Forex Trading Tips That All Traders Should Follow
Devise a Strategy
A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.
Trade on Off-Peak Hours
Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller).
Trade on the News
Big market moves occur around news time. Trading volume is high and the moves are significant meaning there is no better time to trade than when news is released.
If you place a trade and it’s not working out you must cut your losses and get out. The worst mistake is to stay in and hope for a swing in luck. If you’re in a winning trade, don’t talk yourself out of the position because you’re bored or want to relieve stress.
Without a well-conceived strategy your trades are essentially thoughts only and thoughts and emotions and a very poor foundation for trading.
Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. It can be dangerous to novice traders though as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.
Knowledge is Power
When starting out trading forex you must understand the basics of this market if you want to make the most of your investments. The main forex influencer is global news and events. The potential in the forex market is in the volatility, not in its tranquillity.