Trading currencies doesn’t have to be an extremely tough thing to do. The only reason so many traders lost their money is simply because they don’t have sufficient knowledge about currency trading before actually put their money on the line. These 4 currency trading tips are the basis of trading safely, so make sure you know all of them and avoid being the next idiot who lost all his money due to his own ignorance.
- Do not allow your broker to eat you
Let’s face it. The world is filled with those who are ready to reap some benefits from you if you do not cautious enough. Scam brokerage will offer 101 too-good-to-be-true features to bait you in. When you already inside, they are going to suck your cash dry and kick you out when you can’t give them more deposit.
Give yourself a favor. Conduct some research before actually throwing your money into some unknown brokerage just because they offer you sugary promises. Ask if they are regulated by an official financial authority or not. Read their terms and conditions. Check out their spread. Test their trading platform via the demo account. Spending some time in research can save you from a lot of problems in the future.
- Do not hop into the market with unproven trading system
When you decide to enter the world of forex trading, it’s likely you have some ideas concerning the trading system that you’ll apply to crank out profits. You could be interested in swing trading, day trading, or some other strategies. You might also have interest in automated trading, such as utilizing signal services or forex robot.
Whichever it is, be sure to spare a while to open a practice account and truly test the strategies against real market movement. As a result, you will get much more precise result than mere backtest report.
- Do not depend on yourself to close the trade
Most novices enter the currency trading world with one misconception: they think they can watch the market movement on their own and make the best decision to get the highest possible profits for every trade. This won’t do. Your emotion will get in the way and screw up everything. You’ll stress yourself more and get more losing trades than winning ones.
Learn about simple risk management: placing Take Profit and Stop Loss orders as soon as you take a position. Doing this will keep your trades controlled and you may sleep better at night. Needless to say, there are particular occasions where you can get a lot more by watching the market on your own, but just leave that for another time when you already get accustomed to the game.
- Do not put all your money at stake
Learn basic profit and loss calculation. Learn to calculate your equity. By knowing your numbers, you’ll be able to apply proper money management anytime you are going to execute a trade.
The iron rule here is no matter how good the chance of the trade might be, you’ll never execute a trade that put all your money at stake. Observe the number of lots that you will buy/sell and estimate your loss if the market goes to the opposite way. Could you handle the loss? If you can’t, then it is better to reduce the lot size and play it safe.
The currency trading tips above are basic strategies to get rid of unnecessary risks before you actually put your money in the line. You will need to put some time and effort to do that, but realize that in the world of currency trading, no one can 100% predict the market movement. Things can be chaotic in a matter of seconds and you don’t want to lose everything just because you were careless. So, be prepared for anything; that is the essence of becoming a pro trader.