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martedì 29 maggio 2018

13 Smart Ways To Succeed Forex Trading

13 Smart Ways To Succeed Forex Trading
Forex trading
With practice, knowledge and little tricks down your sleeve, you can generate massive amounts of profit trading currencies. Every trader has their own FX trading strategies. But the best traders keep looking for something new and better every now and then. Here are 13 smart ways to succeed in Forex Trading.
1. Develop a trading plan
One major mistake traders do when trading is relying on intuition rather than a concrete strategy. For instance, when trading, some traders do not stop to think about the “what ifs” like; What if your prediction was wrong? Where will you be left? As a result, they end up dealing with a big loss that would have been prevented with a simple trading plan. Whenever you get into a trade, it is crucial that you have a clear plan that should be adhered to until the end. Part of this plan is knowing when to leave a trade. Some critical factors to consider when creating a trading plan include;

  • Know how much money you are willing to risk

  • Know when and how to leave even if your prediction is right or wrong
  • Knowhow much you will earn when your prediction is accurate and how much you will lose when it is wrong
  • Know how to protect your trade-in case of the market shifts in a way you didn’t expect

  • 2. Implement the money management strategy
    This is a strategy that minimizes risks by creating protective orders that stop loss and balances your profit and loss. When trading Forex, it is crucial that you have a target profit mark and understand your risks whether your prediction is wrong or right. Above all, you need to have protective stops to help you control risk.
    It is highly recommended that you choose a trade where you can lose $1000 to the market if you are wrong and make profit of up to $500 with a trade that brings profit 8 out of 10 times than a trade where you can win $1000 or lose $500 in a trade where the ration of winning to losing it 1:3.
    Related Article: How Much Capital Is Required To Start Forex Trading
    The key here is to know and understand your chances of making a profit and knowing how to choose the right profit/loss ratio.
    3. Create protective orders to stop loss
    Most of the time, massive losses while trading Forex are caused by the lack of a money management strategy and a poor trading strategy. Once you begin trading, it is crucial that you put in place realistic protective stop orders. Traders often make the mistake of using imaginable orders that worked for them in the past when the market was favorable and moved in their direction. Putting stop orders in the wrong place only goes to show that you conducted the wrong technical analysis.
    Also Read: How to Set the Stop Loss (SL) and Take Profit (TP) Targets
    4. Close winning trades on time
    One common mistake made by Forex traders, even professionals, is closing profit-making trades too soon while letting loss-making ones linger longer. This error is often as a result of a lack of plan so that you do not know when to leave a trade. Often times, when a trader makes two loses consecutively, they are highly likely to take the next win, regardless of how small it is even if it has the potential to bring you massive profit that would otherwise make up for the money you just lost.
    On the other hand, when the trader starts making losses, they let this loss grow hoping that the market will stabilize, which rarely does. To prevent yourself from this mistake, create protective Stop Loss commands before getting into the trade.
    5. Hold your position for a sensible period
    Another common mistake made by traders is not taking profit on the level dictated by the market. If you do not take profit as defined by the market, the market will take back even more profit from the trade. You are advised to exit a trade once you hit the target profit on your closing balance. Staying too long might result in bigger lossesThe only exception made to this rule is when trading prices move strongly to your direction. Only then are you allowed to move your protective Stop Order to the target.

    6. Remove averaging from your trading strategies
    This is an ancient strategy that was used in the futures and stock markets. However, in today’s market, averaging may destroy your trade with a leverage that stands at 1:1000 or even higher. For instance, when you enter a long position and it moves lower, this may justify you to average downwards, hoping to get a lower average. However, if the market moves in the opposite direction, you risk losing twice as much.
    7. If you get successful, maintain the rate of risk you have been using
    If you have successfully closed 3 or more trades in a run, you may opt to risk with an even bigger amount just because the trade has a larger balance. This is because the preceding successes make you bolder to take even bigger risks. This strategy, however, kills more Forex traders than a loss-making trade does. It is advisable that you maintain the same rate of risk regardless of how big the balance to protect your investment.
    8. Trade a reasonable amount
    Excessive trading occurs when you trade with a big amount from your trading balance or trade with more pairs in a single trade than necessary. To prevent yourself from making such a mistake you are advised to set a limit on your balance so that you never risk trading more than necessary on your balance regardless of how attractive the results are. Overtrading is the surest and easiest way to lose your capital.
    9. Take out profit made from trading from your account in good time
    The volatility in Forex trading can be a killer. That is why it is crucial that you always take out your profit in good time before it is recovered by the market. Still, only 1% of all traders follow this advice. To ensure you take out your profit in good time, preset a level that needs to be attained to allow the withdrawal of your profit from your account.
    10. Maintain your trading plan
    During a trading period, most people are often engulfed with fear and greed instead of staying calm. While you will start trading with a clear set of mind and plans, you will often notice that as the trading proceeds, depending on the market, you might do the exact opposite of your plans.
    Unless there are major force events, do not change your strategy within trading hours. To prevent this from happening, you are advised to draft down your plans before rallies and maintain utmost discipline while trading.
    11. Be patient
    The average amount of time it takes for a trade to take place is usually between 5 minutes up to 9 months. However, not all traders trade to make money. Some just want the market action. So when trading, carefully think if you want to trade within a few hours or if you are patient enough to hold it out for months.
    12. Practice discipline
    One of the major causes of loss while trading is the lack of discipline. Train yourself to always stick to a trading strategy, know how to manage loss, take out your profit, be patient and consistently apply for money management orders. Beginners are advised to practice discipline by watching the market for an entire day before they make their first trade, even if they face a good opportunity.
    13. Copy trading
    Copy trading is a new technology that allows traders to follow the footsteps of a successful trader and copy their trades on a set ratio. However, when copy trading, it is crucial to remember that even guru traders have bad days, weeks and even months. To mitigate this, you are advised to diversify. When you copy more than one trader, you spread your risk.

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