Things To Not Do When You Are Into Forex Trading
Okay, so you want to trade in Forex?
Welcome to the club! Almost everyone who sees a friend, an acquaintance or a neighbor who is into Forex trading sometimes is bound to feel tempted to try to do it themselves. When you acquaintance is making heaps of money in the Forex market, you throw caution to the wind and think to yourself, if he can, why not me?
The reality, my friend is that many people and by the term ‘many’ I mean thousands of them have failed miserably and have made big losses in the Forex trading field only because they were uneducated about the actual working of the trading and were too undisciplined about the trading per se.
But you need not be one among the people who regret. Here are some of the choicest tips that have been compiled after interviewing the best brains in this field.
Define your risks:
As in all kinds of speculation, you must carefully analyze your financial positions and then start speculating in this field. If there is a need for you to learn about market dynamics, then spend a little time studying the market trends and then take a dive. There is never wisdom in diving without knowing the basics.
Plan a goal and then don’t waver from it:
You must be able to make a plan before you start to trade in Forex. You must also determine whether this is going to be your bread and butter or is it going to be a source for you to generate a little more income. If you are only looking to supplement your income, then how much time you can spend daily or weekly in order to reach your goals. Keep a tangible goal in mind and keep at it.
Also, make sure that you set a limit for your investments. In case you do not break even or do not make profits, you must be in a position to pull yourself out of it.
Your choice of broker is very important:
You must review the existing brokers in the market before zeroing in on the right broker for yourself. You must choose a broker after careful determination of his customer portfolio.
Don’t have over expectations in the beginning:
In the beginning, don’t get carried away with Forex that has high leverage value. We highly recommend that you go slowly. Jumping in at Forex with high determinants can spell doom if you are not sufficiently equipped with the knowledge to be able to speculate and earn a good profit. You may end up losing all the money and it can leave a bad taste. So better to go slow!
Start with really small sum:
Start trading with smaller sums. As time passes and you get confident with experience, you can speculate with the bigger amount and with currencies that have high to very high leverage.
Focus on single currency pair and then graduate to pairing:
Forex market is extremely chaotic and volatile. Any small changes in the social, economic or political fabric f the world can mean very big implications in the Forex market. So, for a beginner, it is a good idea to only trade in one currency that he or she is confident in. with time and experience, they may learn to handle various other currencies. A lot of experts seem to advise even the advanced speculators stick to only one Forex currency for trading at a time.
Do what you understand and understand what you do:
The golden rule in trading of Forex is that you must never lend your ears to rumors, hearsay and other people’s idea of the future in the trade. But you must do your own research and come to your own deductions before you can confidently go ahead with your choice of currency.
Avoid strong emotions:
Don’t get carried away by greed, avarice, and jealousy. If someone else has had a good day, learn from his case study and try and apply it in your trading albeit with smaller sums. Don’t be euphoric and also invest immediately. Your greed can become your nemesis.
Learn from your mistakes
You must have an analytic approach and not a closed door policy. If you have done very well, try to document the strategy that you used to win that day. On the other end if you have had a bad day at the Forex, learn from the mistakes that you committed and make sure that you do not repeat them.
Be humble; be patient:
No one in the trading has the Midas touch. Every one of them has good and bad days. The difference between a good and a bad trader is that a good trader uses his failures to make it as stepping stones to success whereas contrarily, a bad trader can get too over confident with his success and get reckless in this trading consecutively. The difference lies in the attitude and the approach