Forex trading is one risky activity which when done wrongly, can result in serious losses.
Some newbies suffer so significant losses that they vow to never again venture into trading.
Do you also have to get to that extent?
So what should you do not to blow so many accounts?
Well, you need to gather enough experience in Forex trading in order to be skilled enough to pull consistent income out of the markets.
But wait, do you have to make the same mistakes which people like myself have made in order to be better?
Of course not.
For that reason, I will walk you through the top 10 Forex trading tips that work.
They have worked for me and for other successful Forex traders. You can not afford to miss any point.
Here is the list:
The worst mistake you can make in life is to be caught up in something you know nothing about.
So what exactly is Forex trading?
What are assets and what are brokers? What is technical and fundamental analysis? What is …, what is …
Do you understand how Forex actually works?
How do you earn money out of Forex?
Do you understand how much capital you need to venture into Forex trading?
Lots of questions, right?
Here is more. Haha.
Do you understand how to protect your capital while trading?
What are Take Profit and Stop Loss orders? Technical chart analysis tools and indicators? What are they?
A whole lot of questions and all I want to say is that, as you can clearly tell, Forex is a whole field of knowledge.
You must have prior knowledge about this field of Forex before you invest.
A broker is that firm that will grant you access to the Forex, Stock, Commodity, and any other asset market.
You must open a trading account with any broker of your choice in order to access the markets you want to trade.
But what informs your choice of a broker?
A suitable broker must have enough market experience so that you are sure that they will still be around in the future.
For safety and reliability, the broker must be well regulated in your country.
You will then be sure they won’t run away with your money.
You must also ensure that your broker offers affordable commissions and spreads as well as Forex education.
If there is no way a broker can be reached for client support, then avoid it like a plague.
You must have a trading strategy first, in order to trade profitably.
A trading strategy is a set of rules and conditions which define your entries and exits of trades.
Whether you choose to use price action strategies or technical indicators is up to you.
Just ensure you read the right materials and develop strategies backed by the basic principles of how markets move.
Lovers of technical indicators must understand the various classes of technical indicators.
You should combine technical indicators of different classes for the best results.
Do you know how to protect your capital while trading?
If you don’t, just don’t go into Forex trading because you are going to lose all your capital.
You must understand how to protect your account by the use of Stop Loss orders.
Additionally, understand what proper risk to reward ratios are so that you don’t risk so much to gain so little.
Understand also how much of your account should be exposed per trade so that you don’t stake all your capital in one trade.
You should never exceed 5% of your account in one trade.
Engaging your emotions while trading Forex will make you lose money.
For success, you must keep your emotions in check so that you act according to your trading and money management strategies and not emotionally.
Control your anger, revenge, fear, greed, and overexcitement.
They are all emotions all human beings possess but in Forex trading, they are lethal.
Let your trading plan, strategies, and systems do their work, then keep emotions out of the business.
You need to keep practicing Forex trading even when markets are closed.
There is what we call weekend analysis, where you can backtest strategies or see how the markets behaved and what you would have done better.
Not even so, but keep practicing even when you don’t seem to make money out of the markets.
It is such practice and resilience which will one day earn you a fortune out of Forex.
When to Trade What.
Currencies are traded in shifts and sessions.
Each Forex Session has a pool of currency pairs related to it, whose volatility is highest when the session is open.
High volatility is the best for the most profitable opportunities.
Know the major Forex session, when they open and close, then which currency pairs should be traded during the span of each session.
That way, you will know when to trade and what to trade.
When to Stop Trading.
Do you know when to Stop Trading?
What about when tired, when market volume and volatility are low, and when you are losing almost every trade?
I think those are some of the times you need to stop trading.
Leave when you also hit your targets and never try to take revenge.
You must have a trading plan, else you will be a boxer punching in the air.
Plan every entry and exit so that you have realistic and objective targets to hit.
Your trading plan must also define when to start and when to stop trading.
That way, you take planned actions and can easily account for them.
Learning from Your Mistakes.
Your mistakes in Forex are not meant to kill you.
They are meant to shape you into a better trader.
What that means then is that you need to learn from them in order to perform better the next time.
A trader who takes mistakes as lessons always emerges a better trader.
All successful Forex traders including myself have been making mistakes ever since but learning from them.