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Forex Beginners 'Must-Do'
Written by article default Sunday, 02 August 2009 20:22
It is believe that more than 50% of Forex traders are losing money long term in the foreign currency exchange market. Yet, there are still a lot of Forex traders jumping in to the market, trading blindly and losing their money.
Trade after trade, its surprising to see that 'often-losing' traders keep betting (not investing!) their money into the Forex market without reviewing their trading strategy. No matter if you are the experienced trader or merely a beginner, there are certain 'must-do' things when trading Forex to manage the risk wisely and to increase your chances to make profits.
'Must-Do 1': Invest in your brain first
If you are serious about investing in Forex market, building up your trading skills and knowledge is the very first step that you must take. Seminars, workshops, video tutorials, online learning, or even books are helpful for us to learn from the professionals.
Learn to implement technical charting into your trades; learn using indicators to determine the right time to enter/exit the market; brush up your experience by trading with a demo account… all these are effective methods to ensure you a smooth start and it will definitely reduce your chances of losing money.
Recommended GLF Forex trading courses
'Must-Do 2': Getting the right trading system
It is wise to carry out extensive research and to consider all the various brokers' systems available to you before making your choice. By applying a certain level of computer automations (such like charting and doing auto trades), trading; a well-designed trading system will reduce your work dramatically. This in turn gives you more time to focus on studying the market and plotting your strategy. Also, using auto-trading system will avoid you from making emotional-trades.
Recommended Forex trading tool
'Must-Do 3': Have a trading plan
As the old say: “Failing to plan is planning to fail”. Trading is like a sailing boat in the middle in the sea; you will not be going anywhere without a compass and navigator.
What is the detailed objective of the trade? How much profit can you expect from the trade? When should you get into the market? How much should you invest? What price should you exit the market? If things do not work out, when do you execute the stop loss order? How high is the affordable risk? A good trading plan should at least answers the above questions. Furthermore, if your trading plan fails, review and modify your trading plan.
Realise your mistakes and learn from them.
'Must-Do 4': Money management
Money management is controlling your risk through the use of protective stops, while balancing your potential for profit against your potential for loss. For example, good money management means you know your profit objective and the odds of being right or wrong, and controlling your risk with protective stops. You are better off with a trade where you might lose $1000 if you are wrong and make $500 if you are right, that would work eight times out of ten, than to take a trade where you would make $1000 if you are right and lose only $500 if you are wrong, but works only one time out of three.
If you are investing using your savings, it's even more important that you manage your money in your trading and in your personal expenses. Chances are high that you miss a good investing chance because of you are lack of capital.
'Must-Do 5': Discipline trading
Trading Forex with discipline is important. Success in Forex trading can not be achieved by plotting out the best trading plan. It also depends on implementing the trading plan. Be disciplined, trade according to your plan and never trade with your emotion no matter you are losing money or winning. Greed will stop you from taking profit at a predetermined level; while fear will stop you from making a killing in the market.