Sure you can pick up currency trading basics fast. Many people get completely lost in charts, indicators, software platforms, fundamental analysis, commodity currencies and so on until they hardly know where to begin. But the principles of forex trading are really quite simple.
Currency trading is available to anybody with a high speed internet connection. It is a very special type of investment opportunity that offers the possibility of making a lot of money and becoming financially free. At the same time, it is very risky. People who are drawn in to start trading before they know what they are doing are likely to lose money.
Whether you are a beginner or a successful trader, you will need to take account of these 5 golden rules to increase your profits from forex trading.
1. Understand your forex system
You will need a profitable system to start trading on the currency markets. This is simply a set of rules that tell you when the market conditions are right for opening and closing a trade, what your position size should be, etc. There are many systems available online through ebooks and videos, or you can develop your own by trial and error using tips that you can pick up on websites such as ours.
But whether you figure out your own forex trading system or invest in one that is known to make money, you must test it for yourself in a demo account before you go live. This will ensure that you can make it work for you and it will give you a chance to fully understand how it works. You should not be risking real money until you are sure that your system works.
2. Be consistent
Once you know that your system is going to be profitable for you in the real market, you should have confidence in it and not be discouraged by the occasional loss or diverted by advertising for other systems. If you keep switching systems, opening trades based on your intuition or changing the rules of your system after you go live, you will only lose money.
3. Cut your losses
All systems will have a proportion of losing trades and you better be ready for them. The way to do this is to always have a stop loss that will be triggered to minimize your loss when things go against you. Never hold on, hoping that a bad trade will come good. Get out fast and wait for a better trading opportunity.
4. Learn from your mistakes
We all make mistakes and there is no point beating yourself up over them. However, make sure you learn from them before you forgive, forget and move on. Whether it was a distraction that made you enter the wrong figure in a box or a temptation that you gave into, it is worth making a note of what happened in your trading records.
5. Do not get excited
Forex trading can be an exciting business but it is very important to stay calm when you are trading. Early success may lead you to become over confident and start risking too much. Avoid that temptation. Early failures can discourage you and make you give up too soon. Do not let your feelings dictate your trading.
If you put our golden rules into practice in your own trading, you will soon see how you can overcome the complexities of the market to make the currency trading basics work for you.