FX traders experience fast-paced excitement of Forex financial markets, and enjoy a significant financial incentive to do so. They often work from home, and use the power of the internet to analyze the latest CAD news before placing trades. Savvy traders know there are great opportunities to be had. At the same time the recognize that Forex trading is a high risk/high reward occupation. If you’re thinking of entering this market for the first time be aware of the following.
#1 Build a Solid Foundation
Education is the key to success in trading the FX markets. Search online for a reputable trading trainer who can teach you how to perform market analysis. Do not make the mistake many newbies make of risking capital without educating yourself concerning the marketplace.
Investment without education is a dangerous strategy. In fact you could inadvertently empty your entire trading balance on your very first trade if you act impulsively. So please take the time and effort to educate yourself properly before entering your first live trade.
#2 Practice Makes Perfect
Brokers offer trading platforms with demo accounts. Before placing all your disposable income into a live brokerage account spend some time practicing trades in the demo account. Demo accounts have all the features of standard live accounts, except you are not using real money. Use the demo to test trading strategies and practice opening and closing trades before going live with your own capital.
#3 Join a Team
Sign up for group mentorship with a qualified trader who enjoys a successful track record. Mentoring programs help you avoid the pitfalls of trading and allow you to learn from others’ mistakes. There are online chat rooms and services that support trading activities. Do some research to locate and join a service that suits your needs.
#4 Analyze Reward and Risk
Risk analysis is the most important function you perform as a trader. Be aware of the percentage of risk involved in the trade before you place any cash into a trade. If you don’t know what you’re actually risking on the trade you are likely setting yourself up for disaster. For example, never trade a risk-reward profile of less than 1:1 and never place a trade without precisely following the rules set forth in your trade plan.
#5 Create a Trade Plan
Every trade you make needs a specific plan designed for the trade. Each trade you make is unique. However, how you trade – your trade plan – should remain consistent. Create rules that you adhere to and follow each time you place a trade. Back test your trading strategy before going live and be confident before you engage. If your trade plan criteria are not met, walk away from the trade. You will be glad you did.
#6 Mind Your Money
Money management is another trading area where many newbies fail. Using excessive leverage, or trading on margin can clean out your account balance rapidly. It is imperative you pay attention. Know how much you are risking in the market and never risk more than 5% of your capital on any one trade. Sound money management principles ensure you continue with capital to trade, and are not forced to exit the platform with major losses.
Be aware of geopolitics!
To become a successful, profitable trader it’s imperative you keep up with global financial events that move markets. It’s a good idea to register for a news service so you can receive the latest details on currency pairs such as, for example, Australian Dollar news that you use to formulate your trading strategy.
Shift Frequency Publication – Educational Material © 2018