The Forex Market: Market for Everyone [3 Main Rules to avoid losses]
Getting started in Forex: First steps as a trader
No person on the planet would not dream of a good life. Earning enough money, but at the same time spending as little effort and time as possible - empty dreams, you say. However, some disagree with you. Successful Forex Traders!
The advantage of trading on the international foreign exchange market is that you can make transactions from almost any place convenient for you: office or home, using a computer, laptop, tablet, or mobile device - it does not matter.
Yet, despite the good prospects for this type of earnings, the path of a foreign exchange trader is more likely to be covered with thorns, and certainly not rose petals. Where should you start, you ask? The answer is obvious - from training.
Many people who are new to the foreign exchange market quit after their first loss. They go back to their jobs they don't like but are stable and keep working for someone else. Instead of realizing you were wrong and moving on, after going through so many bad but important things.
Therefore, before entering the Forex market, you must prepare very well and learn a lot, as becoming a currency speculator, you enter a high-risk area.
A real trader is always honest with himself. There is a market. Made a deal, made a profit - your merit; remained at a loss - your merit. Everything is simple and fair. It is necessary to correctly combine losses and profits. More often than not, professional traders believe that 1: 3 can be unprofitable to profitable trades.
But even if you have completed a training course and decided that your knowledge and skills are not enough to conquer the peaks of the international currency market, or you simply do not have enough time for this, investing in Forex using the PAMM service can be a good way out of the situation.
This special service allows those who do not want or cannot, to engage in trade on their own, to earn money. Investing in experienced managers allows you to profit from them. Almost every forex broker provides a rating of managers, where you can view the terms of cooperation and the trading history and choose the trader that suits you.
First Steps in Forex: 10 Tips for Beginners
For those who have decided to work on a trading platform such as the forex market, it is important to know a few simple rules. This will help to achieve the desired result sooner and avoid possible mistakes. One should be able to make quick decisions, move from simple to more complex, and draw conclusions from mistakes made, both own mistakes and others' mistakes also.
The advantage is a well-established system, self-discipline is the key to success in Forex, and acceptable risk is a reasonable risk.
Experienced professional forex traders recommend building a trading pyramid, studying permanently psychology of trader´s behavior and taking into account cyclic results.
Only a trader is responsible for the work done and its results. A trader on the currency market should always have his/her own game system and make instant decisions. By not listening to the advice of others trader is able to understand if his actions are right or wrong and this is the key moment in making successful trading.
Studying the psychology of traders´ behaviour.
Traders with their own psychology and emotions are the main actors in shaping the currency market. And the currency chart is a graphical representation of the desires, hopes, opinions and fear of the global trading community. Successful trading involves learning about human psychology and how it can affect the outcome of trading decisions. When analyzing price charts you should try to get into the trader´s thoughts and feeling which overwhelm him every minute.
Use of cyclicality of results.
Almost all word events have a tendency to occur in cycles. The life of the currency market participants is no exception and also goes through ups and downs. You can achieve a positive outcome only by increasing or decreasing the size of existing positions at the moment of merging with the market. Many successful traders skillfully manage their accounts, which brings them profit.
Correct building of a trading pyramid.
You should not forget about increasing your trading position if the market is pointing to a positive profit and you feel you are in the right. The basic trick to building trading pyramids is the fact of each new addition to the previous one. With this strategy, your open position and its average rate will develop resistance to short-term moves against you.
The key to success is self-organization.
Even with a "formidable weapon"- your own trading system- traders can face defeats. To keep away from this, traders should master the basic rules of self-discipline and listen to the system signals. It is not advisable to skip the opening and closing key positions. Trading can easily get derailed by greed and hope.
Trading is a lifelong baton.
The speculative game should be a business to which you will devote more than one year of your life, gaining both moral and material satisfaction. According to the experience of traders working with Admiral markets brokers, inexperienced beginners, who want to increase their account two or three times on their first transaction, practically always fail in the first month of trading. The main goal in achieving a positive result should be literacy and the desire to become a seasoned professional.
Move from the simple to the complex.
One should choose one trading platform and study its history of formation over the last five to ten years. On the price chart, there should be marked several levels of resistance and support, the tendencies of price`s behaviour when approaching these levels. It is recommended to analyze the signal, trend and psychological functions of the indicators. They will allow you to trace the market and characterize the trading mood.
Your system is your main advantage.
To win the game of Forex you need a certain "weapon" against the other participants. Such a "weapon" is a trading system, which must be proven by historical data and show a positive.
Learning from your own and others' mistakes.
Careful analysis of not only your own profit but also losing positions is very important. The bitterness of losses will be less significant if conclusions have been drawn from the error and it all not happen again in the future. A trader who learns from his mistakes will be successful.
An acceptable risk is a reasonable risk.
To start trading, traders need to have some funds at their disposal. The amount should be determined based on the risk tolerance for each market in which you plan to invest your own money, as well as the total amount of the security deposit, which should not be more than 25%.
Professional traders can only risk funds that they can lose without the risk of financial loss. It is only under this condition that the forex market participants are able to make sensible and calm decisions.
Don’t underestimate using the Demo account
The demo is a good training tool for you to be a good trader.
Advantages of demo account:
- It lets you see how prices move and understand the risks that come with using leverage.
It lets you learn how the platform works and get a feel for how the broker handles trades.
It lets you come up with ways to trade.
Using currency pair
If you're just starting out, you shouldn't look at too many currency pairs. Keeping an eye on just one or two currency pairs is enough. You can check the most used currencies.
The 3 Main Rules to Avoid losses in Forex Market
If you decide to trade in Forex, it is better to adhere to the following rules.
Rule # 1: Don't take on a lot of leverage, especially if you're just learning to trade Forex.
The course usually does not jump much. During the day, the difference is most often hundredths of a percent. So, if you make deals only for the amount of your deposit, you won't earn much.
That is why forex is traded with leverage. This means that a forex dealer can provide you with a virtual analog of a loan. Real money will not come to your account, but leverage will allow you to increase the transaction amount several times. And you can go beyond just the money on your deposit. By law, the maximum leverage that a forex dealer can give you is 1:50.
If you guess the course change, you can multiply your profit in this proportion. You will incur losses in the same ratio if you don't guess.
In other words, your potential winnings, but also your risk of losing money, increase in the same proportion as your leverage. Therefore, to begin with, choose leverage within the range of 1: 5–1: 15.
Rule # 2: limit your deposit - the amount you put into your trading account with a forex dealer.
After all, you can lose this amount at any time. It won't be possible to trade profitably all the time, losses are inevitable. But a forex dealer will not allow you to lose more than you have on the deposit, and go into the red. He will forcefully close the deal.
True, losing the entire amount on the account is also not pleasant.
Rule # 3: use stop-loss - automatic exit from a trade.
Forex programs usually allow you to limit losses on a trade. This option is called a stop loss. This opportunity is worth using if you do not want to lose your entire deposit at once. Stop-loss allows you to automatically close a trade when losses reach your set limit.
Unfortunately, the stop-loss option is not available in all forex programs. If it is not there, you will either have to risk the entire amount or each time you withdraw money from the trading account of a forex dealer and leave only a deposit there, which you are not afraid to lose.
Regardless of whether it is training, or already directly investing in Forex, the best advice is to never give up and confidently stride towards your goal. And remember that the profitability of your trade also depends on the broker you choose!
5 Forex Trading Points to Consider by a novice
1. Get basic level training at a specialized institute, don´t give up on self-study. This will allow you to understand the tools you use, understand the rules of the game on the currency market, and not lose all of your money on the first try.
2. Constantly practice fundamental and technical analysis, even allowing a lot of mistakes. Beginner traders often think that they have it all figured out and can work by themselves. This delusion is shattered by the first major loss.
3. Always have a goal, after which you are ready to quit trading. In other words, lock in your profits at predetermined currency values. As long as you have not lost everything, do not gamble.
4. Avoid overreacting. Many novice traders, due to the adrenaline rush, feel the need to be in the market and trade constantly, which sooner or later - and rather quickly - leads to a tangible loss. Don´t trade for the process itself, trade only for-profit and only according to your chosen trading strategy.
5. Stick to a trading plan without letting your emotions get the better of you, and be disciplined. Intuitive actions and emotional impulses are inherent to everyone, but beginners should not allow themselves to have them.
Learn more about elements of the Forex Market: What is a lot size and how to calculate a lot in Forex? and What is Price Action?