In this article we share some basic tips that every Forex trader should learn before trading real money. Most people are pulled into the world of day trading by the notion that they are able to make vast amounts of cash quickly. Oh if only things were this simple.
You see; the majority of people do not seem to realize that the profits they have their minds set on do not exist yet. It is all down to the trading style of a person to turn these ‘virtual profits’ into real gains.
The problem is that many rookies have absolutely no idea what they are doing in this regard. They will tend to blow away the cash that they have available before they even learn how to trade or how different currency pairs correlate to others. That is why we have put together this article–whether or not you are a Forex affiliate or a trader–because either way, keeping a couple ‘guidelines’ in mind can mean the difference between success and failure in the world of Forex day trading. Here are our top Forex trading tips.
- Knowledge: When it comes to any type of trading, knowledge is going to be at the forefront of everything. Knowledge about your planned trades, the way in which prices have acted previously, and even knowledge about the news is going to be vital in making your decision. As a rookie trader it is likely that you are going to spend more time reading through information and selecting the trades as opposed to actually trading. Always make informed decisions; they are much more profitable.
- Focus on small wins: It is important that you are realistic about the amount of profit that you could potentially make. Many rookie traders are greedy. Don’t be greedy. In our opinion, and probably the opinion of most Forex traders out there, it far, far better to end up with just a small amount of profit than nothing at all! Nobody ever went broke by taking a profit, no matter how small.
- Leveraged Trader: As a newcomer to the world of Forex day trading it is suggested that you steer clear of extremely leveraged trading. The high degree of volatility associated with positions over 100:1 could cut into your profits substantially in mere seconds, so beware of the greedy voice telling you to roll the dice…that’s gambling, not currency trading.
- Entry & Exit: It is important that you know exactly what price you are going to enter and exit a particular market at. This will help increase your profits and reduce your losses. You always stick to your intentions too…be a robot…seriously. You want to exit a market as soon as conditions become less than favorable to you. When you start trading on emotion, you will tend to make rash decisions.
- Pairs: During your early days of trading you should stick to just one or two currency pairs at a time. This should make everything easier to manage. We know plenty of day traders out there who trade multiple pairs at once, but unless they are highly skilled, these people find it very tough to spot opportunities to both enter and exit a market.
- Look before you leap into a trade: It is important that you try not to trade during the first 20 minutes or so of the trading day unless you understand how to ‘fade’. Price movements tend to be very profitable here due to severe turbulence, but most FX traders should be trading during the middle part of the exchange’s day as prices will be a whole lot more stable and it will slightly be more difficult to make ‘stupid’ decisions.
- Manage your money: The only money that you should be trading with is money that you are prepared to lose. You do not want to be cutting into your living expenses and the like for the sake of making a trade. The last thing you want to do is find yourself homeless, right?