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How to Start Making a Profit With Forex Trading



2020-10-21 02:23:56 Business

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The currency exchange is a gigantic financial market - in fact, the largest in the world. The daily turnover reaches 6 trillion US dollars. It is possible to make money on Forex, but you need patience and perseverance. Traders who don’t prepare or act impulsively are likely to fail. Here are a few tips to help you develop a proper strategy.

Retail trading has existed since the 1990s. Previously, only banks and other institutions could access the exchange. Now, anyone can become a retail trader.

In India, the segment is booming. Still, only a third of all traders succeed. This is according to a 2014 Bloomberg report. This highlights the importance of education and strategic consistency. So, what are the keys to profits?

1. Prepare for Every Trading Day

The worst way to start is by using leverage without a roadmap. With margin ratios like 1:100, trading is irresistible. Unless you have a strategy, you will end up wiping out your deposit with a single bad trade. Instead, focus on meticulous preparation.

The first step for every beginner is training in the demo mode. Demo accounts are easy to register. They allow you to trade in the simulation mode. The trading terminal imitates real market conditions, so you can learn at your own pace.

There is no shortage of educational material. Your broker should be able to provide articles on the subject. There are books, video tutorials, and entire YouTube channels. Choose trusted sources and experts with a proven background. Some of the best Forex trading books include:

● "Currency Forecasting: A Guide to Fundamental and Technical Models of Exchange Rate Determination," by Michael R. Rosenberg,

● "Forex Strategies: Best Forex Strategies for High Profits and Reduced Risk," by Matthew Maybury,

● "The Little Book of Currency Trading: How to Make Big Profits in the World of Forex," by Kathy Lien, and

● Trading in the Zone: Master the Market with Confidence, Discipline, and a Winning Attitude," by Mark Douglas.

2. Diversify and Limit Your Risks

Instead of focusing on winning, concentrate on managing your risk. The more different instruments you use - the safer it is. Diversification is a basic condition for consistent success. On the other hand, reliance on a single currency pair is dangerous.

Instead, aim to execute multiple trades in different markets: for example, stocks, CFDs, and currencies. This way, when you make a loss in one field, it is neutralized by profits elsewhere. A global brokerage like Forextime provides a wide range of trading instruments. Another way to hedge risks is through stop and limit orders.

Traders should set Stop Loss and Take Profit for every position. This way, potential losses are limited, and you can collect the desired return. A trailing stop is another useful feature. All of these instruments are covered in the above mentioned books. They form the basis of the best Forex trading strategy that can be tried.

3. Be Patient and Calm Down

Emotions are traders’ worst enemy. When humans experience strong feelings, they act irrationally. Whether it’s fear, panic or joy, don’t stray away from your plan.

When traders make mistakes, they may start chasing losses. The market can always turn against you: it is natural. Instead of making more mistakes, stop and think. Analyze your behavior to see what caused the loss. Learn lessons from your blunders and use them to improve the strategy.

Trade mindfully. Keep a trading journal and note down the details of each position, including your motives for initiating it. Analyze the size, liquidity, volatility, and other fundamental aspects. A written record will allow you to review performance and see what works and what doesn’t.

4. Learn From Your Mistakes

Many beginners feel anxious if the market does not move in the direction they expect. Remember that perfection is unattainable. Even seasoned professionals have losing trades time after time. This is why you shouldn’t open a live trading account until you know exactly how to use the software.

Focus on preparation and incessant learning. Always manage your risks. In Forex, there is always room for improvement. Success comes to those who follow a plan and suppress their impulses.


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