A Forex guide designed for traders of all levels. The guide explains the essential steps to success in Forex trading, from building a reliable strategy to applying risk-limiting techniques.
Some people do not consider trading seriously. A mere pastime, it is just a way of trying one’s luck and spending free money on something that might possibly return a lot more. However, if your approach is more serious, you know that Forex trading is not a gambling machine like binary options are, but a professional activity. As such, it requires a sound foundation of knowledge and skills. Let’s explore some of them in this article.
Education first
To make considered, carefully thought out decisions in the financial markets, you need to learn about them first. Some brokers provide their own educational courses that help fill in knowledge gaps on how the markets work and what do all those terms, like spread, pip, leverage, and many others, mean.
Analytics matters
Successful Forex trading is unimaginable without quality analytics. This includes overviews of fundamental factors, such as geopolitical and economic events, and technical analysis carried out by professionals. If you are looking for a more individualized trading experience, you may want to learn how to conduct the analyses yourself.
Trading strategy for consistent approach
Only a fully developed trading strategy, based on either technical or fundamental analysis, or a combination of both, can give consistent results. Some strategies imply waiting for weeks for strong signals, while others are about opening orders every few minutes. However, all of them require a systematic approach that will greatly help you reach your financial goals.
Diversified means protected
As long as you invest in different assets, your overall portfolio will be better protected against market crashes, extreme price fluctuations, and other negative events happening in the markets. For instance, OctaFX offers gold as a trading instrument. You can diversify your currency portfolio with this safe-haven asset to protect it during economic downturns.
Limiting risks and dealing with emotions
Fear, hope, and greed often influence traders’ decisions, making them unprofitable, ultimately resulting in stress and emotional burnouts. Risk management techniques help to build an efficient strategy with fixed risk parameters set for each trade. One of the most common formulas sounds like this: no more than 4% of the capital used and no more than 25% loss incurred per trade. That is, if you have 1,000 U.S. dollars in your trading account, set a 25% (10 U.S. dollars) stop-loss before opening a position and don’t put more than 40 dollars into a single trade.
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