10 things a new Forex trader should be aware of

Forex trader

To help you get started Themerrymarkets.com, here are the top 7 rules for trading the currency market successfully – which you can adopt to become a better trader:

1. Trading is an art, not science The systems and ideas presented here are the results of years of observing price movements in this market and provide approaches to trading in trend and counter-trend configurations. However, they are by no means a sure guarantee of success. Neither trading approach is 100% accurate. Therefore, no trading rule is totally absolute (except the rule on the use of stop-losses, the strategy for limiting losses). However, these 7 rules work well in a variety of market conditions and will help keep you out of harm’s way.
2. Use both technical and fundamental analysis Both methods are important and have effects on price movements. Fundamental analysis is useful in determining general aspects of the market that can last for weeks, months, or even years. Technical analysis can change quickly and is useful for identifying specific input and output levels. A golden rule: enter and exit based on technical analysis and advance based on fundamental analysis. For example, if the market were fundamentally a positive environment for the dollar, we would have to look for opportunities to buy in falls instead of selling in recoveries.
3. Never let a winning deal turn into a loser The currency markets can move quickly, with gains that turn into losses in a matter of minutes. Therefore, proper capital management is essential. There is nothing worse than watching a trade go up to 30 points in a minute, to see it reverse the movement a little later. You can protect your profits by using trailing stops and trading for more than one lot.
4. Never risk more than 2% per trade This is the most common and most unfulfilled rule in trading. The trading books are full of stories of traders losing one, two, and even five years of profit in a single trade that has gone terribly wrong. By setting a stop loss of 2% for each trade, you would have to bear 10 consecutive losing trades to lose 20% of your account.
5. Always match the strong with the weak When a strong army is positioned against a weak one, the odds are heavily tilted toward victory for the strong army. This is how you should approach trading. When we trade in currencies, we always do it in pairs – each trade involves buying one currency and selling another. Because strength and weakness may last for some time as economic trends evolve, pairing a strong currency with a weak one is one of the best ways for traders to gain an edge in the currency market.
6. The risk can be predetermined and the reward is unpredictable Before negotiating, you must know your limit. You need to find out what would be the worst-case scenario and place your stop loss based on a technical or monetary level. Every negotiation, no matter how sure you are of your outcome, is an educated guess. There is nothing safe in trading. Furthermore, the reward is unknown. When a currency moves, the movement can be huge or small.
7. No excuses The “no excuses” rule is applicable at times when the operator does not understand the movement of prices in the markets. If, for example, you have a short position in a currency as negative news is anticipated and that news takes place, but the currency recovers, you should exit immediately.

Sebastian

Sebastian was born and raised in the busy city of Abbottabad. As a journalist, Saad Mushtaq has contributed to many online publications including the PAK Today and the Huffing Post. In regards to academics, Saad Mushtaq earned a degree in business from the Abbottabad UST, Havelian. Saad Mushtaq follows the money and covers all aspects of emerging tech here at The Hear Up.Thanks