even have access to forex signal services or even have access to top notch trading strategy, but lack of experience on how to put it all together can spell doom for their trading and they will end up losing money. Even if they have started making something tangible at the start, their lack of experience may make them lose everything they have made within a very short period of time. There are so many things to be put into consideration when trading forex. Forex trading should be seen as a real business on its own and the best way to prosper in a real business is to learn all you can in that business. This way, you will be able to make profitable trading decisions. There are some basic principles, ideas and terminologies a newbie needs to learn about forex trading. The newbie needs to be familiar with how the market works and how to apply the candle sticks, the trading indicators and the news events to make a profitable outcome.
2.White elephant ideas
Many of the newbie out there today have great dreams of making millions in forex trading in their first day of trading. They have heard stories of how other make it big and they too have this unreasonable and unattainable expectation that they would make it big the first day. As a result, they end up making unwise trading decisions that will lead to the loss of their investments. Some so called forex gurus and forex coaches have a way of painting the forex market in bright light and any unlearned newbie will fall for these tricks easily. The pictures painted by these gurus make people think forex trading is an easy money-making means where you will not do anything much but make something big. Because of these unreasonable expectations, some newbie even quit their jobs before they start making profit in forex. This is very unreasonable to say the least.
3.No trading plan
Many of the newbie flooding forex trading today do not have any thing called trading plan. They just buy forex strategies from so called gurus or get them free online and they are ready to start applying their new “fail-safe” strategies to real trading without delay with the hope of making it big the first night. This is a very unreasonable perspective about the forex market. If you do not have good trading plan, you are sure of losing money big time. You must make up your mind on the exact amount you want to make each day. After reaching your goal for the day, it is only right to stop trading for that day and wait till the next day for another trading session.
Many of those who lose their money in forex trading today do so due to lack of discipline. They just hit social trading platforms without properly schooling themselves on self control during trading. Patience is one virtue that must be considered by a forex trader that wants to make consistent profit. Many of the newbie lack patience and they end up losing their investments over and over again. They never know when to stop and they may end up losing all their profitable positions.
5.Stop loss and take profit
Lots of so called forex gurus might have taught you never to bother about stop loss, since forex brokers tend to work towards your stop loss and manipulate the market to make sure that you lose your money. If you are following this kind of instruction, you are doing your trading a great damage. Stop loss is designed to help protect your investment. Take profit helps to ensure you do not miss out of possible profitable position.
6.Too high leverage
A sensible newbie will never go for leverage too high than he can manage. It is true that high leverage in social trading platforms gives you better opportunity to making huge profit, you should also know that high leverage opens you to the risk of making very big loss. High leverage is as good as when you are winning, but it can ruin your account when you are losing.
7.How many open positions at once?
If you are not well experienced in forex, you should not open more than one or two trading positions. If you open more than this, you will be doing your investment lots of damages. If things turn against you, it may wipe off your account before you very eyes at the twinkle of an eye. With too many open positions, you will have so many things happening around you at the same time. This can be confusing and can make you lose potentially profitable trades.
8.Riding the trend for too long
Social trading platforms can be sweet, especially when the trend is going either bullish or bearish in your preferred direction, but things can turn against you suddenly if you hold that open position for too long. For example, a sudden opposite spike due to newly released high impact news can turn the table against you and make an erstwhile profitable position to become a losing one. This is where you must never forget about your stop loss and take profit. After the trade had moved in your direction for some time, lock it in by adjusting your stop loss. This way, you will never be caught unawares.
9.Never ignore pip spread
Pip spread is the means via which the forex brokers make their own profits. If the pip spread is too high, it is not in your best interest to trade that currency pair. Some experts recommend that you should not trade a pair if the pip spread is higher than 3. This will help ensure a more profitable trade. If you do not choose your pip spread carefully, a winning trade may be suddenly turned to a losing one. Some currency pairs have very low pip spread and some other ones have high pip spread, it is important to watch out for these so as not to make wrong moves.
10.Lack of proper money management
Any trader that wants to make anything tangible out of forex must have good money management skill. It does not matter if you are trading with some of the best forex brokers in the industry, a bad money management skill will ruin your trading opportunities. Lack of good money management skill makes a trader to fall into temptation and greed. You will find yourself entering into some rather ridiculous trades that you should have avoided. Forex trading must never be seen as gambling; it is real business and must be handled as such.