The Six Steps To Follow When Trading Forex

Learning forex? Here are six golden rules to follow before you start trading for real. Drill this carefully in your head before blowing your first live account.

Keep it simple

Too much information on your screen can prove confusing.

Platforms

Not all trading platforms are created equal. Choose a platform that is proven and tested – don’t fall for an inferior trading platform because it “looks” great.
Set daily limits and follow them – Many traders look for the big score in one day. Trading should not be about changing your life overnight, but it can change your life if you create a realistic daily income and even a daily loss limit for yourself and stop trading for the day once it is reached. Too often, people lose out on profits they had during the day because they get greedy. Stay focused and be disciplined, not greedy.

Lock in your profit quickly

The profit any trader seeks comes from the fluctuations in the currency exchange market. These changes occur every second – if you wait for a huge profit you can lose whatever gains you have made in the blink of an eye. After you make an opening trade, decide upon a small profit level and set a limit order to close the position. Since most Forex providers do not charge a commission, you can make as many trades as you want until your target for the day has been reached.

Be Realistic

Do not set yourself unrealistic targets and do not have crazy expectations. Trading, as much as it can be scientific through technical analyses, is not an exact science – there are other factors that are at play. Setting unattainable targets will lead to frustration and failure when your targets are not met.
Read – It is very important in trading international currencies to know as much as you can about the market. Knowing that the PPI of a country is low is not enough, how that relates to the rest of the world is important too. For example, Producer Prices in one country affect Consumer Prices in another – if the unemployment rate is higher then people buy less goods – which can lead to a lower valued currency.

Trade with your head, not over it

If you are a beginner, make sure you do not trade more than you can afford to lose. Emotions can be detrimental to keeping level trading head. People who cannot afford to lose the money they are trading tend to lose sight of their strategy when the trades are not going their way. This only leads to bigger losses. Create a plan and follow it – no matter what.

The old adage

It is written on every brokerage advertisement and it is true – past performance does not guarantee future results. What happened yesterday might not happen today even if the circumstances are the same. Each day brings something new – do not let your guard down and do not deviate from your plan – even if you think it could make you more money, 9 out of 10 times you will lose.