Tips For Trading Forex
Forex trading can be one of the most fulfilling types of trading if you know what you are doing. With volatility seemingly around every corner, here are 10 tips to help turn you into a forex trading pro.
The single most important characteristic found within successful Forex traders is the ability to exit losing positions quickly. Losing trades are inevitable for high volume traders. Many novice traders are unwilling to recognize and accept when a position goes against them. Seasoned traders have learned to cut their losses on an adverse trade quickly. A reduced loss is no less valuable than a gain from a winning position. However, human psychology skews our perspective making a loss infinitely more painful than a gain is pleasurable. Overcoming this inherent human flaw is the first critical step towards becoming a Forex pro.
Professional Forex traders employ detailed and strict money management regimens. Novice traders often get overly excited at the prospects of a given trade and plow into it full force. This behavior almost always translates to account blow-ups and Forex losers. Forex winners learn quickly that there isn’t any trade, no matter how attractive, that is worth risking more than 4% of your account balance. Those just starting out are advised to limit the risk associated with any single trade to 2% of the account balance. Forex professionals manage their risk assiduously.
Follow the famous advice of McDonald’s found Ray Kroc who said to “keep it simple, stupid!”. Many Forex traders fall victim to information overload, especially with many of the trading “command centers” available today which can display hundreds of data points. A Forex pro becomes a specialist in trading given pairs or spotting a specific group of indicators. By keeping it simple, you are able to become an expert in your Forex niche able to outwit other traders who do not possess your level of experience and knowledge within it.