The world of the foreign exchange is exquisitely intricate. For every market movement, there are a thousand different market drivers that may have played a part, and in order to learn how to read and pre-empt these, you’ll need an awful lot of skill, time, and effort to invest.
Although this may sound disheartening, it shouldn’t be taken as such; in fact, you need to see it as an opportunity. Market movements are neither spontaneous nor arbitrary, and this means that it’s entirely possible to tip the odds in your favour.
Rather than having to rely on a twist of fate, you can secure your own successes. All that you need to do is pay attention to these ten handy tips…
#1: Do Your Homework
Like any academic pursuit, the greatest forex successes will usually go to those who work the hardest to achieve them. There are a wealth of different resources available for you to choose from, and these offer something to suit every learning style. The best way to get to grips with the market is by studying as many different materials as you can, so whether it’s YouTube tutorials, blog posts, commentaries, or old-fashioned books that suit you the best, spend some time doing your research and teaching yourself all about the complicated world of forex.
#2: Choose Currency Pairs that Complement You
Before you consider trading, it’s important to choose your currency pairs, and whittling them down to the ones that suit you can be a long process. Your research should already have taught you about what to expect from the various combinations, so take the time to assess which of them will complement your strategy, tactics, and personality to the greatest degree. The ‘four majors’ are often a sensible starting point, but it should come down to your individual preference above anything else.
#3: Find the Right Broker
Once you know which pairs you’d like to trade, you need to compile a selection of suitable brokers, so start looking at the options that are open to you. You’ll find a wide variety of prices and services to choose from, and it’s important to comprehensively assess each of them before you reach a final decision. Above all, consider how much support you’ll receive from your chosen firm, and don’t settle for any company that isn’t capable of fully meeting your needs. Reputation should also take priority, so brokers like ETX Capital should be boosted straight to the top of your shortlist.
#4: Choose a Platform that Suits Your Trading Style
Your next consideration should be your trading platform, and the research you’ve already conducted should enable you to comprehensively assess your options, and decide on a model that’s right for you. Your main choice will be between MT4 and MT5, but you’ll also need to select the type of software that suits you best, whether this is mobile, web-based, or multi-platform. It’s important to consider when and where you’ll be trading whilst you’re mulling this over, so that your eventual pick complements your needs as fully as possible.
#5: Be Realistic with Your Budget
The aim of trading forex is to increase your capital, and bankrupting yourself is one way to ensure that your plan goes awry. To avoid this, you need to be realistic. Success on the markets is never guaranteed, so you must always ensure that you limit your trades to amounts you can afford to lose. This way, your losses should always be recoverable, and your life outside of the markets should never be negatively impacted by your trading decisions.
#6: Learn to Keep a Lid on Your Emotions
One of the most common causes of catastrophic forex losses is overly emotional trading, so you need to be able to stay calm and collected at all times. There may well be days where it seems that your trades are going wrong more often than right, but provided that you put the proper procedures in place, these will not have the power to harm your overall strategy. When you feel yourself starting to panic, simply take a step back, breathe deeply, and commit yourself to not making the same mistakes in the future.
#7: See Your Mistakes as an Educational Opportunity
On that note, see each of your mistakes as the golden opportunity that it presents: the opportunity not to repeat it. As important as it is to study your triumphs and try to reproduce them, it is equally important to look at where things have gone wrong, and pinpoint ways to avoid them happening a second time. The more you can take away from these disasters, the more quickly you can begin to build a solid chain of successes.
#8: Apply the 10 Per Cent Rule to Every Trade
Another top tip for those looking to expand their money is to follow the 10 per cent rule. The idea behind this is simple: you never stake more than 10 per cent of your account total on a single trade. This means that if your instincts are mistaken and you suffer losses, you need not panic, as these small catastrophes will always be recoverable. After all, individual defeats mean little provided that your account is still in the black at day’s end.
#9: Look at the Bigger Picture
That last point is one that really ought to be emphasised: individual losses don’t matter, so long as you’re profiting overall. Too many traders become wrapped up in minor mistakes, and allow these to knock their confidence and impact their decision-making. This is entirely the wrong attitude to adopt. As many of history’s greatest names have stated, no single battle will win or lose the war. If you’re in the black at day’s end, then you’ve made a profit, and tomorrow you can do the same again.
#10: Always Use Stop Losses
Our final and most important piece of advice is incredibly easy to follow: always use stop losses. Commonly known as the ‘trader’s best friend’, they are the surest way to avert catastrophe when you make the wrong choice, and will steadfastly ensure that your mistakes never get the opportunity to spiral into disaster.
Triumph on the forex markets today with these ten top tips.