A Step By Step Guide to Successful FOREX Trading
A Step By Step Guide to Successful FOREX Trading
Before you jump into FOREX trade, the first thing you should take into account is risk. Successful forex trading depends largely on successful risk management. In the trade, there is a higher probability of losing than winning. According to statistics, 95% of FOREX traders lose and only 5% of them win in the trade.
Some of the risks involved in FOREX include;
• Country Risks
• Interest Rate Risks
• Leverage Risks
• Counterparty Risks
Without a comprehensive risk mitigation strategy, any risk can result in the loss of everything you have invested in this trade. But despite this, many people still would like to try their luck with FOREX trading, simply because the rewards from it can be mind-blowing.
Trust me, with a proper strategy, you can make profits in the tune of six figures and above annually. Did you know that FOREX is one of the most profitable internet businesses with estimated annual revenue of about 6 trillion dollars? There is so much money to be made here that is if you know how to mitigate the risks.
Ineffective Risk Mitigation Strategies
A lot of so called FOREX experts have come up with several risk mitigation strategies that simply don’t work. There are countless ‘risk strategies’ out there that simply will not prevent your funds from going down the drain when it comes to currency trading. Why is that so?
The answer is simple, they are bogus strategies. The people behind those strategies know that many traders are desperate for an approach that can help them limit risks as well as reduce losses. They are aware that these poor traders are willing to spend any amount on a strategy.
A Proven Strategy for Success in FOREX Trading
Unlike these dishonest individuals who recommend ineffective, misleading approaches for risk management in FOREX trading, we are going to share with you a very simple strategy that will help you mitigate risks, reduce losses as well as boost profits, buying and selling money.
1. Define Your Goals and Select a Suitable Trading Approach
Before anything else, make sure you have some goals that you want to achieve and know how you will achieve those goals. You should have precise goals in mind as to what you would like to accomplish both in the short run and long run with respect to this trade. Your approach should not only be capable of realizing those goals, but it should also match your personality.
Each type of approach has a different risk profile, which needs a different attitude as well as tactics to succeed in FOREX trading. For instance, if you can’t risk going to sleep with an open position in the market, then you might want to consider day trading. Nevertheless, if you have currency that you think will benefit from the appreciation of a trade over a period of time, then you might want to become a position trader.
Just ensure that your personality fits the trading approach you choose. If it doesn’t match the approach, this might lead to a lot of stress, which can hinder you from making good financial decisions hence losing.
2. Go with a Reliable Broker
The type of broker that you choose can make or break your investment. If you go with a bad broker, you are going to fail miserably. If you select a good broker, on the other hand, chances are high that you will succeed.
So how do you determine a good FOREX broker as well as a bad one? It is simple, a good broker provides an appropriate trading platform that allows you to do the analysis you need to make good decisions. A bad broker, on the other hand, offers a platform with inadequate or misleading signals, which can cause you to make bad decisions.
3. Be Consistent with Your Methodology
There are many different methodologies that a trader can use to execute winning trades. For instance, some traders pay attention to the basic principles of the market as well as the economy. They then utilize a range of tools to determine the best time to execute a trade. Other traders use technical analysis; consequently they will only work with charts to time a trade.
Fundamentals impact the trend in the long run, whereas charts may provide trading opportunities in the short term. Be consistent with the methodology you select.
It is always good to go with something that is flexible. A methodology that keeps up with the changing dynamics of the market is an important secret to trading success.
4. Select Your Entry As Well As Exit Time Frame with Caution
One of the things that cause many traders to lose trades in FOREX is the confusion that results from conflicting information that they interpret when studying charts in different time frames. What appears as a buy signal on a weekly chart could, in fact, appear as a selling opportunity on an intraday chart.
If therefore you are deriving your primary trading direction from a weekly chart and using a daily chart to time an entry, ensure that you synchronize the two. What I am trying to say is that, if the weekly chart is feeding you with a buy signal, wait until the daily chart also confirms a buy signal.
These are the only effective tips that will help you succeed in FOREX trading. Let nobody deceive you that there are other hidden secrets to success on the biggest financial market. They are also the only working essentials for money management in FOREX trading.
If you define your goals as well as select a trading approach that matches your personality, nothing will stop you from making profits, buying and selling currency. Likewise, if you choose a reliable broker as well as remain consistent with your methodology, you can be sure that you will make a lot of money trading currency.
Finally, selecting your entry as Well as exit time frame with caution will enable you to avert 99.9% of losses involved in this big trade. We hope you will implement these tips and will be successful in forex trading.