Most people think that currency trading is a very difficult things to do. Well, it doesn’t have to be that way. If you heard all the stories about traders that lost all their money overnight, realize that they’re novices who didn’t strengthen their basic first before actually enter the market. These 4 currency trading tips are the basis of trading safely, so make sure you know all of them and avoid being the next idiot who lost all his money due to his own ignorance.
1. Do not let your broker to eat you
Let’s face it. The entire world is filled with those who are ready to reap some benefits from you if you do not careful enough. Scam brokerage will offer you 101 too-good-to-be-true features to lure you in. When you already inside, they are going to suck your cash dry and kick you out once you can’t give them more deposit.
Give yourself a favor. Do a little research before actually throwing your money into some unfamiliar brokerage just because they offer you sugary promises. Ask if they are regulated by an official financial authority or not. See their terms and conditions. Have a look at their spread. Test their trading platform via the demo account. Spending a little time in research will save you from many troubles in the future. Check out the details of my recommended broker on another look at FBS broker.
2. Do not jump into the market with unproven trading system
When you decide to enter the world of forex trading, you may have several ideas about the trading system that you’ll use to generate profits. You could be considering swing trading, day trading, or other strategies. You might also have interest in automated trading, such as making use of trading signals or expert advisor. Find out the alternatives on managed capital in currency trading.
Whichever it is, make sure you spare a while to open a demo account and actually test the strategies against live market movement. Using this method, you’re going to get much more precise result than mere backtest report.
3. Do not depend on yourself to close the trade
Most novices enter the currency trading world with one misconception: they think they can watch the market movement on their own and make the best decision to get the highest possible profits for every trade. This won’t do. Your emotion are certain to get in the way and mess up everything. You’ll stress yourself more and get more losing trades than winning ones.
Learn about basic risk management: placing Take Profit and Stop Loss orders after you take a position. Doing this will keep your trades controlled and you may sleep better at night. Obviously, there are certain events where you can obtain a much more by observing the market by yourself, but just leave that for another time when you already get used to the game.
4. Do not place all of your money on the line
Learn basic profit and loss calculation. Learn how to calculate your equity. By knowing your numbers, you can employ proper money management anytime you will execute a trade.
The iron rule here is no matter how good the prospect of the trade might be, you’ll never execute a trade that put all your money at stake. Observe the number of lots that you will buy/sell and calculate your loss if the market goes to the opposite way. Can you handle the loss? If you can’t, then it is better to lessen the lot size and play it safe.
The currency trading tips above are basic strategies to get rid of unnecessary risks before you actually put your money in the line. You will need to put some time and effort to do that, but realize that in the world of currency trading, no one can 100% predict the market movement. Things can be chaotic in a matter of seconds and you don’t want to lose everything just because you were careless. So, be prepared for anything; that is the essence of becoming a pro trader.
If you find the tips helpful, check out further tips in learn to trade forex. Additionally, read the facts of my top preferred live course at a review of Bob Iaccino Trader Outlook.